The Last Knight of Liberalism

Chapter 15. Crises

1 Mises, Erinnerungen (Stuttgart: Gustav Fischer Verlag, 1978), p. 53.

2 Mises to Simon, letter dated April 9, 1930; Mises Archive 66a: 28; see also Mises to unknown correspondent, letter dated April 28, 1930; Mises Archive 66a: 45. Mises used the occasion to meet his friends at LSE, although he had not announced the trip to them much in advance, if at all. Thus he missed Robbins, who had been out of town for some time and then tried to meet him for lunch, but met Meyendorff in King’s College on Monday, April 1. Meyendroff probably introduced him to Alistor Phillips from Trinity College Dublin. They had also planned to meet Hearnshaw, but the latter was not in London. See Mises to Robbins, letter dated April 12, 1930; Mises Archive 83: 21; Meyendorff to Mises, letter dated March 30, 1930; Mises Archive 88: 2.

3 Margit von Mises, My Years with Ludwig von Mises, 2nd enlarged ed. (Cedar Falls, Iowa: Center for Futures Education, 1984), p. 21.

4 Mises to Fritz Arnstein, letter dated December 17, 1931; Mises Archive 95: 6.

5 She could not believe her eyes when she saw she was invited to give a talk, and her teachers laughed at her, saying it could not possibly be a serious invitation: Mises was only being polite to a student of his friends from the Frankfurt circle. But Mises was serious. When he thanked her for accepting the invitation to Vienna she exclaimed, “But it is I who have to thank you for letting me rise, as if through the touch of a magic wand, from the mass of nameless scientists!” See the correspondence in Mises Archive 71: 22–35.

6 Richard von Schüller was the official president of the committee, but he did not take part in the writing. See Franz Baltzarek, “Ludwig von Mises und die österreichische Wirtschaftspolitik der Zwischenkriegszeit,” Wirtschaftspolitische Blätter 28, no. 4 (1981): 136; Mises, Erinnerungen, p. 49.

7 Redaktionskomitee der Wirtschaftskommission, Bericht über die Ursachen der wirtschaftlichen Schwierigkeiten Österreichs (Vienna: Staatsdruckerei, 1930), p. 19.

8 Neither were the other members of the committee. The report was widely perceived as a manifesto of Manchester capitalism. Mises’s hand in it was obvious. See Baltzarek, “Ludwig von Mises und die österreichische Wirtschaftspolitik der Zwischenkriegszeit,” p. 136. The author states that Mises’s views had a major impact on Austrian policy debates in the early years of the crisis.

9 See the syllabus in Mises Archive 40: 14.

10 See syllabus in Mises Archive 17: 219; see also the letter by Bloch referring to Köppel’s lecture in Mises Archive 17: 202a, 203.

11 Österreichischer Klub in Wien to Mises, letter dated October 14, 1930; Mises Archive 66: 2f. Mises apparently also gave another public talk, in Vienna, on Monday December 1, 1930; see Steiner to Mises, letter dated December 8, 1930; Mises Archive 66: 23. On Eisler see Irving Fisher, Stabilised Money: A History of the Movement (London: George Allen & Unwin, 1935), pp. 100–02.

12 Mises to Siebeck, letter dated February 19, 1931; Mises Archive 92: 36.

13 Mises, Die Ursachen der Wirtschaftskrise (Tübingen: Mohr, 1931). On February 19, 1931, Mises had approached Mohr’s CEO Paul Siebeck for the publication of his lecture in Czechoslovakia in the series “Recht und Staat.” Siebeck was glad to accept this proposal and by March 2, they had agreed on the terms: Mises would obtain 30 complimentary copies, 80 marks per 16 pages, and the total number of copies in any edition would not exceed 2000 (see Mises Archive 92: 32ff.). Mises then also changed the title of the work from “The Causes of the World Economic Crisis” to “The Causes of the Economic Crisis” (see Mises Archive 92: 11). In mid-April, shortly before leaving for the United States, he was through with the revisions. On top of his thirty complimentary copies he ordered another twenty-five copies, and had twenty out of these fifty-five copies sent directly to their recipients. The money (170 marks, see Mises Archive 93: 14) was wired to his Postscheck account (see Mises Archive 92: 13).

