The Last Knight of Liberalism

Chapter 7. The Great War

1 See in particular Ludwig von Mises, Nation, Staat und Wirtschaft (Vienna: Manz, 1919); translated by Leland B. Yeager as Nation, State, and Economy (New York: New York University Press, 1983); and, Omnipotent Government: The Rise of the Total State and Total War (New Haven, Conn.: Yale University Press, 1944).

2 Louise Sommer to Mises, letter of September 1917; Mises Archive 4: 143ff.

3 See Mises Archive 62: 143ff. and 100: 3.

4 See k.u.k. Armee, “Kriegsereignisse im Norden. Von der Mobilisierung bis einschliesslich der Schlacht bei Lemberg,” Österreichisch-ungarische Kriegsberichte aus Streffleurs Militärblatt (Vienna: Seidel & Sohn, 1915), bk. 1, pp. 7ff.

5 Mises, Nation, Staat und Wirtschaft, p. 112n; Nation, State, and Economy, p. 138n.

6 Information on equipment and organization of k.k. artillery batteries is contained in Mises Archive 3: 23ff.

7 See Mises Archive 100: 28.

8 See correspondence in Mises Archive 100: 13, 23, 15, 29, 31. Mises later denounced the bad treatment of the common soldiers as a serious impediment to the war effort:

From the political point of view it was a grave mistake to follow completely different principles in the compensation of the officer and the enlisted man and to pay the soldier at the front worse than the worker behind the lines. That contributed much to demoralising the army! (Nation, Staat und Wirtschaft, p. 135, n. 18; Nation, State, and Economy, p. 166)

9 See correspondence in Mises Archive 100: 20, 26, 35; 102: 6, 7, 8, 18, 33.

10 See Mises Archive 2: 97.

11 See correspondence in Mises Archive 100: 19, 22.

12 Correspondence in Mises Archive 2: 98.

13 See correspondence in Mises Archive 100: 49.

14 The book was first published 1918 in Berlin, and then remained for decades a standard monograph of aviation theory, being reprinted in a posthumous 6th edition in 1957 (Berlin). Before the war, Richard von Mises had already gained an expert reputation based on his Elemente der technischen Hydromechanik (Leipzig: B.G. Teubner, 1914).

15 Mises emphasizes that wartime public opinion strongly favored a confiscatory taxation of the great profits made in the armament industries. Initially, the Austrian leadership did not give in to these demands because it was aware of the military importance of having an efficient private production of war materials. See Mises, Nation, Staat und Wirtschaft, pp. 142f.

16 See correspondence in Mises Archive 100: 44.

17 Mises, Nation, Staat und Wirtschaft, p. 114; Nation, State, and Economy, pp. 140f. See also Rudolf Sieghart, Die letzten Jahrzehnte einer Grossmacht (Berlin: Ullstein, 1932), p. 282.

18 See k.u.k. Armee, “Kriegsereignisse im Norden. Von der Mobilisierung bis einschliesslich der Schlacht bei Lemberg,” Österreichisch-ungarische Kriegsberichte aus Streffleurs Militärblatt (Vienna: Seidel & Sohn, 1915), bk. 2, p. 35.

19 In the German: “es mit den Russen besser geht.” See postcard from Richard von Mises to Ludwig von Mises, dated December 18, 1914; in Mises Archive 2: 102.

20 At least, this was the guess of Mises’s uncle Alfred Landau. In a letter to Mises, dated December 3, 1914, he surmises that Mises’s studies of the Ruthenian language will be helpful for the administration of the new “Gouvernement Tarnopol.” See Mises Archive 2: 118. Ruthenian was the language of the Ukrainians living under Austrian rule in the eastern part of Galicia.

21 See correspondence in Mises Archive 2: 102. This must have been Alfred Adler (1870–1937). Up to the 1930s, Adler was the most famous Vienna psychologist. He had first worked with Sigmund Freud, but early on went his own way in placing great emphasis on the particular conditions of each individual patient (Individualpsychologie).

22 See correspondence in Mises Archive 2: 103.

23 See correspondence in Mises Archive 2: 116. A full description of his military decorations is in Marcel Klang, Die geistige Elite Österreichs (Vienna: Barth, 1936), pp. 617f.

24 See correspondence in Mises Archive 102: 14.

25 See Mises Archive 2: 21f., 24. He later observed that only the Austrian Germans and the Hungarians fought for the monarchy with full conviction, whereas the service of the Slavs and Romanians was half-hearted at best; many of them actually fought on the other side; see Mises, Nation, Staat und Wirtschaft, pp. 112f.

26 Mises kept some news clippings about these successes, which were reported on daily. See Mises Archive 102: 29, 31. He later remarked that the success was due to the by-then inferior armament of the Russian troops; see Mises, Nation, Staat und Wirtschaft, p. 112n.

