The Last Knight of Liberalism

Chapter 19. Birth of a Movement

1 Mises to Johannes Bahner, letter dated June 12, 1947; Grove City Archive: “B” file. Johannes Bahner was the owner and CEO of the Elbeo textile corporation.

2 Mises to Reinhard Kamitz, letter dated October 18, 1946; Grove City Archive: Kamitz file. Kamitz eventually became Minister of Finance and then president of the Österreichischen Nationalbank. Mises respected him very much and paid him the following tribute about his time as a Minister of Finance: “under the most adverse circumstances you have proved yourself to be a worthy successor to the two Pleners and to Böhm-Bawerk.” Mises to Kamitz, letter dated November 14, 1961; Grove City Archive: Kamitz file.

3 Mises to Hans Ilau, letter dated May 17, 1947; Grove City Archive: NAM files.

4 Robert M. Crunden, The Mind and Art of Albert Jay Nock (Chicago: Henry Regnery, 1964), p. 179.

5 Julian Joseph DelGaudio, Refugee Economist in America: Ludwig von Mises and American Social and Economic Thought, 1940–1986 (Ann Arbor, Mich.: University Microfilms International, 1988).

6 E.M. Biggers to Congressman H.P. Fullmer, letter dated June 5, 1943; Grove City Archive: “B” files.

7 George H. Nash, The Conservative Intellectual Movement in America Since 1945 (New York: Basic Books, 1976), pp. 6f.

8 F.A. Hayek, The Road to Serfdom (Chicago: University of Chicago Press, 1944), pp. 17, 36.

9 Frank Chodorov, “What This Country Needs Is Guts,” analysis 2 (February 1946): 3.

10 Mises’s speech was first published as “Planning for Freedom,” together with a speech by Rufus S. Tucker, delivered before the same audience, in a 24-page pamphlet: Economic Planning (New York: Dynamic America, 1945), pp. 3–12. Later the essay was reprinted in Mises’s book Planning for Freedom (South Holland, Ill.: Libertarian Press, 1952). In correspondence with A. Dauphin Meunier, a professor in Paris, Mises mentioned that he disliked the title and subtitles of the printed version of his talk. The French translation was published in 1947 in the Revue de l’Économie Contemporaine under the title “L’interventionnisme et le salaire.” See Grove City Archive: Dauphin Meunier file. In a letter to Selma Fuller, Mises praises the virtues of Road to Serfdom, but concedes the appropriateness of Fuller’s critical stance on the book.

The positive program developed by Hayek matters little when compared with these virtues of his book. However, it is a very comforting fact that your friends were shrewd enough to see the contradictions in this program. (Mises to Fuller, handwritten manuscript of a letter dated November 14, 1944; Grove City Archive: Fuller files)

11 Mises to Montes de Oca, handwritten manuscript of a letter dated April 3, 1945; Grove City Archive: Montes de Oca files.

12 Read in an interview with George H. Nash, quoted in Nash, The Conservative Intellectual Movement in America, pp. 22f.

13 F.A. Hayek, “The Intellectuals and Socialism,” University of Chicago Law Review 16 (1949): 417–33, reprinted in Bruce Caldwell, ed., The Collected Works of F.A. Hayek, vol. 10: Socialism and War: Essays, Documents, Reviews (Chicago: University of Chicago Press, 1997), p. 222.

14 Allman to Mises, letter dated May 10, 1945; Mises to Allman, letter dated May 18, 1945; Grove City Archive: “A” files.

15 Mises to Machlup, letter dated December 15, 1946; Grove City Archive: Machlup files.

16 Herbert von Beckerath, Goetz Briefs, Gottfried von Haberler, Georg Halm, and Joseph Schumpeter had obtained positions at Harvard; Machlup was at the new (Rockefeller-funded) University of Buffalo, and Morgenstern at Princeton. Apparently they were all unwilling or unable to get Mises into their departments.

