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Hard times for Hamburg

Things could not have been much worse. Inflation and hyperinflation, world economic crisis, banking crisis, two devastating world wars with millions of dead, two total collapses of the economy and civil order, hunger, misery, refugees and displaced persons, bombed out cities, the almost complete destruction of infrastructure and industrial production. And then the currency reform that turned everything on its head again, the “zero hour.”

The first half of the twentieth century brought enormous challenges for the banking house Joh. Berenberg, Gossler & Co. And one man had to meet them, take responsibility and make decisions whose consequences were imponderable, as there was no experience from the past that help in the new situation. When Cornelius von Berenberg-Gossler took over the leadership of the family company after his father’s death in 1913 Imperial Germany was already headed for its first catastrophe. Cornelius, a private banker and family man, married to Nadia Clara of Austria since 1898, was almost forty years old and by no means new to the business. For sixteen years he had been a shareholder of the company, leading it alongside his father John von Berenberg-Gossler.

With the death of his father, the baronetcy tied to the family property in Niendorf was passed on to him. The new baron was a respected and honourable member of Hamburg society, and since 1907 had been General Consul of the Kingdom of Bavaria in Hamburg. He was a political man, monarchist at heart, liberal in spirit, and despite a realistic view of political developments, hopeful of a victory of reason. This is reflected in the often laconic, terse entries in his diary, which he kept to the end of his life.

He was deemed unsuitable for military service in the First World War for health reasons. So he and his 50 hp Mercedes formed a motorized unit that supplied aid on the eastern and western fronts, bringing soldiers “charitable gifts” from home. For a time Cornelius also worked as a delegate of the Red Cross in Vilnius.

After the collapse of Imperial Germany he joined Gustav Stresemann’s German People’s Party (DVP). Stresemann, who was later to become foreign minister and briefly also chancellor of the Weimar Republic in 1923, formed the party as a successor to the National Liberal Party. But only once, in 1920, did it get more than 13 percent of the vote. Germany was on its knees. The economy slowly got started again, but money was worthless. For Christmas 1920 employees of Joh. Berenberg, Gossler & Co. got a package containing flour, rice, bacon and other comestibles. Inflation turned into hyperinflation. In August 1923 Cornelius paid 200,000 marks for a streetcar ride to Niendorf, as he noted in his diary. In September a pound of butter cost 40 million marks. 135 printers and 35 paper factories in Germany stayed busy making banknotes. The Berenberg bank employed 400 just to check and count paper money. “Writing zeros” created jobs.

To stabilize the economy, in 1923 a bank was founded in Hamburg to emit payment instruments backed by gold, the Hamburgische Bank von 1923. Cornelius was chairman of the supervisory board while his brother John, formerly Germany’s ambassador to Rome, was chairman of executive board.

The Berenberg family’s private bank navigated the crisis safely, thanks to its good relationships outside the country, and its balance sheet was solid. Yet Cornelius could tell that the apparently thriving economy was fragile, and worried about the future of his family’s bank. Rightly so – in 1929 the New York stock exchange crashed. A shockwave hit the credit business and only the strong could survive. In 1930 Cornelius looked for a larger partner and tied his bank to the Darmstädter und Nationalbank (Danatbank), with whom Berenberg had good relations. But Danatbank was hit by the German banking crisis in 1931, and at the instructions of its newly formed advisory board merged with Dresdner Bank. Cornelius was able to recover the Berenberg shares and preserve his company’s independence.

The bank had always been active in foreign trade, but in view of the political situation, in 1932 he withdrew Berenberg from active bank business. He was disgusted by the increasingly powerful National Socialists. “I’m ashamed in front of my friends by what the Nazis are doing to the Jews,” he wrote in his diary on 1 April 1933.Jewish friends, among them Paul Salomon, branch director of Dresdner Bank, advised him to join the NSDAP so that the party would include people who weren’t antisemitic. The DVP had dissolved by that point. Cornelius joined the NSDAP but left again in 1934 after just four months, because he couldn’t stand the party’s antisemitism. He withdrew to a reclusive life in Niendorf and resigned from the increasingly nazified clubs and associations, as well as from the church board. He kept his distance. “Better a small but honestly run state than a great empire like Germany is today, without justice or morality, governed by thieves and murderers,” he noted in 1938 after the occupation of the Sudetenland and the assimilation of Austria. He assisted business friends who were in danger, and helped some of them escape the country.

He no longer ran the company alone, having taken on his son Heinrich as shareholder in 1935. In June 1942 his oldest son Johann, a regimental doctor, was killed in Novgorod and his youngest son Hellmuth was seriously wounded. Joh. Berenberg, Gossler & Co. survived the Nazi period as a holding company for the bank’s investments, including two small private banks involved in wealth management.

On 3 May 1945 English troops marched into Hamburg. “Now we have to deal with the consequences of the war, and try to help our children build their futures,” wrote Cornelius, now 71. Half the city was destroyed and the harbour, Hamburg’s heart, was out of commission. 2900 wrecks clogged the harbour and river. Together with his son Heinrich, Cornelius decided to take up banking activities again. They acquired the Hamburg branch of the Norddeutsche Kreditbank in Bremen, since it had to divest itself of the branch as it was in a different occupation zone. In return, the Norddeutsche Kreditbank received a share in the Berenberg bank.

In 1948, immediately after the currency reform, the old family company opened for business at its new location on Alte Wall 32. Old friendships in other countries were quickly reactivated, and the economy started to pick up speed as well. The bank had a wide field of activity before it as industrial production revived, foreign trade opened up and old customers returned. The Economic Miracle had begun.

It was finished. On 29 September 1953 Cornelius Baron von Berenberg-Gossler died aged 79 after a short illness. On his tombstone in Niendorf it says, “Blessed are the dead who die in the Lord. They will rest from their labour, and their deeds follow them.”