Warburg Tomes

"To the guardians of the Federal Reserve System past, present, and future" are dedicated the two volumes (1,752 pages in toto) titled The Federal Reserve System, written by Banker Paul Moritz Warburg, appearing last fortnight (Macmillan, $12). Banker Warburg, therefore, partly dedicates his work to himself, for the Federal Reserve System had had no more vigorous founder or critical guardian than himself. By no means light is the reading of the Warburg tomes. But since they are authoritative, to students and experts they should be indispensable, to the laity they are often interesting.

The Book. Choosing as his gambit an article by Professor William B. Munro which states that the people, not the Congress, make the laws, that laws are already half made before they are subjected to and often un-idealized by the jockeying of politicians, Mr. Warburg traces economic U. S. conditions which led first to the need and then the passing of the Federal Reserve Act. Says Mr. Warburg: "I was trained in the practices of a banking system, which under varying forms had worked satisfactorily in almost every industrially advanced country except the U. S. From the time of my arrival in America (1902) I felt impelled to urge the adoption of ... [these fundamental principles]. . . . Everybody will agree today that it would be difficult to imagine a banking system more cruel and more in efficient than that prevailing in the U. S. at the beginning of the twentieth Century. . . ." The cruelties were imposed by the eccentricities and individualism of the private bankers, by the lack of a central controlling or guardian agent. But "the idea of a central banking system [was] anathema to all. The compromise between the anathema and the need was the Federal Reserve Board of which Senator Carter Glass, opponent of a central bank, once resignedly remarked, "'Oh, hell, it is a central bank.'" The Redistricting Intermezzo. The book's most personal chapter deals with the dividing of the country into "not less of 'direct pressure' (the warning of Feb. 7, 1929 [TIME, Feb. 18] as opposed to the raising of the discount rate) has clarified the problem (protection of credit against speculation) and advanced its solution." The Man, In 1798, in Hamburg, was founded M. M. Warburg & Co. Since then a son of the Warburg family has always headed the House of Warburg, none other than Warburgs have reached dominance therein. Paul Warburg, unquestionably one of the most brilliant & internationally-minded U. S. bankers, was born in Hamburg in 1868, entered the House of Warburg at 20. In 1894 he married Nina, daughter of Solomon Loeb of Kuhn, Loeb & Co. In 1902 he went to the U. S., became a Kuhn, Loeb partner as had his brother Felix in 1896. Since then he has been not only a great banker, but an illuminating banker. His essays on banking are published in Vol. II of his book. The Significance. "The object in writing this book was to show whence we came, whither we are drifting, and by what fairly simple means we can avoid dangerous rocks now threatening our course." The laity however will regret Mr. Warburg's decision to go the "extreme of foregoing to mention by name even onetime fellows-at-arms to whom I longed to pay a tribute. . . ." For, as everyone knows, names point and clarify information. While the elect may read between the lines, much of Mr. Warburg's book must remain obscure to the ordinarily intelligent citizen. Perhaps it remains for less timorous a writer than Mr. Warburg to make the history of the Federal Reserve System completely clear.

This file is automatically generated by a robot program, so reader's discretion is required.