17 Nash, The Conservative Intellectual Movement in America, pp. 13, 351, n. 47. Nash mentions that Hazlitt and Read were among those involved. Nash also mentions (ibid., p. 20) that Hayek’s position at the University of Chicago was similarly subsidized out of private funds. It is not clear who, apart from Fertig, contributed to paying Mises’s salary. It is however most likely that a major part of the money came from the Volker Fund. Other potential donors were among the men who would later back The Freeman, in particular Alfred Kohlberg (importer), Jasper Crane, Howard Pew (Sun Oil), Herbert Hoover (former U.S. president), W. Prentis (Armstrong Cork), W.F. Peter (Chicago, Rock Island, and Pacific Railroad). See Charles H. Hamilton, “The Freeman: The Early Years,” R. Lora and W.H. Longton, eds., The Conservative Press in Twentieth-Century America (London: Greenwood, 1999).

18 Mises to Machlup, letter dated December 26, 1944; Hoover Institution: Machlup-Mises correspondence file.

19 When he was looking for a job right after his arrival in the United States, Machlup had brought him in touch with New York University’s department of economics. In November 1940, the department head (Spahr) invited Mises to give a talk on his contributions to economic theory. Spahr was slow (or unwilling) to follow up with a job offer and Mises then accepted the position at NBER.

20 Yoneo Azuma to Mises, letter dated July 13, 1948; Grove City Archive: Azuma file. Azuma was a student of Mitsutaro Araki, to whom Mises had already in 1925 granted permission to translate and publish Theory of Money and Credit. Araki never completed the translation, but his student finished it in the early years of the war. When he wrote to Mises in 1948, the manuscript of the translation had survived the war years in a vault of the publisher. Azuma also kept Mises informed about intellectual developments in Japanese economics.

21 Machlup reported a few years later from a meeting with Japanese colleagues in Tokyo: “there was a discussion of whether certain parts of your Theory of Money were already in the first edition or only added in the second edition. There were several present who were able to discuss this question. See Machlup to Mises, letter dated March 28, 1955; Hoover Institution: Machlup-Mises correspondence file.

22 Jujiro Iwai to Nymeyer, letter dated January 23, 1952; Grove City Archive: Nymeyer files.

23 Mary Sennholz, Leonard E. Read: Philosopher of Freedom (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1993), p. 69.

24 Mises continued to be invited to other NICB conferences. For example, on May 16, 1946, he discussed the subject of postwar interest rates with Woodlief Thomas (a Federal Reserve economist), Friedrich Lutz, and Paul Samuelson. And on January 22, 1948, he took part in a symposium that dealt with the question: “Should we return to a gold standard?” Here he met Philip Cortney; among the other contributors were Albert Hahn and Michael Heilperin. See Grove City Archive: NICB files. He was probably also instrumental in providing his friend Walter Sulzbach with a job at NICB in 1946 or 1947; see Grove City Archive: Sulzbach file.

25 The number of 30,000 was attained by early 1949. See Read’s memorandum dated March 23, 1949; Grove City Archive: FEE files.

26 He was “paid a uniform amount at regular intervals” and therefore became, for technical reasons (tax laws), an employee of FEE in October 1946. See Curtiss to Mises, letter dated October 8, 1946; Grove City Archive: FEE files.

27 See Nash, The Conservative Intellectual Movement in America, p. 24.

28 Frank Knight, Freedom and Reform (New York: Harper, 1947); Henry C. Simons, Economic Policy for a Free Society (Chicago: University of Chicago Press, 1948).