14 Mises, Die Ursachen der Wirtschaftskrise, p. 14.

15 Ibid, pp. 14f.

16 His opinion was already on record. See his remarks in the 1926 essay “Sozialliberalismus,” reprinted in Kritik des Interventionismus (Jena: Gustav Fischer, 1929). In January 1926, the Neues Wiener Tagblatt approached Mises to get his opinion on how unemployment was to be reduced (see Mises Archive 80: 26). And on March 6, 1930 the Vienna journal Welt am Morgen published Mises’s advocacy of the abolition of unemployment relief (see Mises Archive 66a: 40). Among the other economists who argued along these lines, see in particular, A.C. Pigou, Industrial Fluctuations (London: Macmillan, 1927); Jacques Rueff, “L’assurance chômage cause du chômage permanent,” Revue politique et parlementaire (December 10, 1925); Lionel Robbins, The Great Depression (London: Macmillan 1934).

17 Mises, Die Ursachen der Wirtschaftskrise, p. 15.

18 Five years before, in his piece on “Interventionism,” Mises had characterized this free-market unemployment as a “frictional phenomenon” that would not exist in a static state—that is, in equilibrium. See Mises, Kritik des Interventionismus, pp. 13, 20.

19 Mises, Die Ursachen der Wirtschaftskrise, pp. 16f.

20 Ibid., p. 18.

21 Ibid., pp. 26, 32.

22 Ibid., pp. 31f.

23 Mises to Fritz Georg Steiner, letter dated January 29, 1932, Mises Archive 71: 11.

24 Otto Conrad, “Der Interventionismus als Ursache der Wirtchaftskrise—eine Auseinandersetzung mit Ludwig Mises” (Interventionism as cause of the economic crisis—a dispute with Ludwig Mises”), typewritten manuscript, Mises Archive 23: 42ff. Mises’s response had the title “Interventionismus der Unternehmer? Entgegnung auf die vorstehenden Ausführungen Otto Conrads” (Interventionism of the entrepreneurs? Reply to Otto Conrad’s aforesaid remarks), typewritten manuscript, Mises Archive 23: 31ff.

25 Bermann to Mises, letter dated August 24, 1931; Mises Archive 95: 23ff. Bermann had been a student of Mises’s in 1918. Later Mises brought the gifted Bermann into the Kammer and also maintained close private contact. See their correspondence in Mises Archive 51: 31f.; 95: 32.

26 Mises to Bermann, letter dated September 10, 1931; Mises Archive 95: 22.

27 Emil Lederer, Technischer Fortschritt und Arbeitslosigkeit (Tübingen: Mohr, 1931). He had advocated these views for many years, along with the opinion that inflation can somehow create additional goods. See for example his editorial “Der technische Fortschritt” in the Vienna journal Arbeiter-Zeitung (September 4, 1927): 12.

28 Mises, “Das festangelegte Kapital,” Economische Opstellen: Aangeboden aan Prof. C.A. Verrijn Stuart (Haarlem: De Erven F. Bohn N.V., 1931), pp. 214–28.

29 Erich Carell, review of Mises’s Ursachen der Wirtschaftskrise in Jahrbücher für Nationalökonomie 135 (1931): 924f.

30 Wilhelm Röpke, review of Mises’s Ursachen der Wirtschaftskrise in Zeitschrift für Nationalökonomie 4, no. 2 (1932): 273–75.

31 Mises, Die Ursachen der Wirtschaftskrise, p. 31.

32 Walter Tschuppik in Süddeutsche Sonntagspost (November 8, 1931); Mises Archive 45: 66.

33 Dr. Eugen Altschul in Magazin der Wirtschaft (June 19, 1931).

34 Albert Lauterbach in Der Holzarbeiter 40, no. 4 (February 18, 1932).

35 Wolfrum to Mises, letter dated May 4, 1931; Mises Archive 77: 22.

36 See correspondence in Mises Archive 66: 28; 66a: 85, 98, 109, 129; 68: 51; 83: 14.

37 See Murray N. Rothbard, America’s Great Depression, 5th ed. (Auburn, Ala.: Ludwig von Mises Institute, 1999), esp. chap. 11: “The Hoover New Deal of 1932.”

