The Last Knight of Liberalism

Chapter 5. Early Professions

1 Carl E. Schorkse, Fin-de-siècle Vienna (New York: Knopf, 1980), is famous for his claims that this interest in science and art was a substitute for the political career that the existing monarchical regimes made impossible. Schorke’s claim relies on the implicit hypothesis that politics is inherently more satisfying than science or art—an hypothesis that tells us more about Schorske’s own value-judgments than about those prevalent among young Germans and Austrians at the time.

2 Erik von Kuehnelt-Leddihn, The Cultural Background of Ludwig von Mises (Auburn, Ala.: Ludwig von Mises Institute, 1999), pp. 6f.

3 Rudolf Sieghart, Die letzten Jahrzehnte einer Grossmacht (Berlin: Ullstein, 1932), p. 263.

4 Ludwig Pohle, Die gegenwiirtige Krisis in der deutschen Volkswirtschaftslehre (Leipzig: Deichert, 1911), p. 52.

5 See Karl Helfferich, Das Geld (Leipzig: Hirschfeld, 1903).

6 Mises, Erinnerungen (Stuttgart: Gustav Fischer Verlag, 1978), p. 69f.; Notes and Recollections (Spring Mills, Penn.: Libertarian Press, 1978), p. 105.

7 Mises, Erinnerungen, pp. 23; Notes and Recollections, p. 39.

8 The most important source of data on Mises’s early professional development is a letter of application and curriculum vitae that he wrote to the Chamber of Commerce in 1909. This letter is today kept in the files containing the Machlup-Mises correspondence, at the Hoover Institution. See also the undated and non-addressed manuscript of a letter (written in the fall of 1937); Grove City Archive: Kammer für Handel, Gewerbe und Industrie files.

9 See Joseph A. Schumpeter, “Eugen von Böhm-Bawerk,” Neue Österreichische Biographie (Vienna, 1925), vol. 2, p. 65; Shigeki Tomo, Eugen von Böhm-Bawerk (Marburg: Metropolis, 1994), p. 53.

10 “The civil service was considered to be the nobilium officium par excellence, while top executive positions with private firms were valued far less highly.” Sieghart, Die letzten Jahrzehnte einer Grossmacht, p. 158.

11 His 1909 curriculum vitae describes his position as that of a Konzeptspraktikant at the k.k. Finanzbezirksdirektion in Vienna. Mises’s congratulatory letter on Spitzmüller’s seventieth birthday in 1932 speaks of a Finanz-Landes-Direktion (head financial office of the regional government). See the June 12, 1932 letter in Mises Archive 71: 151. It is ironic that Mises would become the most outspoken and influential critic of the policies of the Austro-Hungarian Bank under Spitzmüller’s governorship.

12 Mises, Bureaucracy (New Haven, Conn.: Yale University Press, 1944), p. 94.

13 Quoted from Heinrich Treichl, Fast ein Jahrhundert (Vienna: Zsolnay, 2003). The question was addressed to Treichl’s father Alfred, a friend of Mises’s, who had made exactly the same decision a few years earlier.

14 Second floor, Krugerstr. 13.

15 Mises, “Die wirtschaftspolitischen Motive der österreichischen Valutaregulierung,” Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 16 (1907): 561–82.

16 Mises, “Neuere Schriften über Geld- und Bankwesen,” Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 17 (1908): 660–74.

17 Erich Streissler states that Menger applied exactly this technique in his lectures to Crown Prince Rudolf; see Streissler, “Menger’s treatment of economics in the Rudolf lectures,” Erich W. Streissler and Monika Streissler, eds., Carl Menger’s Lectures to Crown Prince Rudolf of Austria (Aldershot, U.K.: Edward Elgar, 1994), p. 11.

18 See Mises, Erinnerungen, pp. 14f.

19 Ibid., pp. 64f.

20 See Martine Brunschwig Graf, Jean-Claude Frachebourg, Norman Scott, and Peter Tschopp, HEI 1927–2002 (Geneva: Graduate Institute of International Studies, 2002), p. 45. This part of the book was written by Norman Scott.

21 See Mises, “The Foreign Exchange Policy of the Austro-Hungarian Bank,” Economic Journal 19 (June 1909): 201–11. Edgeworth, the editor of the journal, had asked Philippovich to write this paper, but Philippovich had no time and proposed Mises.

