The Last Knight of Liberalism

Chapter 16. The Geneva Years

1 See the report on an interview with him in “Von Mises to Speak Tonight,” Santa Ana Register (October 17, 1944); a copy is in Grove City Archive: Hoiles files.

2 Rappard to Mises, letter dated March 19, 1934; Mises to Rappard, letter dated March 23, 1934; Grove City Archive: Graduate Institute Archive.

3 Kammeramtsdirektor to Mises, letter dated October 31, 1934; Grove City Archive: Kammer für Handel, Gewerbe und Industrie files. The file also concerns salary statements for the years 1936 and 1937. In both years, Mises had a gross annual income of 14,620 schillings.

4 Martine Brunschwig Graf, Jean-Claude Frachebourg, Norman Scott, and Peter Tschopp, HEI 1927–2002 (Geneva: Graduate Institute of International Studies, 2002), p. 40. See also p. 50.

5 His mother was a scion of the Hoffmann-Laroche family from Basel. In July 1919, William Emmanuel Rappard became secretary general of the new League of Red Cross Societies, a position he quit in 1921. Before 1919, he was already a member of the International Committee of the Red Cross. His magnum opus was Die Bundesverfassung der Schweizer Eidgenossenschaft, 1848–1948—Vorgeschichte, Ausarbeitung, Weiterentwicklung (Zurich: Polygraphischer Verlag, 1948).

6 See the testimonies by Léopold Boissier and Carl J. Burckhardt in the memorial volume edited by Rappard’s family: William-E. Rappard (Geneva: Kundig, 1961), pp. 45, 57.

7 This was the same Flexner who had written the famous Flexner Report: Medical Education in the United States and Canada: A Report to the Carnegie Foundation for the Advancement of Teaching (1910) which led the the closure of four out of six medical schools in the United States.

8 Brunschwig et al., HEI 1927–2002. Of particular interest is the section dealing with the years 1927 to 1978, authored by Norman Scott.

9 Ibid., pp. 37, 72, 81.

10 During the war, he had served as a personal interpreter between his college friend Albert Thomas and Lloyd George, both of whom were commissioned to coordinate the reorganization of the British and French munitions industries. At the end of the war, George was Prime Minister and Thomas would soon become the first president of the International Labour Organization in Geneva. “The die was cast. Mantoux’s new career was made” (ibid., p. 51).

11 See the untitled typewritten statement dated July 9, 1934; Grove City Archive: Kammer für Handel, Gewerbe und Industrie file. Michael Heilperin later stated that Rappard and the economists had particular affinities with Charles Rist, Jacques Rueff, Jacob Viner, and Lionel Robbins. See his statement in William-E. Rappard, p. 78.

12 Alfred Zimmern to Mises, letter dated December 12, 1929; Grove City Archive: Institut des Hautes Etudes Internationales files. Zimmern was a professor at the University of Geneva and head of international affairs at the Institute for Intellectual Cooperation. Before the establishment of the Institut, he had run “summer vacation schools on international affairs”—the Zimmern School—for some years. He then moved to Oxford University. See Scott in Brunschwig et al., HEI 1927–2002, p. 29.

13 This strong financial connection (dependence) was downplayed by all sides. In 1942, Tracy Kittredge wrote in a letter to the U.S. State Department that the

Foundation has been familiar with the work of Professor von Mises for more than ten years and has contributed toward research projects under his direction in Vienna and in Geneva, and to his present stipend at the National Bureau of Economic Research.

Kittredge to Acheson, letter dated January 5, 1942; Grove City Archive: Mexico 1942 files. In fact, the Rockefeller Foundation paid the NBER stipend in full.

14 When Kelsen was ousted from his chair at the University of Cologne in 1933, he received offers from the Institute, from LSE, and from the New School for Social Research. The language issue prompted him to opt for Geneva, where professors could teach in French. See Rudolf Aladár Métall, Hans Kelsen (Vienna: Verlag Franz Deuticke, 1968), p. 64.

15 Mises to Wilhelm Hertz (Geneva), letter dated November 9, 1961; Grove City Archive: “H” files. In this letter Mises recalled the quiet years of study and exchange with like-minded friends and mentioned in particular these four.

16 Neil de Marchi, “League of Nations Economists and the Ideal of Peaceful Change in the Decade of the “Thirties,” CD. Goodwin, ed., Economics and National Security (Durham, N.C.: Duke University Press, 1991), pp. 143–78.

17 Scott in Brunschwig et al., HEI 1927–2002, pp. 53f. Mantoux was not present all the time—already in 1928, he had moved his home to Paris because the city on the Seine offered better educational possibilities for his children and also because he continued to work on the official records of the Versailles Conference. This had prompted Rappard to join him as a co-director of the Institut in the same year.

18 Rappard quoted from Scott in Brunschwig et al., HEI 1927–2002, p. 56.

19 Rappard to Mises, letter dated March 19, 1934; Graduate Institute Archive. The dollar amount can be calculated on the basis of the following data: 20 SWF = 0.1867 ounces of gold; 35 USD = 1 ounce of gold. The essential terms of his contract (3 hours of teaching, 25,000 SWF compensation) applied throughout the entire period of his employment at the Institute; see the certificate from André Mussard (the Institute’s secretary-general), dated June 6, 1940; Graduate Institute Archive.