38 Mises to Wilhelm Klein, letter dated June 10, 1931; Mises Archive 66a: 100.

39 Mises to Fritz Wolfrum, letter dated June 10, 1931; Mises Archive 77: 23.

40 The meeting took place on March 20, 1931. See the report by Gustav Linert in Mises Archive 66a: 175.

41 Anselm von Rothschild had founded the Credit-Anstalt in 1855 as a public-private venture to stimulate economic development. Its difficulties in 1931 were essentially due to the fact that, two years before, the Rothschild family had given in to demands from the Austrian government to save the semi-public Boden-Credit-Anstalt after it had been subject to a bank run of several weeks. Merging with this bankrupt institution proved to be too much even for the financial acumen of Louis von Rothschild, who owned some 30 percent of the Credit-Anstalt.

42 Only three years later did he feel free to analyze these events in an article published in a prominent review: “Der Weg der österreichischen Finanzpolitik” [The path of Austrian financial policy], Wirtschaftliche Nachrichten 18, no. 1 (January 10, 1935): 38–39.

43 See Aurel Schubert, The Credit-Anstalt Crisis of 1931 (Cambridge: Cambridge University Press, 1991); Howard S. Ellis, Exchange Control in Central Europe (Cambridge, Mass.: Harvard University Press, 1941).

44 See Mises’s letter, dated June 10, 1931 in Mises Archive 66a: 107.

45 Mises to Josephus Jitta, letter dated June 10, 1931; Mises Archive 66a: 102. Jitta was the president of the Rotary Club in Den Haag. Mises never met him on his prewar trips to Holland (1926–1936). The two men met for the first time at the second (1949) Mont Pèlerin Conference. See the correspondence in Grove City Archive: Jitta file.

46 F.A. Hayek, Das Mieterschutzproblem. Nationalökonomische Betrachtungen (Vienna: Steyrermühl-Verlag, 1930). Mises was fond of this publication and recommended it in private correspondence; see for example Mises to Wolfrum, letter dated June 10, 1931; Mises Archive 77: 23. Another good study was published by Josef Schell, Gerechtigkeitsidee und Mietengesetzgebung (Vienna: Manz, 1927). Schell was married to a young woman who had attended Mises’s classes at the Handelsakademie. See Schell to Mises, letter dated January 29, 1955; Grove City Archive: Schell file.

47 He held this opinion after 1921. See Mises, Erinnerungen, p. 46.

48 Coase started his recollections of his early years at LSE with the following words: “I will be discussing what happened in economics in England, but these were times when, to a very considerable extent, this was what happened in economics.” Ronald Coase, Essays on Economics and Economists (Chicago: University of Chicago Press, 1994), p. 19.

49 Mises to Sulzbach, letter dated January 12, 1931; Mises Archive 66a: 70.

50 Martha Braun later said that Robbins had tried for years to get Hayek to LSE. Martha Steffy Browne [Braun], “Erinnerungen an das Mises-Privatseminar,” Wirtschaftspolitische Blätter 28, no. 4 (1981): 115.

51 This work earned Hayek a Habilitation degree at the University of Vienna. It was published in 1929 as “Gibt es einen Widersinn des Sparens?” Zeitschrift für Nationalökonomie 1, no. 3 (1930).

52 Keynes suggested that a deliberate policy of lowering interest rates “would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalists to exploit the scarcityvalue of capital.” John Maynard Keynes, General Theory of Employment, Interest, and Money (New York and London: Harcourt, Brace, 1936), p. 376.

53 Coase, Essays on Economics and Economists, p. 19.

54 Lionel Robbins, Autobiography of an Economist (London: Macmillan, 1971), p. 127. Robbins went on (p. 128):

I do not think nowadays that the analytical constructions which excited us so much in the lectures on Prices and Production had all the width or appropriateness of assumption which some of us—including conspicuously the present writer—were disposed to claim for them.

55 Hayek to Mises, letter dated November 21, 1931; Mises Archive 81: 19ff. Hayek went on: “I must tell you this because I here feel more indebted to you than anytime before. Moreover, given that Robbins and Plant provide excellent support to championing your ideas, I hope to have some success.”

56 Mises to Hayek, letter dated December 7, 1931; Mises Archive 81: 18.

57 Hayek to Mises, letter dated January 11, 1932; Mises Archive 81: 2.

58 Robbins to Mises, letter dated May 25, 1932; Mises Archive 83: 1. Lionel Robbins, Nature and Significance of Economic Science (London: Macmillan, 1932).