22 See Mises, “Das Problem gesetzlicher Aufnahme der Barzahlungen in Oesterreich-Ungarn,” Jahrbuch fuer Gesetzgebung, Verwaltung und Volkswirtschaft (Schmollers Jahrbuch) 33, no. 3 (1909): 985–1037. He also expressed these thoughts in his Theory of Money and Credit (London: Jonathan Cape, 1934); reprinted (Indianapolis: Liberty Classics, 1980) and commented on the problem in Mises, “Austrian Empire, Finance and Banking,” Encyclopaedia Britannica, 12th ed. (1921), vol. 30, pp. 323f.

23 On the incident, see Mises, Erinnerungen, pp. 28–32.

24 See Walther Federn in Jahrbuch filer Gesetzgebung, Verwaltung und Volkswirtschaft (Schmollers Jahrbuch) 34 (1910): 151ff.; Otto Neurath, “Geset-zliche Barzahlungen und Kriegsfall,” in ibid., pp. 417ff.; Mises, “Zum Problem gesetzlicher Aufnahme der Barzahlungen in Öesterreich-Ungarn: Ein Schlusswort gegenüber Walther Federn,” in ibid., pp. 1877–84. Also see Fed-ern’s piece in Der oesterreichische Volkswirt 44 (July 31, 1909).

25 Mises, Erinnerungen, p. 31; Notes and Recollections, pp. 51f. He added:

Throughout my life I have held to these principles. I knew a great deal, if not all, about the corruption of interventionists and socialists with which I had to cope. But I never made use of this knowledge, which was not always properly understood by others.... It was often held against me that I politely rejected offers to supply me with proof, admissible in courts of law, of embezzlement and frauds by my opponents.

26 This decision of the Vienna Chamber of Commerce seems to have been paralleled at many other places in Germany and Austria-Hungary since the late 1890s; see Franz Boese, Geschichte des Vereins für Sozialpolitik, 1872–1932 (Berlin: Duncker & Humblot, 1939), p. 126.

27 See Franz Geissler, “Die Entstehung und der Entwicklungsgang der Handelskammern in Österreich,” Hans Mayer, ed., Hundert Jahre österreichischer Wirtschaftsentwicklung, 1848–1948 (Vienna: Springer, 1949), pp. 104, 108. See also Bundeskammer and Wiener Kammer der gewerblichen Wirtschaft, eds., 100 Jahre Handelskammern in Österreich (Vienna: Amtsblatt der Bundeskammer der gewerblichen Wirtschaft, 1948), p. 136.

28 See Mises, Erinnerungen, pp. 45f.

29 See Treichl, Fast ein Jahrhundert, p. 17. After the war, he ran the Bie-dermann Bank with Schumpeter, its brief-tenured president.

30 One author claims that he was hired on October 15, 1909 as a provisional Konzipient (an aspiring lawyer who has only recently passed his exams). See Alexander Hörtlehner, “Ludwig von Mises und die österreichische Han-delskammerorganisation,” Wirtschaftspolitische Blätter 28, no. 4 (1981): 141. This seems to be wrong. In a May 1909 newspaper report Mises is mentioned as a “representative of the Kammer Bureau.” See Neue Freie Presse (10 May 1909), p. 4.

31 At this point, Mises was still living in I., Friedrichstrasse 4. Ludwig and his mother moved to another apartment in 1911. The new address was Wol-lzeile 24, also in the first district. See the Wohnungszeugnis (housing certificate) in Grove City Archive: file #6/9/1/1. Housing regulations prevented Ludwig from keeping the apartment when his mother died in 1937. By October 31 of that year, he found new tenants who sublet him one room, where he stored his library and personal documents. See his letter to the housing administration, dated September 24, 1937; Grove City Archive: file #6/9/1/1.

32 Mises, Erinnerungen, p. 46.

33 Their opponents were agrarian circles that championed free trade, but only in industrial products. See Bundeskammer and Wiener Kammer der gewerblichen Wirtschaft, eds., 100 Jahre Handelskaminern in Österreich, p. 126. Still the Kammer’s demeanor had to be moderate and reasonable. Some Austrian industrialist hardliners therefore created a number of other institutions of a more combative character, in particular the Industriellenklub (founded 1875). After World War I, it merged with other similar organizations into the Hauptverband der Industrie Österreichs. One of Mises’s best friends, Weiss von Wellenstein, led that organization.

34 See Bundeskammer and Wiener Kammer der gewerblichen Wirtschaft, eds., 100 Jahre Handelskammern in Österreich, p. 135f.