20 Adam Smith quoted in Hayek to Mises, letter dated October 15, 1937; Grove City Archive: Hayek files:

I have thought a great deal upon this subject, and have inquired very carefully into the constitution and history of several of the principal universities of Europe; I have satisfied myself that the present state of degradation and contempt into which the greater part of these societies had fallen in almost every part of Europe arises principally, first, from the large salaries which in some Universities are given to professors, and which render them altogether independent of their diligence.

21 Mises to Rudolf Berthold, letter dated November 4, 1959; Grove City Archive: Berthold file.

22 Mises to Machlup, letter dated October 23, 1934; Hoover Institution: Machlup-Mises correspondence file.

23 This information is taken from the school’s catalogue pertaining to the 1939–1940 academic year.

24 Typewritten copy of an extract of Parker T. Hart’s report to the Institute of International Education of New York. Rappard had obtained a copy of the report from the president of the Federal Technical University of Zurich, Mr. Rohn, who organized student exchanges between the United States and Switzerland. See Rappard to Mises, letter dated March 25, 1937; Graduate Institute Archive.

25 Haberler later singled out J. Marcus Fleming and Alexandre Kafka. See Gottfried von Haberler, “Mises’s Private Seminar” in “Erinnerungen an das Mises-Privatseminar,” Wirtschaftspolitische Blätter 28, no. 4 (1981): 123.

26 Hal Lary quoted from Scott in Brunschwig et al., HEI 1927–2002, p. 67.

27 See the sales contract (dated September 30, 1936) and his driver’s license (dated November 13, 1936) in Grove City Archive: file # 6/10/1/1. The price of the car was 5,900 Swiss francs, about a quarter of his annual salary.

28 See the route protocols in Grove City Archive: file #6/10/1/2. His first independent ride was on December 20, 1936 (85 km). The day tour with Heilperin took place on January 17, 1937 (235 km).

29 Margit von Mises, My Years with Ludwig von Mises, 2nd enlarged ed. (Cedar Falls, Iowa: Center for Futures Education, 1984), p. 27.

30 At a 1965 conference, Machlup had attributed the attempt to restore a gold standard to special interest politics. Mises was in the audience and thereafter refused to talk to Machlup. According to his wife he said: “He was in my seminar in Vienna... he understands everything. He knows more than most of them and he knows exactly what he is doing.” Margit von Mises, My Years with Ludwig von Mises, p. 146. Machlup’s view of the event is reprinted in ibid., pp. 192f.

31 Mises to Machlup, letter dated January 11, 1936; Hoover Institution: Machlup-Mises correspondence file.

32 Mises to Machlup, letter dated June 29, 1937; Hoover Institution: Machlup-Mises correspondence.

33 Scott in Brunschwig et al., HEI 1927–2002, p. 63.

34 The product of these lectures was a book with the title International Economic Planning (London: Macmillan, 1937).

35 Mises to Robbins, letter dated December 10, 1935; Grove City Archive: Robbins file. Mises commented on the second edition of Lionel Robbins, The Nature and Significance of Economic Science (London: Macmillan, 1932) in particular on Robbins’s use of the word “experience.” Speaking about the significance and role of tautologies, Mises said that he had learned from Meyerson. See Émile Meyerson, De l’explication dans les sciences (Paris: Fayot, 1927).

36 For a concise presentation of the Austrian impact on Robbins’s intellectual development see Denis P. O’Brien, “Lionel Robbins and the Austrian Connection,” Bruce J. Caldwell, ed., Carl Menger and His Legacy in Economics (Durham, N.C.: Duke University Press, 1990), pp. 155–84. O’Brien stresses Robbins pervasive eclecticism. He points out that Mises’s impact on Robbins was at all times matched, if not surpassed, by Wieser’s and Mayer’s.

37 The deposit account would be quite substantial after the publication of Theory of Money and Credit and Socialism. In February 1936, Mises had more than 237 pounds in the account; by May 1939 it was almost 780 pounds. See Hayek to Mises, letter dated February 15, 1936, as well as the typewritten statement of the development of the accounts until May 1939 in Grove City Archive: Hayek files.

38 Hayek to Mises, letter dated January 12, 1941; Grove City Archive: Hayek files.

39 Machlup to Mises, letter dated September 25, 1934; Grove City Archive: Machlup files. Copies of Machlup’s original questionnaire, and the answers formulated by Mises, Hayek, Haberler, Marschak, and Machlup himself are in the same file. One year later, Oskar Morgenstern demolished the idea that the average period production was an adequate measure of capital-intensity. See Morgenstern, “Zur Theorie der Produktionsperiode,” Zeitschrift für Nationalökonomie 6 (1935): 196–208. Historian Harald Hagemann suggests that this critique was instrumental for Hayek to abandon the period-of-production concept in later works. See Hagemann, “Einführung,” Harald Hagemann, ed., Zur deutschsprachigen wirtschaftswissenschaftlichen Emigration nach 1933 (Marburg: Metropolis, 1997), pp. 13f.