59 He was a notorious champion of intervention most notably in the free labor market. See William Beveridge, Unemployment: A Problem of Industry, 2nd ed. (London: Longmans, Green & Co., 1930).

60 Hayek to Mises, letter dated March 10, 1933; Mises Archive 81: 5. Mises replied: “I am sorry that the impact of Gemeinwirtschaft on Sir William was not the intended one. By the way, has he already read the English version?” Mises to Hayek, letter dated March 17, 1933; Mises Archive 81: 6. Thus the manuscript must have been available by March 1933. Beveridge’s opposition could explain why the book came out only in 1936.

61 Significantly, he hailed Hayek’s article on “Capital Consumption” as the best and clearest of all his writings—after Hayek had published his two early books on money and the trade cycle. See Mises to Hayek, letter dated December 18, 1931; Mises Archive 81: 17.

62 Hicks had taught advanced classes in economics from 1929 onwards, that is, from the moment Robbins assumed leadership of the department. See Robbins, Autobiography of an Economist, p. 129.

63 F.A. Hayek, Prices and Production (London: Routledge, 1931); idem, Monetary Theory and Trade Cycle Theory (London: Routledge, 1933); Mises, Theory of Money and Credit (London: Jonathan Cape, 1934); idem, Socialism (London: Jonathan Cape, 1936).

64 In the few years following the creation of the Institut für Konjunkturforschung, his political views became indistinguishable from those of Mises. See the description of his activities in Hans Jörg Hennecke, Friedrich August von Hayek (Düsseldorf: Wirtschaft und Finanzen, 2000), pp. 87–91.

65 The best illustration of this is F.A. Hayek, Pure Theory of Capital (London: Macmillan, 1941). The product of ten years at LSE, it was a book with neither head nor tail.

66 See the correspondence in Mises Archive 66a: 142; 69: 8. The Bank of England suspended payments on September 19, 1931.

67 The incident is reported in John R. Hicks, A Market Theory of Money (Oxford: Clarendon, 1989), p. 101. Ursula Webb was at the time studying in Vienna. A few years later she married John Hicks.

68 In London, Mises stayed at Robbins’s house. See Mises to Robbins, letter dated November 23, 1931; Mises Archive 83: 9. See also Mises to Lederer, letter dated October 6, 1931; Mises Archive 73: 10. He had probably arranged this trip at the end of September in order to avoid celebrations of his fiftieth birthday in Vienna. He asked his secretary to stifle all such attempts. He would be more agreeable if the organizers of birthday parties returned in twenty years. See Thieberger to Mises, letter dated August 12, 1941; Grove City Archive: Thieberger files.

69 Mises to Wolfrum, letter dated October 24, 1931; Mises Archive 77: 21.

70 For example, Reisch published a paper arguing that, although all fiduciary media are by their very nature inflationary, this inflation was not harmful if the fiduciary media were issued only as short-term commercial credits. See Richard Reisch, “Das Kreditproblem der Volkswirtschaft,” Zeitschrift für Nationalökonomie 3, no. 1 (1932). Reisch, it will be recalled, was the president of the Oesterreichische Nationalbank. Mises commented on the paper in private correspondence: “horrendous.” Mises to Steiner, letter dated January 29, 1932; Mises Archive 71: 11.

71 Loveday (League of Nations) to Mises, letter dated July 1, 1930; Mises Archive 91a: 3ff.

72 League of Nation to Mises, letter dated October 13, 1931; Mises Archive 66a: 141. Keynes and others had meanwhile published the Macmillan Report (London: HMSO, 1931), which made a highly successful case for inflationary finance to stop the fall of the price level.

73 Mises to Robbins, letter dated November 23, 1931; Mises Archive 83: 9. The original German term for the Board was “Devisenbeirat” or, more explicitly, “Beirat für die Devisenzuteilung in der Nationalbank.”

74 Mises to Hayek, letter dated December 7, 1931; Mises Archive 81: 18.

75 Frowein to Mises, letter dated January 16, 1932; Mises Archive 71: 16; Mises to Frowein, letter dated January 21, 1932; Mises Archive 71: 17. After the war, Frowein became the honorary president of the ICC and remained on good terms with Mises. See their correspondence in Grove City Archive: “F” files.