29 Nymeyer to Mises, letter dated May 20, 1946; Grove City Archive: Nymeyer files.

30 Nymeyer to Mises, letter dated June 12, 1947; Grove City Archive: Nymeyer files.

31 Nymeyer to Mortimer Adler, letter dated February 14, 1948; Grove City Archive: Nymeyer files.

32 Mises to P.C. Armstrong, letter dated January 16, 1950; Grove City Archive: Armstrong file.

33 Nymeyer to Mises, letter dated October 12, 1948; Grove City Archive: Nymeyer files.

34 Nymeyer to Mises, letter dated January 25, 1949; Grove City Archive: Nymeyer files.

35 Mises to Nymeyer, handwritten manuscript of a letter in response to Nymeyer’s letter dated April 26, 1949; Grove City Archive: Nymeyer files.

36 Mises to Nymeyer, letter dated May 17, 1952; Grove City Archive: Nymeyer files.

37 Nymeyer to Hayek and others, correspondence of spring and summer 1952; Grove City Archive: Nymeyer files.

38 Nash, The Conservative Intellectual Movement in America, p. 10.

39 Henry C. Simons, Annals of the American Academy of Political and Social Science 236 (November 1944): 192.

40 Hoiles to Mises, letter dated September 7, 1949; Grove City College Archive: Hoiles file.

41 Mises to M.H. Johnson, letter dated October 25, 1956; Grove City Archive: “J” files.

42 See the memorandum dated January 13, 1947 in Grove City Archive: FEE files.

43 Lane to Mises, letter dated July 5, 1947; Grove City Archive: Lane files.

44 According to Lane, Mises had fallen prey to the confusion of egalitarianism. She quotes Mises: “It is obvious that every constitutional system can be made to work satisfactorily when the rulers are equal to their task.” Thereupon she comments: “Stuff and nonsense!... The basic fallacy [of Germany] was in the lack of a rational political thought, and this book admirably displays that lack.” Rose Wilder Lane in Economic Council Review of Books 2, no. 10 (November 1945), p. 3.

45 See the fall 1949 and fall 1950 correspondence in Grove City Archive: Lane files.

46 Machlup to Mises, letter dated December 13, 1946; Grove City College Archive: Machlup files.

47 Mises to Machlup, letter dated December 15, 1946; Grove City College Archive: Machlup files.

48 See their correspondence of June and July 1945; Grove City Archive: Montes de Oca files.

49 Mises to Montes de Oca, letter dated January 12, 1946; Grove City Archive: Montes de Oca files. Mises received $590 for the study. He finished the epilogue at the end of December 1945. See Mises to Schmidt, letter dated December 31, 1945; Grove City Archive: Schmidt file.

50 Mises to Karl Brandt, letter dated September 7, 1946; Grove City Archive: Brandt file.

51 Mises to Hayek, letter dated December 31, 1946; Grove City Archive: MPS files.

52 Mises to Hayek, letter dated December 31, 1946; Grove City Archive: MPS files.

53 Mises to Hayek, letter dated December 31, 1946; Grove City Archive: MPS files.

54 For an overview see R.M. Hartwell, History of the Mont Pèlerin Society (Indianapolis: Liberty Fund, 1995).

55 For example, by January 1949, Hayek had already paid several visits to Austria. See Charmatz to Mises, letter dated January 27, 1949; Grove City Archive: Charmatz file.

56 Hayek to Mises, letter dated December 28, 1946; Grove City Archive: MPS files. Mises to Karl Brandt, letter dated September 7, 1946; Grove City Archive: Brandt file. Mises had been in touch with Hoff prior to June 28, 1946. Hoff had written a libertarian manifesto during the war. He sent the manuscript to Sweden, from where an American diplomat was supposed to send it to Alfred A. Knopf in New York. But the diplomat never did so. Hoff learned after the war that this was because the diplomat found the manuscript “undemocratic”—which probably meant that it was too critical of the fundamental dogmas of America’s war ally. Hoff had also come to an independent discovery of the impossibility of economic calculation in socialism. Mises had the highest opinion of the Norwegian economist. Hoff was “one of the few contemporaries whose judgment on the problems dealt with in Human Action is of consequence.” Mises to Hoff, letter dated January 11, 1950; Grove City Archive: Hoff files.