40 F.A. Hayek, ed., Collectivist Economic Planning: Critical Studies on the Possibilities of Socialism (London: Routledge, 1935). An appendix of the volume featured Barone’s 1908 article arguing that a socialist directorate could use a system of general equilibrium equations as a planning device.

41 Hayek, “The Nature and History of the Problem,” in ibid., p. 33.

42 Hayek, “The Present State of the Debate,” in ibid., pp. 208ff. This distinctive perspective on the problem of economic calculation under socialism was a consequence of Hayek’s acceptance of mathematical general equilibrium analysis as the most advanced expression of modern economic science. This was correctly noticed on all sides. For example,

Professors Hayek and Robbins of the London School of economics, who next to Mises are the leading opponents of socialism among economists, have apparently been influenced by Barone. They have taken up a second line of attack, the line that is usually taken after a principle has been admitted. They admit that a rational allocation of resources is theoretically possible in a socialist state, but deny that it can be worked out in practice. (Benjamin E. Lippincott, “Introduction,” On the Economic Theory of Socialism, ed., B.E. Lippincott [New York: McGraw-Hill, 1964], p. 13)

See also Eduard März, “Die Bauer—Mises-Schumpeter-Kontroverse,” Wirtschaftspolitische Blätter 28, no. 4 (1981): 73.

43 Hayek, “The Present State of the Debate,” p. 238.

44 He pointed out these problems in his original 1920 article and throughout his later works. See for example The Ultimate Foundation of Economic Science (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 2002), p. 110.

45 Mises, “The Equations of Mathematical Economics and the Problem of Economic Calculation in a Socialist State,” Quarterly Journal of Austrian Economics 3, no. 1 (2000). The original version of this article was written in German, but never published. A French translation by Gaston Leduc appeared in 1938 in Charles Rist’s Revue d’économie politique 97, no. 6 (1938): 899–906. The quoted English translation by Vera Smith was originally prepared for Economica, but not published there because the editorial board of the journal rejected all submissions that had already appeared elsewhere.

46 Hayek to Mises, letter dated October 20, 1938; Grove City Archive: Hayek files.

47 Hans Jörg Hennecke, Friedrich August von Hayek (Düsseldorf: Wirtschaft und Finanzen, 2000), pp. 131–34. The author quotes from a 1981 letter that Hayek wrote to Terence Hutchinson:

But the main intention of my 1936 lecture was to explain gently to Mises why I could not accept his a priorism. Curiously enough, Mises who did not readily accept criticism from his juniors, accepted my argument but insisted that it was not incompatible with his view.

48 See section “Wieser’s long shadow” in chapter “Winds of Change,” above.

49 Hayek to Mises, letter dated May 10, 1937; Grove City Archive: Hayek files.

50 A revision of the historical performance of nineteenth-century capitalism set things straight after World War II. The feeble beginnings are in F.A. Hayek, ed., Capitalism and the Historians (Chicago: University of Chicago Press, 1954).

51 Hayek, “The Nature and History of the Problem,” in Individualism and Economic Order (Chicago: University of Chicago Press, 1948), p. 135.

52 H.C. Simons, A Positive Program for Laissez-Faire. Some Proposals for a Liberal Economic Policy (Public policy pamphlet no. 15; Chicago: University of Chicago Press, 1934).

53 Some of them, most notably Hayek, later turned toward a more laissez-faire stance. But this turn came at a time when the neo-liberal steamroller was already well underway.

54 For an eyewitness account of these events, see Sisley Huddleston, In My Time (New York: Dutton & Co., 1938). Mises was also an eyewitness. He commented on the change of Soviet tactics in Theory and History: An Interpretation of Social and Economic Evolution (New Haven, Conn.: Yale University Press, 1957), p. 350.

55 Western journalists and intellectuals played a shameful role covering up the reality of the Soviet regime. See for example Sally J. Taylor, Stalin’s Apologist: Walter Duranty, the New York Times’s Man in Moscow (Oxford: Oxford University Press, 1990), and Paul Hollander, Political Pilgrims, 4th ed. (New Brunswick, N.J.: Transaction, 1998).

56John T. Flynn, The Roosevelt Myth (New York: Devin-Adair, 1948); reprinted with an introduction by Ralph Raico (San Francisco: Fox & Wilkes, 1998).

57 To mention just a few of these new laws and bureaus: the Tennessee Valley Authority (1933), the Agricultural Adjustment Act (1933) establishing a system of price controls, the National Recovery Administration as part of the National Industrial Recovery Act, the Wagner Act (1935) attempting to establish compulsory unionization, the Undistributed Profits Tax (1936) confiscating up to 74 percent of profits, the Wages and Hours Act (1938) establishing compulsory higher minimum wages and a compulsory 40–hour work week.