35 The official name of his position was “Konzipist.” See Mises Archive 107: 79.

36 See Alois Gratz, “Die österreichische Finanzpolitik von 1848 bis 1948,” Hans Mayer, ed., Hundert Jahre österreichischer Wirtschaftsentwicklung, 1848–1948, pp. 265, 307, fn. 70, 309, fn. 123.

37 Mises Archive 107: 55b.

38 Mises Archive 107: 55c. In a postwar book, he would point out that the conflict between commercial and agricultural producers had an ethnic aspect, the former being predominantly German and the latter non-German. See Mises, Nation, Staat und Wirtschaft (Vienna: Manz, 1919), p. 134; translated by Leland B. Yeager as Nation, State, and Economy (New York: New York University Press, 1983), pp. 164f.

39 Mises Archive 107: 55d, 62.

40 See for example the press reports in Mises Archive 107: 62, 71a.

41 See for example Mises Archive 107: 71.

42 All over the world, there were various “Young” movements: among the Czechs, the Chinese, in literature, painting, politics, etc.

43 Sieghart, Die letzten Jahrzehnte einer Grossmacht, p. 138.

44 Ibid., p. 143.

45 See Boese, Geschichte des Vereins für Sozialpolitik, 1872–1932, pp. 131, 133; see also Mises’s letter to Franz Böse dated September 30, 1919 in Mises Archive 53: 47f.

46 Other topics dealt with were problems of enterprise owned by local government and a memorial lecture on the German economist Hansen, which was delivered by Georg F. Knapp.

47 See Mises, “Max Weber und der Kathedersozialismus,” Kritik des Interventionismus (reprint, Darmstadt: Wissenschaftliche Buchgesellschaft, [1929] 1976, pp. 85ff.); Dieter Lindenlaub, “Richtungskämpfe im Verein für Sozialpolitik,” Vierteljahrschrift für Sozial- und Wirtschaftsgeschichte, Beiheft no. 52 (1967), pp. 272ff.; Dieter Krüger, “Max Weber und die ‘Jüngeren’ im Verein für Socialpolitik,” Wolfgang Mommsen and Wolfgang Schwentker, eds., Max Weber und seine Zeitgenossen (Göttingen: Veröffentlichungen des Deutschen Historischen Instituts London, 1988), pp. 98–136.

48 Adolf Weber had no family ties with the brothers Alfred Weber and Max Weber.

49 Mises, Kritik des Interventionismus, pp. 86f.; the translation is from Mises, A Critique of Interventionism, Hans Sennholz, trans. (New York: Arlington House, 1977), p. 103.

50 Heino Heinrich Nau points out that Max Weber merely elaborated Carl Menger’s methodological position. His main contribution was to synthesize Menger’s methodology with Heinrich Rickert’s theory of value relations. The debate on value freedom itself was therefore a continuation of Methodenstreit between Menger and Schmoller. After World War II, there was another round of essentially the same debate in the so-called Positivismusstreit, which at the beginning of the 1960s opposed the Marxist Frankfurt School and Karl Popper and his followers. See Nau, “‘Zwei Ökonomien.’ Die Vorgeschichte des Werturteilsstreit in der deutschsprachigen Ökonomik,” Nau, ed., Der Wer-turteilsstreit. Die Äusserungen zur Werturteilsdiskussion iin Ausschuss des Vereins für Sozialpolitik (1913) (Marburg: Metropolis, 1996), pp. 9–64.

51 The cartels reduced foreign competition and thus they diminished—for a while at least—the downward pressure on wage rates in the least competitive industries. Workers employed in these industries had less incentive to emigrate than they otherwise would have had.

52 Verhandlungen der Generalversammlung in Mannheim,” Schriften des Vereins für Socialpolitik 116 (Berlin: Duncker & Humblot, 1906).

53 On Naumann see Ralph Raico, Die Partei der Freiheit (Stuttgart: Lucius & Lucius, 1999), chap. 6.

54 Boese, Geschichte des Vereins für Sozialpolitik, 1872–1932, p. 113.

55 Ibid., p. 133.

56 See Friedrich von Wieser, “Der Geldwert und seine Veränderungen,” Schriften des Vereins für Socialpolitik 132 (Munich, 1909); reprinted in idem, Gesammelte Abhandlungen, F.A. Hayek, ed. (Tübingen: Mohr, 1929), pp. 193–242.

57 The lecture manuscript was also published in the Verein’s series. See Friedrich von Wieser, “Über die Messung der Veränderungen des Geldw-ertes,” Schriften des Vereins für Socialpolitik 132 (Munich, 1909); reprinted in idem, Gesammelte Abhandlungen, Hayek, ed., pp. 243–52.