57 Mises to Hayek, letter dated December 31, 1946; Grove City Archive: MPS files.

58 Mises, “Observations on Professor Hayek’s Plan,” typewritten memorandum dated December 31, 1946; Grove City Archive: MPS files.

59 Mises to Hayek, letter dated December 31, 1946; Grove City Archive: MPS files. Mises suggested that Hayek invite Montes de Oca and Velasco from Mexico, Maestri from Cuba, and Hytten from Australia.

60 Hayek to Mises, letter dated February 3, 1947; Grove City Archive: MPS files.

61 On Luhnow, see the special collections of the Kansas City Public Library, which also contain photography.

62 Shortly after Volker’s death, the Fund moved from Kansas City to Burlingame, California. This must have been between April 1949 and June 1951. See correspondence in Grove City Archive: Herbert Cornuelle file.

63 Hazlitt to Mises, letter dated December 21, 1953; Grove City College Archive: Mont Pèlerin Society files.

64 Liaison Officers were Richard Cornuelle and Kenneth Templeton. Herbert Cornuelle left the Fund in November 1953 for a business job in Honolulu.

65 F.A. Hayek, “Opening Address to a Conference at Mont Pèlerin,” Studies in Philosophy, Politics, and Economics (Chicago: University of Chicago Press, 1967), p. 148. See also the very moderately worded “Statement of Aims.” A copy is in Grove City Archive: Intercollegiate Society of Individualists file (filed around 1964).

66 Milton Friedman and Rose D. Friedman, Two Lucky People: Memoirs (Chicago: University of Chicago Press, 1998), p. 161.

67 Wilhelm Röpke, “Homage to a Master and a Friend,” The Mont Pèlerin Quarterly (October 1961): p. 5.

68 Possibly Allais’s visit to FEE in October 1947 reinforced his concerns that the American libertarians were far too radical for his taste. The visit is mentioned in Herbert Cornuelle to Mises, letter dated October 14, 1947; Grove City College Archive: FEE files.

69 Eventually Hunold from Zurich and Aaron Director became secretaries; Eucken, Jewkes, Knight, Rappard, and Rueff were elected vice-presidents; and Hardy became the Treasurer. Mises, Antoni, Gideonse, Iversen, Robbins, and Röpke became members of the Council. See “President’s Circular No. 1,” dated November 17, 1947; Grove City Archive: MPS files. On December 10, Albert Hunold announced that Mises would soon receive a photo album with some seventy pictures of the conference as a Christmas present.

70 In June 1945, Mises still said the book was “to be published in an American edition next year.” Handwritten manuscript of letter to Tietz; Grove City Archive: Tietz file.

71 He addressed the issue on pp. 632–33 of Human Action: A Treatise on Economics (New Haven, Conn.: Yale University Press, 1949), and in a later letter to his French friend Lhoste Lachaume. See Ballvé to Mises, letter dated March 18, 1955; Grove City Archive: Ballvé files. See also Mises to Lidia Alkalay, letter dated February 19, 1952; Grove City Archive: “A” files.

72 Richard von Mises, Kleines Lehrbuch des Positivismus: Einführung in die empiristische Wissenschaftsauffassung (The Hague: Van Stockum & Zoon, 1939).

73 Hayek to Mises, letter dated November 15, 1948; Grove City Archive: Hayek files. Mises to François Perroux, letter dated November 13, 1948; Grove City Archive: Perroux file. Perroux had learned about the accident from Helene Berger Lieser.

74 Crane to Mises, letter dated June 28, 1949; Grove City Archive: Crane file.

75 Apparently he also declined an invitation to lecture at the University of Vienna in a U.S.-sponsored program in 1948. Fritz Machlup took part. See Thieberger to Mises, April 18, 1948; Grove City Archive: Thieberger files.

76 There was no similar curiosity for Italy, where Luigi Einaudi, after leading three years the country’s central bank, had just been elected Italian president.