58 This is the first paragraph of Mises’s preface to A.S.J. Baster, Le crépuscule du capitalisme américain—étude économique du New Deal (Paris: Librairie de Médicis, 1937).

59 These premonitions turned out to be justified. See Thomas DiLorenzo, “Franklin Delano Roosevelt’s New Deal: From Economic Fascism to Pork-Barrel Politics,” John V. Denson, ed., Reassessing the Presidency (Auburn, Ala.: Ludwig von Mises Institute, 2001), pp. 425–51.

60 See the front page of El Sol (May 31, 1936). A copy is in Grove City Archive: Madariaga file.

61 Mises to Machlup, letter of June 1936; Hoover Institution: Machlup-Mises correspondence.

62 Mises to Baus, letter dated November 6, 1938; Grove City Archive: Baus file.

63 John Maynard Keynes, Collected Writings (London: Macmillan, 1973), vol. 7, p. xxvi:

Nevertheless the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire.

Similarly, in 1933, Keynes allowed a German translation of his paper on “national self-sufficiency” to be purged of passages that might have been offending to the new Hitler government. See Knut Borchardt, “Keynes” ‘Nationale Selbstgenügsamkeit’ von 1933. Ein Fall von kooperativer Selbstzensur,” Zeitschrift für Wirtschafts- und Sozialwissenschaften, vol. 108, pp. 271–84.

64 At the onset of the Keynesian Revolution, a few eminent historians of thought had pointed out that Keynes’s views about the relationship between variations of the money supply, employment, and output had been anticipated and stressed in mercantilist thought. See Eli Heckscher, Mercantilism, 2nd ed. (New York: Macmillan, [1930] 1955); Jacob Viner, Studies in the Theory of International Trade (New York: Harper and Bros, 1937), chaps. 1 and 2. The implication is that Keynes was not so much a revolutionary, but a reactionary champion of the ancien régime. The single most detailed study of his magnum opus confirmed this implication in rather devastating terms:

Now though I have analyzed Keynes’s General Theory in the following pages theorem by theorem, chapter by chapter, and sometimes even sentence by sentence, to what some readers may appear a tedious length, I have been unable to find in it a single important doctrine that is both true and original. (Henry Hazlitt, The Failure of the “New Economics,” 2nd ed. [Irvington-on-Hudson, N.Y.: Foundation for Economic Education, (1959) 1994], p. 6)

65 Mises, “Stones into Bread, The Keynesian Miracle,” Henry Hazlitt, ed., The Critics of Keynesian Economics, 2nd ed. (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1995), p. 313. This paper was first published in the March 1948 issue of Plain Talk.

66 Mises, “Lord Keynes and Say’s Law,” in Hazlitt, ed., The Critics of Keynesian Economics, p. 319. This paper was first published in the October 1950 issue of The Freeman.

67 See the volumes of the Travaux du IXe Congrès International de Philosophie (Paris: Hermann & Co., 1937). These conference proceedings appeared in the series Actualités scientifiques et industrielles. Mises’s paper is printed in volume 5, pp. 49–55, Kotarbinski’s in volume 4, pp. 190–94.

68 Eugen Slutsky, “Ein Beitrag zur formal-praxeologischen Grundlegung der Ökonomik,” Annales de la classe des sciences sociales-économiques (Kiev: Académie Oukraïenne des Sciences, 1926), vol. 4. Mises quotes this paper in Epistemological Problems of Economics, 3rd ed. (Auburn, Ala.: Ludwig von Mises Institute, 2003), chap. 1, p. 6. This very passage contains the phrase “a universal praxeology” and thus suggests that Mises had adopted the word already in 1933. But in the original text, Mises used a slightly different expression, namely, “eine allgemeine Praktik,” meaning a general science of human practice or human action. See Grundprobleme der Nationalökonomie (Jena: Gustav Fischer, 1933), p. 14. The translation is however justified in the light of Mises’s later adoption of the term.

69 Robert Wälder, “Diskussionsbemerkungen zu den Leitsätzen von Professor v. Mises zur Erörterung der methodologieschen Probleme der Sozialwissenschaften,” typewritten paper, dated April 19, 1934, 10 pp.; Mises Archive: 32: 7–11. On page 6 of this paper, Wälder states that Mises had talked about “Praxeologie,” and on page 5 he uses the expression “System des praxeologischen A priori.”

70 This work was published one year later as a French-language appendix to one of Kotarbinski’s works. See Tadeusz Kotarbinski, “Considérations sur la théorie générale de la lutte,” Z Zagadnien Ogólnej Teorii Walki (Warsaw, 1938), pp. 65–92.

71 Alfred Espinas, “Les origines de la technologie” Revue philosophique 15 (July to December 1890); idem, Les origines de la technologie (Paris: Felix Alcan, 1897). Mises apparently did not have direct access to Espinas’s work. Hayek looked up the reference for him in London, and it was also Hayek who discovered that the relevant passage from Espinas’s book was taken verbatim from an article that Espinas had published some years earlier. See Hayek to Mises, handwritten note dated November 12, 1939; Grove City Archive: Hayek files.