76 And for other private reasons: he had a small account at the Österreichisches Creditinstitut für öffentliche Unternehmungen und Arbeiten, through which all foreign payments were channeled. Mises used it to pay for his books, for example, for the Encyclopaedia of the Social Sciences, to which he had subscribed before the foreign exchange controls were instituted. Yet this “private clearing” involved a markup of 22 percent. See the correspondence in Mises Archive 71: 107ff.

77 See for example Fischer to Mises, letter dated September 26, 1932; Mises Archive 68: 7.

78 Hayek in London had heard reports about it. See Hayek to Mises, letter dated November 21, 1931; Mises Archive 81: 21.

79 Mises, “Die Krise und der Kapitalismus,” Neue Freie Presse (October 17, 1931).

80 Hedwig Lemberger to Mises, dated November 15, 1931; Mises Archive 66a: 158.

81 Mises to Lemberger, dated November 21, 1931; Mises Archive 66a: 157.

82 Jorge Radványi to Mises, letter dated May 21, 1959; Grove City Archive: Buenos Aires file.

83 A collection of press articles that Machlup, Morgenstern, Haberler, Hayek, and others wrote from 1931 to 1934 for Graetz’s Neues Wiener Tagblatt has recently been published in Hansjörg Klausinger, Machlup, Morgenstern, Haberler, Hayek und andere (Marburg: Metropolis, 2005).

84 See Ernst Hoor, Österreich 1918–1938 (Vienna: Bundesverlag für Unterricht, Wissenschaft und Kunst, 1966), pp. 142f.

85 Fritz Wolfrum, “Das Geldproblem,” typewritten manuscript dated November 12, 1931, pp. 8f.; Mises Archive 77: 17f.

86 Robbins to Mises, letter dated December 19, 1931; Mises Archive 83: 5ff. “Streng” means severe.

87 Mises, “Die Goldwährung und ihre Gegner,” Neue Freie Presse (December 25 and 30, 1931).

88 See their correspondence and related documents in Mises Archive 71: 52, 58f., 158ff.

89 Gesell’s views found a spokesman in the eloquent and authoritative Keynes. See Keynes, General Theory of Employment, Interest, and Money, chap. 23, sec. 6.

90 Mises to Hahn, letter dated April 9, 1932; Mises Archive 71: 45.

91 Mises to G.M. Verrijn Stuart, letter dated June 30, 1932; Mises Archive 71: 136.

92 Mises to James Gardner, letter dated March 30, 1964; Grove City Archive: “G” file. Mises here states that he advocated “the classical old gold standard (and not... the gold exchange standard)” and that “I changed my mind concerning the functioning of the gold exchange standard as it happened more than 30 years ago.”

93 See Mises, Theorie des Geldes under Umlausfmittel, 1st ed. (Leipzig: Duncker & Humblot, 1912), pp. 44, 48, 56f.

94 He was underlining something said by Spahr. See the typewritten manuscript of Mises’s comment in Grove City Archive: Courtney files. Mises later incorporated these views in Human Action: A Treatise on Economics (New Haven, Conn.: Yale University Press, 1949, p. 780) and in the new 1953 edition of his Theory of Money and Credit (London: Jonathan Cape, 1934), pp. 450ff.

95 See their thesis papers in Mises Archive 40: 21f.

96 See the schedule in Mises Archive 17: 233.

97 The ICC conference in Innsbruck took place in the third week of April, the Welthandels-Woche in the first week of May, and the ICC conference in Munich started on May 18. See correspondence in Mises Archive 68: 10, 13; 71: 38; 81: 14; 85: 5.

98 The Weltwirtschaftskonferenz Berlin 1932 was part of a Welthandels-Woche, a weeklong conference organized by the newspaper Berliner Tageblatt. Mises was back in Vienna by Friday morning, May 6, for urgent Kammer business. See documents and correspondence in Mises Archive 71: 10; 77: 6.

99 See the schedule in Mises Archive 17: 258, 261.

100 Fischer to Mises, letter dated April 24, 1931, Mises Archive 68: 52.

101 See their correspondence in Mises Archive 57: 34; 75: 15, 37.

102 Steiner to Mises, letter dated December 8, 1930; Mises Archive 66: 23.

103 Mises to Fischer, letter dated October 26, 1931; Mises Archive 68: 47.

104 See the correspondence between Robbins and Mises, dated November 12 and 23, 1931; Mises Archive 83: 9f. Mises in fact reproduced in his book the entire survey on recent contributions to the analysis of socialist calculation that he had published some years before in the Archive. See Mises, “Neue Beiträge zum Problem der sozialistischen Wirtschaftsrechnung,” Archiv für Sozialwissenschaft und Sozialpolitik 51 (December 1923): 488–500.