58 Mises, “Eugen von Philippovich,” Neue Österreichische Biographie (Vienna, 1926), 1st section, vol. 3, p. 56.

59 See Max Weber, Gesammelte Aufsätze zur Wissenschaftslehre (Tübingen: Mohr).

60 Max Weber, “Verhandlungen des Vereins für Socialpolitik in Wien, 1909,” Schriften des Vereins für Socialpolitik 132 (Munich and Leipzig: Duncker & Humblot, 1910): 583.

61 Mises, “Eugen von Philippovich,” p. 60.

62 The Vienna debate had a follow-up in a meeting of the Verein’s Committee, which took place on January 5, 1914 in Berlin and was dedicated exclusively to the discussion of the role of value judgments in economic science. In order to avoid unsuitable publicity, the fifteen papers on which the meeting was based were not published, and there are no records of the debate. The meeting was the culmination of the value-judgment debate, which in modified form was continued in the 1960s in the so-called Positivis-musstreit. Meanwhile those fifteen papers have fortunately been published. See Nau, ed., Der Werturteilsstreit.

63 By early January 1909, Weber had taken part in a meeting in Berlin to prepare the establishment of the sociological association. Among the thirty-nine other participants were Ferdinand Tönnies, Georg Simmel, Werner Sombart, Friedrich Herkner, Paul Barth, Ludwig Goldscheid, Hermann Kantorowicz, Franz Oppenheimer, Ernst Troeltsch, and his brother Alfred. Max Weber was also among the signers of the open letter of invitation to the first meeting of the Association in Frankfurt in 1910, where Tönnies was elected president and Weber himself treasurer.

64 See Mises Archive 107: 70, 95.

65 See Mises, “La Réforme financière en Autriche,” Revue Économique Internationale 7, no. 4 (October 1910): 39–59; idem, “Neue Literatur über Geld- und Bankwesen,” Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung 19 (1910): 385–95.

66 See Ludwig von Mises, “Die neue Regierungsvorlage zur Abänderung des Personalsteuergesetzes,” Neue Freie Presse (#16931, October 10, 1911); copy is in Mises Archive 106: 7.

67 See Mises, “Der ‘kleine Finanzplan’ des Abgeordneten Steinwender,” Neue Freie Presse (December 5, 1912); copy in Mises Archive 106: 10.

68 See Mises Archive 107: 81.

69 This line of argument seems to have been especially pronounced at the end of his campaign. A case in point is a report that he probably submitted in May 1913 on the proposed taxation of insurance contracts. Mises here criticized the differential treatment of agrarian and urban segments of the population, and the excessive orientation of the proposal toward the interests of the financial administration. See Mises Archive 107: 92.

70 See Gratz, “Die österreichische Finanzpolitik von 1848 bis 1948,” p. 264.

71 Mises received fifty complimentary copies and had to pay 1372.50 marks (or 26.6 oz of gold) as his share of the total production costs (2264.18 marks). The first edition comprised 1,000 copies plus 100 complimentary copies for reviews and gifts (see Mises Archive 50a: 36f.).

72 See correspondence in Mises Archive 50a.

73 Max Weber, Wirtschaft und Gesellschaft, 3rd ed. (Tübingen: Mohr, 1947), vol. 1, § 6, p. 40. In the English edition, this passage is not quite correctly translated as “The formulation of monetary theory, which has been most acceptable to the author, is that of von Mises.” Economy and Society: An Outline of Interpretive Sociology, Guenther Roth and Claus Wittich, eds. (Berkeley: University of California Press, 1978), p. 78.

74 See Joseph Schumpeter, “Das Sozialprodukt und die Rechenpfennige: Glossen und Beiträge zur Geldtheorie von heute,” Archiv für Sozialwissenschaften und Sozialpolitik 44 (1917–1918).

75 “The principal advantages of the work are found in that the author, in all mastery of the theory, never allows himself to fall into unrealistic abstractions, but remains fully grounded in fact.” Albert Hahn, review in Archiv für Soziahwissenschaften und Sozialpolitik, quoted from Mises Archive 87a: 11f.

76 Benjamin M. Anderson, The Value of Money (New York: Macmillan, 1917), p. 100.

77 See Mises, Erinnerungen, p. 18. See also Otto Ehrlich to Mises, letter dated April 29, 1942; Grove City Archive: Ehrlich file.