72 Mises to Rudolf Berthold, letter dated November 4, 1959; Grove City Archive: Berthold file. Mises thus initiated a second praxeological tradition. Present-day followers of the early French school call themselves “praxiologists” and their discipline “praxiology.” These scholars, most of whom are academics from France and Poland, publish the series Praxiology: The International Annual of Practical Philosophy and Methodology (New Brunswick, N.J.: Transaction, 1992); see in particular vol. 7: The Roots of Praxiology—French Action Theory from Bourdeau and Espinas to Present Days, V. Alexandre and W.W. Gasparski, eds. (2000). Mises himself kept up with the praxiologists at a distance. In 1956, he noticed with interest the existence of a. Journal of Praxiology that was edited by a scholar at the University of Melbourne in Florida (Grove City Archive: Hugh P. King file). He distinguished the two approaches in a letter to Stephen B. Miles, dated April 19, 1961; Grove City Archive: “M” files.

73 Occasionally he made interesting observations on the methodology and the logical character of economics in his correspondence. Of particular interest is a letter to Lionel Robbins commenting on the second edition of The Nature and Significance of Economic Science (New York: Macmillan). See Mises to Robbins, letter dated December 10, 1935; Grove City Archive: Robbins files. The letter also demonstrates that Mises was in touch with the positivistic Vienna Circle; he refers to correspondence with the mathematical economist Karl Menger (the son of the founder of the Austrian School).

74 Mises to Machlup, letter dated March 5, 1938; Hoover Institution: Machlup-Mises correspondence file. The paper was eventually published in the proceedings of the conference, as “Les Hypothèses de Travail dans la Science Économique” (Working hypotheses in economic science), Cournot nella economia e nella filosofia (Padua: Cedam, 1939), pp. 97–122. In previous writings, he had no more than touched on methodological questions. See for example his observations on “the static method” and the possibility of “dynamic laws” in Mises, “Sociology and History,” in Epistemological Problems of Economics, pp. 117f.

75 For some time, he had also advocated the use of equilibrium as a methodological device for the analysis of dynamic changes. See Mises, Gemeinwirtschaft, 1st ed. (Jena: Gustav Fischer, 1922), p. 151. Compare with Mises, Human Action (Auburn, Ala.: Ludwig von Mises Institute, 1998), p. 248. Notice that Mises was perfectly familiar with the pioneering works on

76 See undated and non-addressed manuscript of a letter (written in the fall of 1937); Grove City Archive: Kammer für Handel, Gewerbe und Industrie files. mathematical equilibrium theory that Wald, Rosenstein-Rodan, Morgenstern and others had just published in the Zeitschrift für Nationalökonomie.

77 Becker to Mises, letters dated February 8, 1938 and February 14, 1938; Grove City Archive: Kammer für Handel, Gewerbe und Industrie files. Eventually the reforms turned the Kammer into a pure bureaucracy. For an eyewitness account of the changes, see Mader to Mises, letter dated October 31, 1949; Grove City Archive: “M” file.

78 Mises, “Leitsätze für die Neuordnung der Verhältnisse im Donauraum,” undated manuscript, 10 pp. He left a copy at the Graduate Institute in Geneva, but also took copies with him when he left for the United States in 1940.

79 He went into more detail: The local governments and courts must take account of minorities by using all languages spoken by more than 15 percent of the local population. Because economic legislation, in particular free trade and the regulation of banking and money, must be uniform in all countries, one needs a central parliament and a central jurisdiction. The proceedings of these institutions would be in an official language, and Mises believed French or English should be chosen. The central organizations would have to be located in Vienna, which would have a special status corresponding to the status of Washington, D.C. within the United States. In order to avoid jealousy among the national populations, some of the federal officers would have to be of French or British nationality.

80 He later developed his plan for the establishment of an Eastern Democratic Union in much more detail in two major papers that have only recently been published: “Entwurf von Richtlinien für den Wiederaufbau Österreichs” (May 1940, 51 pages) and “An Eastern Democratic Union: A Proposal for the Establishment of a Durable Peace in Eastern Europe” (October 1941, 43 pages); both papers have been translated and published in Richard Ebeling, ed., Selected Writings of Ludwig von Mises: Political Economy of International Reform and Reconstruction (Indianapolis: Liberty Fund, 2000).

81 Quoted from Margit von Mises, My Years with Ludwig von Mises, p. 27.

82 Joachim Fest, Hitler (Berlin: Deutsche Buch-Gemeinschaft, 1973), p. 753.

83 See Mises, “Information” (March 4, 1939)—a rough list of the items that were in the room he had sublet in the apartment; Hoover Institution: Hayek-Mises correspondence.