105 See correspondence between Mises and Fischer, dated October 26 and 27, 1931; Mises Archive 68: 46f.

106 See their correspondence in Mises Archive 68: 31ff., 46.

107 He received thirty complimentary copies of the book, ten of which were hardcover. Twenty of these (six with hard covers) were sent to Vienna. Mises had Fischer send the remaining ten, plus nine more copies for which he himself paid, to the following people: hardcover copies went to Robbins, Anderson, Sulzbach, and Beveridge; paperbacks went to Gregory, Hayek, both Verrijn Stuarts, Adolf Weber, Passow, Wiese, Oswalt, Vleugels, Halm, Hahn, Röpke, Wolfrum, Brutzkus, and Lederer.

108 Anonymous, “Die Gemeinwirtschaft,” Der Deutsche Volkswirt. Literatur-Beilage no. 1 (December 23, 1932). One reviewer said:

The battle between individualism and socialism, which by now has been waged almost one hundred years, has now entered its final phase. In a few years or decades, at most, victory will be on one side or the other. At the high point of this battle, Mises’s book is a crucial action. It is impossible to estimate its intellectual, economic, and, in the long run, even its political implications. (Anonymous, “Sozialismus—eine Utopie,” 1. Htmdelsbeilage der “Berliner Börsen-Zeitung” [November 3, 1932])

109 E.W.E., “Die Planwirtschaft und ihre Gegner,” Die Tat 24 (10).

110 Review of “Die Gemeinwirtschaft,” Kartellrundschau 7/8 (1932).

111 W.W. [Weiss-Wellenstein], “‘Die Gemeinwirtschaft.’ Die zweite Auflage des Werkes von Ludwig Mises,” Mittekuropäische Wirtschaft. Wochen-beilage der “Neuen Freien Presse” (December 10, 1932).

112 Halm to Mises, letter dated April 16, 1932; Mises Archive 71: 89. The response:

I find that Lederer in his amply unclear brochure “Centrally Planned Economy” makes it obvious that socialist theory is completely bankrupt. In fact, the use of money is in his eyes the only basis for economic calculation, but he fails to see that, in a society in which the means of production are not privately owned, there is no pricing process for means of production. Moreover, and characteristically, he falls prey to the other error of Kautsky in that he wants to use past prices as a starting point. The few pages dedicated to this problem deliver nothing new and are even more confused than the previous justification attempts by socialist writers. (Mises to Halm, letter dated April 26, 1932; Mises Archive 71: 37)

113 Mises to Hayek, letter dated December 18, 1931; Mises Archive 81: 17. The phrase “abolition of usury” alludes to point 11 of the National Socialist Worker Party program of February 24, 1920.

114 Mises to Lederer, letter dated April 9, 1932; Mises Archive 73: 4; Mises to Amonn, letter dated April 27, 1932; Mises Archive 71: 143.

115 “I have not yet entirely abandoned all hope that it will be possible to do fruitful work within the Verein für Sozialpolitik. All depends on the course of the Dresden meeting and on the new president.” Mises to Georg Jahn, letter dated July 15, 1932; Mises Archive 71: 133.

116 See Mises and Arthur Spiethoff, eds., Probleme der Wertlehre (Schriften des Vereins für Sozialpolitik 183, no. 1, Munich and Leipzig: Duncker & Humblot, 1931), vol. 1.

117 His speech was subsequently printed, without title, in Mises and Arthur Spiethoff, eds., Probleme der Wertlehre (Schriften des Vereins für Sozialpolitik 183, no. 2, Munich and Leipzig: Duncker & Humblot, 1933), vol. 2, pp. 1–12; reprinted with the title “Der Streit um die Werttheorie” in Mises’s book Grundprobleme der Nationalökonomie (Jena: Gustav Fischer, 1933), chap. 7; translated by George Reisman as “The Controversy Over the Theory of Value,” Epistemohgical Problems of Economics, 3rd ed. (Auburn, Ala.: Ludwig von Mises Institute, 2003), chap. 7.