77 Mises to Read, letter dated December 4, 1948; Grove City Archive: FEE files.

78 In March 1950 he said that he had been to Europe twice, but not to Austria. See Mises to Ernest Neurath, letter dated March 13, 1950, Grove City Archive: Neurath file.

79 Miller to Mises, letter dated March 26, 1949; Grove City College Archive: MPS files. See the front-page report in Neue Zürcher Zeitung (July 25, 1949). In June 1949, Mises was in Europe. See Margit von Mises to R. Ziegler; Grove City Archive: Cluett, Peabody & Co. file.

80 On Franz Oppenheimer’s influence on his student Ludwig Erhard, see for example the interview with Erhard in Deutsche Zeitung (December 30/31, 1961), p. 20. During the Nazi era, Erhard had worked for two economic research institutes. After the war, he became the Bavarian minister of the economy and also attended the private seminar of Mises’s friend, Adolf Weber, who in those days was probably the most “Austrian” professor of economics (see Der Spiegel, October 16, 1963, mentioned by Gibson to Mises, letter dated March 3, 1964; Grove City Archive: “G” file). Weber championed a theory of the market process and of consumer sovereignty that was virtually indistinguishable from Mises’s views; see for example, Adolf Weber, Weltwirtschaft (Munich: Richard Pflaum Verlag, 1947), pp. 86, 102, 106, 108. It was probably under the impact of the discussions in the Weber circle that Erhard received the vision and inspiration for his reforms of June 1948.

81 In those days, Walter Eucken, one of the intellectual leaders behind the Erhard reforms, wrote to Mises about the need for further deregulation: “The German authorities, with whom I am in constant touch, try everything to this effect. But American economic policies in Germany are still essentially based on central planning.” Eucken to Mises, letter dated June 25, 1948; Grove City Archive: Read files.

82 A few years later, the banking theorist Heinrich von Rittershausen speculated in private correspondence with Mises that Gemeinwirtschaft had laid the foundation for Erhard’s success, “because all of the significant young people read it carefully during the 12 bookless years.” Rittershausen to Mises, letter dated August 22, 1957; Grove City Archive: Rittershausen file. Of all postwar monetary theorists in Germany, Rittershausen was probably most sympathetic to Mises’s views.

83 Adolf Wittkowski, Schrifttum zum Marshallplan und zur volkswirtschaftlichen Integration Europas (Bad Godesberg: Bundesministerium für den Marshallplan, 1953).

84 Mises to Mark Jones, letter dated March 31, 1948; Grove City Archive: Jones file.

85 Mises, Human Action: A Treatise on Economics, 3rd ed. (Chicago: Regnery, 1966), pp. 723–24. Until the mid-1950s, Mises was apparently reluctant to even meet with Erhard. Röpke thought this was because Mises was under the influence of his closest German intellectual ally, Volkmar Muthesius, a sharp and relentless critic of Erhard’s economic policies. See Muthesius to Mises, letter dated January 2, 1954; Grove City Archive: Muthesius file.

86 Mises to Muthesius, letter dated June 1, 1955; Grove City Archive: Muthesius file.

87 There is a summary of the programs of the first four Mont Pèlerin Society meetings in Grove City College Archive: MPS files. Folder #9. Summary of all meetings until 1970 in folder #33.

88 Mises to Montes de Oca, letter dated February 26, 1949; Grove City Archive: Montes de Oca files. A handwritten note with keywords for a (later) talk on Keynes is in Grove City Archive: May file.

89 Mises to Montes de Oca, letter dated July 22, 1949; Grove City Archive: Montes de Oca files. They stayed at the Ritz, and he received $1,500 for the seminar (stated in earlier correspondence).

90 Montes de Oca to Mises, letter dated February 24, 1950; Grove City Archive: Montes de Oca files.

91 Mises to Montes de Oca, letter dated March 13, 1950; Grove City Archive: Montes de Oca files.