84 Mises’s personal library went in different directions. The Nazis sent his book collection to a new Judenbibliothek in Berlin. This library was under the control of R. Heydrich’s Sicherheitsdienst (SD) and located at Eisenacher Strasse 12. However, it is not known where Mises’s books are today. During World War II, the collections of the Judenbibliothek were sent back and forth to the provinces to protect them against Allied bombings. They were also subject to various transfers, book exchanges with other libraries, and plunder. See Werner Schroeder, “Bestandsaufbau durch Plünderung—Jüdische Bibliotheken im RSHA 1936–1945,” paper presented at an international congress on Raub und Restitution in Bibliotheken (Vienna City Hall, April 23–24, 2003). By 1956, Mises knew that some of his books had “turned up in German second hand bookshops” and opined that some of his letters—two letters he had received from Sigmund Freud, for example—would “be found one day in the possession of an autograph dealer.” Mises to Eissler, letter dated October 11, 1956; Grove City Archive: Sigmund Freud Archives file.

85 Nine years later, speaking of the reluctance of the Kammer to make restitution for those payments, his former secretary wrote: “But how right you were when you prophesied that we would be cheated of everything.” Thieberger to Mises, letter dated December 16, 1947; Grove City Archive: Thieberger files.

86 See Mises to Köhler, letter dated November 17, 1955; handwritten manuscript of a letter written after May 25, 1959; letter dated April 1, 1960; Grove City Archive: Köhler files. See also the summary list of stolen coins that Mises composed in 1960 but apparently did not submit to the authorities. Köhler was a lawyer in Vienna. Mises got in touch with him after learning about the ratification of a U.S.-Austrian treaty in 1955. But the deadline for claims had already expired in 1953. Most of the gold coins were Polish and pre-1892 Austrian coins. In 1962, Mises eventually obtained restitution—not from Austrian, but from German authorities—in the value of the estimated weight of the collection: some 25 troy ounces.

87 See Brockhausen’s typewritten report on the incident in Grove City Archive: Brockhausen file.

88 Mises later testified:

not all those persecuted were anti-Nazis. For instance, Professor Othmar Spann, one of the outstanding champions of the Nazi doctrine, spent some time in a concentration camp because he was connected with Gregor Strasser, the personal rival of Hitler. (“Nazis and Democrats in Austria,” typewritten manuscript dated March 18, 1946; Grove City Archive: U.S. Government Agencies file)

Ironically, the prison term that he served under Hitler eventually whitewashed him after the war. Spann’s doctrines continued to be taught in Vienna until the late 1960s. See Karl Milford and Peter Rosner, “Die Abkopplung der Ökonomie an der Universität Wien nach 1920,” Harald Hagemann, ed., Zur deutschsprachigen wirtschaftswissenschaftlichen Emigration nach 1933, p. 481.

89 Lionel Robbins, Autobiography of an Economist (London: Macmillan, 1971), p. 91.

90 Engel-Janosi could not find a job in Turkey, where only Turks were allowed to teach modern history. See Richard von Mises to Mises, letter dated June 30, 1938; Grove City Archive: Richard von Mises files. To Machlup, Mises wrote: “I am completely clueless what to do with the masses of Viennese that turn to me for help. Nobody is allowed to stay in Switzerland.” Mises to Machlup, letter dated June 17, 1938; Hoover Institution: Machlup-Mises correspondence file. Margit later recalled: “We helped whenever we could. Our living room looked like a miniature Red Cross office. I was always writing, packing, shipping” (My Years with Ludwig von Mises, p. 39).

91 Margit von Mises, My Years with Ludwig von Mises, p. 31.

92 The original marriage certificate is in the files of the Graduate Institute of International Studies. Margit’s records: Hungarian nationality, born on July 3, 1890, father’s name was Albert Herzfeld, mother’s name was Selica Fontheim.

93 Margit von Mises, My Years with Ludwig von Mises, p. 36.

94 Quoted from ibid., p. 33.

95 She went on:

For the first time I saw a refrigerator—we did not have them yet in Vienna—and it was a real marvel to me. I loved Lu’s sparkling kitchen, but otherwise I had my doubts. The apartment was small... I would not have known where to put my belongings. (Ibid., p. 31)

96 Ibid., p. 36.

97 Ibid., pp. 35–36.

98 Mises also visited frequently with the local Guggenheims and Ginsbergs. See Ginsberg to Mises, letter dated June 19, 1941; Grove City Archive: “L” file.

99 This would never change. They were both thoroughly fond of driving, but they were terrible drivers. They had at least two other serious car accidents: in 1948 and 1966.

100 Richard von Mises refers to such statements from Margit in a letter to Ludwig, dated December 29, 1938; Grove City Archive: Richard von Mises files. At this point, Mises’s treatise Nationalökonomie was “already very close to completion.” Mises to Machlup, letter dated December 18, 1938; Hoover Institution: Machlup-Mises correspondence file.

101 Walter Lippmann, Inquiry into the Principles of the Good Society (Boston: Little, Brown & Co., 1937).

102 Louis Rougier, “Préface,” Le Colloque Walter Lippmann (Paris: Librairie de Médicis, 1938).

103 Walter Lippmann, La Cité Libre (Paris: Librairie de Médicis, 1938).

104 Louis Rougier, “Préface.” He later emphasised that the purpose was to define neo-liberalism. See Louis Rougier, “Le Néo-libéralisme,” Synthèses (December 1958).