118 Martha St. Braun, “Die diesjährigen Verhandlungen des Vereines für Sozialpolitik,” Neue Freie Presse (October 8, 1932).

119 Weber had sent Mises a copy of his book in November 1931. Mises replied: “I greet the success of your book as a sign that public opinion is beginning a gradual shift in the direction of sound ideas.” Mises to Adolf Weber, letter dated November 15, 1931; Mises Archive 66a: 156.

120 Mises was very grateful. See his letter to Budge, dated June 13, 1931; Mises Archive 66a: 98. Some two years later, shortly after Hitler had seized power in Germany, Mises stated that his monetary theory had become in Germany, after World War I, the dominant theory of the business cycle. See Mises to Ugo Papi, letter dated March 17, 1933; Mises Archive 94: 3.

121 Mises said: “Your work needs to be welcomed not only as a scientific achievement, but also as a political deed.” Mises to Karl Wagner, letter dated June 8, 1931; Mises Archive 66a: 117.

122 Franz Boese, Geschichte des Vereins für Sozialpolitik, 1872–1932 (Berlin: Duncker & Humblot, 1939), pp. 229ff.

123 Ibid., pp. 232ff.

124 Martha St. Braun, “Die diesjährigen Verhandlungen des Vereines für Sozialpolitik,” Neue Freie Presse (October 8, 1932).

125 Louise Sommer, “Für die freie Verkehrswirtschaft! (Die Dresdner Tagung des Vereines für Sozialpolitik),” Wiener Wirtschafts-Woche (October 12, 1932), pp. 7f. Sommer was by then a private lecturer in economics at the University of Geneva.

126 See the letters and other materials printed in ibid., pp. 273ff. The Verein was re-established after World War II, in 1948. Mises did not wish to have anything to do with this postwar organization. See Mises to Sommer, letter dated June 11, 1957; Grove City Archive: Sommer file.

127 Robbins to Mises, letter dated May 19, 1933; Grove City Archive: Robbins files. See also Robbins, Autobiography of an Economist, pp. 143f.

128 See Eugen Dietzgen, ed., Gesammelte Werke, 3rd ed. (Stuttgart: Dietz, 1922), in particular vol. 3, which contains Josef Dietzgen’s “Letters on Logic” and his “Excursions of a Socialist into the Field of Epistemology.”

129 Karl Mannheim, Ideologie und Utopie (Bonn: Cohen, 1929).

130 Mises, “Economics and Politics,” Grove City Archive: Mexico 1942 file 6.

131 Ibid. See also Lothar Gottlieb Tirala, Rasse, Geist und Seele (Munich: Lehmann, 1935). The author was a medical doctor.

132 Mises, “Economics and Politics,” lecture given at the National University of Mexico, January or February 1942; quoted from Margit von Mises’s handwritten lecture notes contained in Grove City Archive: Mexico 1942 file 6. In this lecture Mises presented material that he eventually published in Omnipotent Government (New Haven, Conn.: Yale University Press, 1944), chap. 6, sect. 6.

133 Mises, “The Controversy over the Theory of Value,” chap. 7 of Epistemological Problems of Economics, pp. 218f. He had only touched on this point, which he now regarded as fundamental, in a paper he wrote for Probleme der Wertlehre, the volume that served as a basis for the discussion in Dresden. See Mises, “The Psychological Basis of the Opposition to Economic Theory,” chap. 6 of Epistemological Problems of Economics, p. 201.

134 Mises, “The Psychological Basis of the Opposition to Economic Theory,” p. 214.

135 Lederer in Mises and Spiethoff, eds., Probleme der Wertlehre, vol. 2, pp. 114f.

136 Mises in ibid., p. 117.

137 Mises, Grundprobleme der Nationalökonomie: Untersuchungen über Verfahren, Aufgaben und Inhalt der Wirtschafts- und Gesellschaftslehre (Jena: Gustav Fischer, 1933). Almost three decades later, Mises’s American student George Reisman produced a translation. The American edition eventually appeared under the somewhat different title of Epistemological Problems of Economics (Princeton, N.J.: Van Nostrand, 1960).