105 See the leftwing Eduard Heimann, History of Economic Doctrines: An Introduction to Economic Theory (New York: New York University Press, 1945), p. 19. The anonymous reviewer of the French edition of Gemeinwirtschaft presented the author as “the uncontested head of the School of Austrian Economists” (Review of Le Socialisme in Les Industries Mécaniques [Paris, June 1938]). When Louis Baudin invited Mises to join the scientific committee of a new French journal of comparative economics in 1939, he told him that all political orientations would be represented in this committee, reason enough to have liberalism defended by masters such as Mises (see Baudin to Mises, letter dated May 18, 1939; Grove City Archive: Baudin file). The uniqueness of Mises’s role was still recognized some twenty years later by one of the last surviving students of the French laissez faire school. Writing to Mises in September 1957, the professor A. Bastet said that Mises was the successor “to our master Yves Guyot”—who himself was the successor to Gustave de Molinari (1819–1912). And Molinari was successor to the great “proto-Austrian” Frédéric Bastiat (1801–1850). See Bastet to Mises, letter dated September 5, 1957; Grove City Archive: “B” file.

106 Wilhelm Röpke, “Einführung,” in Walter Lippmann, Die Gesellschaft freier Menschen (Bern: Francke, 1937), p. 32. As this preface shows, Röpke was deeply impressed by Lippmann’s work, which he believed had had a tremendous impact on the neo-liberal movement.

107 Rüstow prided himself on having coined the phrase “liberaler Interventionismus” (classical-liberal interventionism) as early as 1932. See the copy of his letter to Volkmar Muthesius, dated May 23, 1955; Grove City Archive: Muthesius file. He probably referred to his talk at the 1932 Dresden meeting of the Verein.

108 “In my course at Geneva dealing with the economic and sociological doctrines in modern political thought I used to devote many hours to [a full refutation of the Nazi doctrines]” (Mises, “Post-war Reconstruction,” typewritten manuscript dated May 28, 1941, 22 pages, quote is from p. 9). Translated and publishd in Ebeling, ed., Selected Writings of Ludwig von Mises.

109 Mises, “Post-war Reconstruction,” pp. 3, 4, 12.

110 Mises, “Gedanken über die Wirtschaftspolitik nach dem Kriege” (Thoughts on postwar economic policy), undated manuscript (probably 1940), 19 pages; see pp. 17f.

111 Mises, “Entwurf von Richtlinien für den Wiederaufbau Österreichs,” report dated May 1940, 51 pages. In the Grove City Archive there is also a first version of this report, which contains 48 pages.

112 Then, however, Mises proceeded to an astounding contention:

Free trade does not mean that all import duties are abolished. It only means that one does not try to increase domestic prices through import duties in order to enable domestic producers to sell their products at higher prices than their foreign competitors. Thus two kinds of import duties are in accordance with free trade: (a) financial duties [which have to correspond to domestic sales taxes], and (b) retortion duties on the import of all, or certain, commodities from countries pursuing a policy which is hostile to the interests of Austrian trade. (“Entwurf von Richtlinien für den Wiederaufbau Österreichs,” p. 24)

113 Ibid., p. 26. He spelled out a definite list of taxes: (a) sales taxes for alcohol and tobacco; (b) a sales tax that is only levied on commodities bought by consumers; (c) an income tax on wages to finance the social security system; (d) a progressive tax on housing expenditures; (e) a tax on luxury cars; (f) a tax on lottery gains; (g) a tax on playing cards; (h) fees for certain administrative acts [registering of patent rights, brands, etc.]; (i) a “moderate taxation” of yields of more than 6 percent on capital, which are paid out to the stock owners of corporations with limited liability. Mises emphasized that, apart from point c, there should be no income taxes. Penalizing income kills the goose that lays the golden eggs. Moreover, all public enterprises would have to be sold or closed if their proceeds did not cover costs.

114 Ibid., p. 31.

115 Ibid., pp. 31–32.

116 Ibid., p. 32.

117 Ibid., p. 36.

118 Ibid., p. 37.

119 Ibid., p. 38.

120 One historian of his Kammer activities pointed out:

At the university and in his books, he showed himself as an uncompromising champion of the free market. As a practitioner and Kammer politician he was rather flexible and ready for compromise if nothing essential had to be given up. But even in compromise he then remained hard and would not deviate from the course of action that had been recognized and agreed upon. (Alexander Hörtlehner, “Ludwig von Mises und die österreichische Handelskammerorganisation,” Wirtschaftspolitische Blätter 28, no. 4 [1981]: 142)

121 On August 7, 1939, Mises wrote from Aix-les-Bains to a Giovanni Demaria; Grove City Archive: Demaria file. He granted permission for an Italian translation of his Theorie des Geldes und der Umlaufsmittel, stating that he alone had all rights for translations into foreign languages. This translation probably never came into existence, but the incident showed that Italian Fascism was far more tolerant than German Nazism. Mises compared Russian freedom and Fascist freedom in Anti-Capitalistic Mentality (Princeton, N.J.: Van Nostrand, 1956), chap. 4, section 4 and chap. 5.