138 Mises, “Aufgabe und Umfang der allgemeinen Wissenschaft vom Handeln,” Grundprobleme der Nationalökonomie, chap. 1; translated as “The Task and Scope of the Science of Human Action,” Epistemological Problems of Economics, chap. 1, pp. 1–69.

139 Thus he insisted: “For the purposes of science, we must start from the action of the individual because this is the only thing of which we can have direct cognition” (ibid., p. 44). And he also stated:

Science cannot proceed otherwise than discursively. Its starting points must have as much certainty as human knowledge is capable of, and it must go on from there, making logical deductions step by step. It can begin as an aprioristic science with propositions necessary to thought that find their support and warrant in apodictic evidence; or as an empirical science it can start with experience. (ibid., p. 49)

140 Ibid., pp. 13f. He went on to argue that the theory of human action ultimately coincides with the science of logic:

Human thought serves human life and action. It is not absolute thought, but the forethought directed toward projected acts and the afterthought that reflects upon acts done. Hence, in the last analysis, logic and the universally valid science of human action are one and the same.

141 Ibid., p. 15.

142 Ibid., p. 30.

143 Mises to Machlup, letter dated July 12, 1934; Hoover Institution: Machlup-Mises correspondence file.

144 During his sojourn in Vienna, Hugh Gaitskell set out to make a new translation of Böhm-Bawerk’s Capital and Interest, which was still available only in a translation from the first edition. Mises later recalled that other English economists too were ready to shoulder the task, and even publication was not a problem in these days when the public interest in Austrian economics was at its peak in Great Britain: “They abstained from this undertaking because they expected that Gaitskell would execute his plan.” But the young man in Mises’s Vienna seminar never finished the job. Gaitskell opted instead for an acceleration of his career in politics, becoming Minister of Fuel and Power in the postwar British Labour government. See Mises to Nymeyer, letters dated November 22, 1947 and November 8, 1950; Grove City Archive: Nymeyer files.

145 Mises, “Leitsätze zur Erörterung der methodologischen Probleme der Sozialwissenschaften und zur Kritik des Kaufmann’schen Standpunktes” (Basic principles for the discussion of the methodological problems of the social sciences and for a critique of the Kaufmannian position); typewritten manuscript, dated March 9, 1934, 6 pp.; Mises Archive 32: 2–4.

146 Felix Kaufmann, Robert Wälder, Erich Schiff, Oskar Morgenstern.

147 See Erik von Kuehnelt-Leddihn, Von Sarajevo nach Sarajevo (Vienna: Karolinger, 1966), p. 47; Hoor, Österreich 1918–1938, pp. 74, 106, 114.

148 The alliance with Italy was cemented in the “Protocols of Rome,” signed on March 17, 1934.

149 Mises became a member on March 1, 1934 at the Patriotic Front’s Kammer branch office. Membership was probably mandatory for all employees of public and semi-public organizations. Mises’s membership card (number 282632) can now be found in the Grove City Archive: file #6/9/1/1. He was also a member of the “Werk Neues Leben,” a subdivision of the Patriotic Front. See his membership card (number 406183) in Grove City Archive: Kammer der gewerblichen Wirtschaft für Wien file.

150 Arguably, his true significance lay elsewhere. Historian Ernst Hoor presents Dollfuss as the first and only stateman of the first Austrian republic who consciously and explicity reclaimed an Austrian nation—as distinct from the German nation—and who framed his policies accordingly. See Hoor, Österreich 1918–1938, p. 75.

151 Lauchenauer to Mises, letter dated December 30, 1932; Mises Archive 97: 3. Arguably, these young politicians gave the papal encyclical a stronger statist reading than was really warranted by its contents. Mises would later acknowledge that the man who wrote the first draft of the encyclical, Jesuit Pater O. von Nell-Breuning, was “one of the few German economists who in the Interwar period advocated economic freedom.” See Mises to Parker, letter dated May 14, 1953; Grove City Archive: Tax Foundation file.

152 See Mises, Erinnerungen, pp. 89–91; Kuehnelt-Leddihn, Von Sarajevo nach Sarajevo, p. 52; Hoor, Österreich 1918–1938, p. 115. Italy changed its alliances in the autumn of 1936, when France and Great Britain sanctioned the Italian invasion and annexation of Abyssinia. The new alliance between Hitler and Mussolini spelled the doom for Austrian independence.

153 Translations by Arlene Oost-Zinner.