122 See Richard to Ludwig, letters dated June 13, and July 23, 1939; Grove City Archive: Richard von Mises files. They probably met on August 8.

123 See the correspondence in Grove City Archive: Machlup files.

124 Machlup’s guess was that UCLA could pay at most $4,000 per annum. Mises said that his means were very limited and that his family-related expenditures were so big that he knew not how to arrange things with the prospective salary from UCLA. See Mises to Machlup, letter dated February 28, 1940; Grove City Archive: Machlup files.

125 Machlup to Mises, letter dated February 15, 1940; Grove City Archive: Machlup files.

126 Machlup to Mises, letter dated April 17, 1940; Grove City Archive: Machlup files.

127 The printing of Nationalökonomie had started by January 1940. Mises half-jokingly surmised that it might be the last economics book published in the German language. See Mises to Machlup, letter dated January 30, 1940; Hoover Institution: Machlup-Mises correspondence file.

128 Benjamin M. Anderson to Mises, letter dated March 1, 1940; Grove City Archive: Anderson file.

129 Mises to Anderson, undated letter manuscript; Grove City Archive: Anderson file.

130 Mises, Nation, Staat und Wirtschaft (Vienna: Manz, 1919), p. 112n.; translated by Leland B. Yeager as Nation, State, and Economy (New York: New York University Press, 1983), p. 138 note.

131 In their purely tactical use of the air force in direct confrontations with enemy troops, the Germans applied the theory of the chief engineer of the French navy, Rougeron, who at the beginning of the 1930s had synthesized the experiences of World War I. In distinct contrast, the western allies would eventually apply the theories of the Italian general Giulio Douhet, according to which the air force should bomb the cities and supply lines in the hinterland of the enemy, thus destroying his economy and the morale of the population. Douhet’s theory had already been anticipated in the strategic planning offices of the British Royal Air Force, directly after its creation in the spring of 1918. The end of the war prevented the application of the plans at this point. See Giulio Douhet, Luftherrschaft (Berlin: Drei Masken Verlag, 1935); Colston Shepherd, The Airforce of Today (London & Glasgow: Blackie & Son, 1939). I am indebted to Philipp Egert for these references.

132 On June 3, 1940, Louis Baudin wrote to Mises that Paris was calm. “I was not surprised by our early failures. We needed to get rid of our bad leaders and to correct people’s mindsets. The Popular Front has cost us dearly!”

133 Mises to Royal Wilbur France, letter dated October 31, 1946; Grove City Archive: France file.

134 Rappard to Kelsen, Mises, and Röpke, letter dated May 27, 1940; Mantoux to Rappard, letter dated May 24, 1940; Grove City Archive: Mantoux file.

135 Surrounded by fascist regimes, Switzerland naturally adapted to the new political landscape as part of a strategy of conflict minimization. In September 1940, for example, Switzerland temporarily introduced Nazi designations for its political offices and institutions, creating “Gauleiter” and an “Arbeitsfront” organization. However, the émigrés who had stayed on in the small mountain country could never be sure they would not be surrendered to the governments they had escaped. See Hermann von Grimeisen to Mises, letter dated November 25, 1940; Grove City Archive: Grimeisen file. Röpke, too, seems to have considered emigration to the United States. See Hayek to Mises, letters dated June 1, 1940 and August 29, 1940; Grove City Archive: Hayek files.

136 Hayek to Mises, letter dated June 1, 1940; Grove City Archive: Hayek files.

137 A copy is in Grove City Archive: Hayek files. A month later, Professor Penrose from the University of California wrote another “official” letter of support, which was ostensibly addressed to Professor Pitman B. Potter of the Geneva Research Center, urging him to facilitate Mises’s passage to the United States. The letter predicted negative consequences on American public opinion for any country that would hinder Mises’s safe passage.

138 Hayek had urged Mises to get in touch with Rougier for the French transit visa. “He has worked miracles in other cases. To avoid any loss of time I am cabling him at the same time and you may possibly hear from him.” Hayek to Mises, letter dated June 1, 1940; Grove City Archive: Hayek files.

139 He had already written a goodbye letter to Mantoux and Rappard on June 10. See Grove City Archive: Mantoux file. He had also left a gift, possibly on this occasion, for the library: a copy of George F. Knapp, Staatliche Theorie des Geldes, 2nd ed. (Munich & Leipzig: Duncker & Humblot, 1918) with Carl Menger’s annotations. See Silberner to Mises, letter dated December 11, 1940; Grove City Archive: Silberner file.

140 Rappard reacted immediately and cabled on the same day to Professor Amzalak in Lisbon. See the transcript of the cable in Graduate Institute Archive.

141 The quote is from Mises to Rappard, letter dated July 14, 1940; Graduate Institute Archive. This letter contains Mises’s report on their adventure at the French border. See also the slightly different (and probably less accurate) account in Margit von Mises, My Years With Ludwig von Mises, pp. 51–56. Official documents and correspondence relating to their escape from Europe are in Grove City Archive: files #6/10/1/2 and #6/10/1/3.