27 Mises, Nation, Staat und Wirtschaft, pp. 114f.; Nation, State, and Economy, pp. 141.

28 The main substance was willow bark (salix=willow).

29 See correspondence in Mises Archive 102: 4, 6.

30 See correspondence in Mises Archive 102: 27.

31 See Mises Archive 3: 34.

32 Newsflash Ödenburger Zeitung (Sopron), November 28, 1915:

Our Heroes. The well known and beloved Reserve Lieutenant Dr. Ludwig Edler von Mises, in civilian life an unsalaried lecturer at the University of Vienna, and currently stationed with our Thirtieth, was honored anew with the Signum Laudis in silver for his outstanding efforts before the enemy.

33 He would stay in touch with them for the rest of his life. See for example, the correspondence with Col. Ottokar Schulz and with Max Sokal, dating from the 1960s; Grove City Archive: “S” files.

34 See correspondence in Mises Archive 2: 36.

35 See Mises Archive 3: 34f.

36 See Mises Archive 3: 30ff.

37 Mises later pointed out that wartime central planning started with Devisenzentralen or Foreign Exchange Centrals. See Mises, “Austrian Empire. Finance and Banking,” Encyclopedia Britannica, 12th ed. (1921), vol. 30, pp. 323f.

38 See Jurij Krizek, “Die Kriegswirtschaft und das Ende der Monarchie,” R.G. Plaschka and K. Mack, eds., Die Auflösung des Habsburgerreiches (Munich: Oldenbourg, 1970), pp. 43–52; Götz Briefs, “Kriegswirtschaftslehre und Kriegswirtschaftspolitik,” Handwörterbuch der Staatswissenschaften, 4th ed. (Jena: Gustav Fischer, 1923), vol. 5, pp. 984–1022; H. Wittek, “Die kriegswirtschaftlichen Organisationen und Zentralen in Österreich,” Zeitschrift für Volkswirtschaft und Sozialpolitik (1922); Otto Göbel, Deutsche Rohstoffwirtschaft im Krieg (Stuttgart: Carnegie Stiftung, 1930).

39 Briefs, “Kriegswirtschaftslehre und Kriegswirtschaftspolitik,” p. 1017.

40 Mises, Nation, State, and Economy, p. 146; Nation, Staat und Wirtschaft, pp. 118f.:

It will be the task of economic history to describe in detail the stupidities of the economic policy of the Central Powers during the war. At one time, for example, the word was given to reduce the livestock by increased slaughtering because of a shortage of fodder; then prohibitions of slaughtering were issued and measures taken to promote the raising of livestock. Similar planlessness reigned in all sectors. Measures and countermeasures crossed each other until the whole structure of economic activity was in ruins.

41 Mises, Nation, Staat und Wirtschaft, p. 114; Nation, State, and Economy, p. 140.

42 Around August 20, Mises arrived in Vienna. Zerline, a relative, welcomed him after a week of “Butterstehen, Eierstehen, Milchstehen.” See Mises Archive 2: 123.

43 See Mises Archive 4: 106.

44 See Mises Archive 2: 43ff., 5: 23. One hundred and eighty-three kronen would be about 200 gold francs or 1.867 ounces of gold.

45 See Mises Archive 4: 38.

46 See Mises Archive 4: 35f., 77, 110ff. Ewald Pribram worked for the Zentralstelle für Wohnungsreform and as of August 1917 was the fiancé of Marianne Fürth (see Mises Archive 4: 173).

47 See correspondence in Mises Archive 56: 22.

48 Mises Archive 107: 94.

49 He published these considerations shortly thereafter in an article for Weber’s Archiv and later incorporated the piece as a chapter of the second edition of his Theorie des Geldes und der Umlaufsmittel (Munich and Leipzig: Duncker & Humblot, 1924). See Mises, “Zur Klassifikation der Geldtheorie” (On the classification of monetary theory), Archiv für Sozialwissenschaft und Sozialpolitik 44 (1917–1918): 198–213; idem, Theory of Money and Credit (London: Jonathan Cape, 1934), appendix A.

50 See Heinrich Treichl, Fast ein Jahrhundert (Vienna: Zsolnay, 2003), p. 15.

51 The rotwild is a German Red Deer. The word rotwild literally translates to “red game animal.”

52 See Mises Archive 4: 69f. See also their correspondence following the publication of his Nation, Staat und Wirtschaft (in Mises Archive 53: 56ff.).

53 See Mises Archive 2: 87. It seems as if shortly before, in April 1916, he had briefly visited his old regiment in Vasarhely in Hungary (see Mises Archive 2: 77).

54 See, for Kelsen and Amonn, Mises Archive 4: 61f.; for Broda, Mises Archive 4: 97ff.; for Schwarz, Pribram, Brockhausen, Adler, Perels, and Bartsch see Mises Archive 4: 41f.

55 Être vrai partout, même pour sa patrie [sic]. Tout citoyen est obligé de mourir pour sa patrie; personne n’est obligé de mentir pour elle.” Montesquieu, Oeuvres completes (Paris: Gallimard / Pléiade, 1996), vol. 1, “Préceptes,” p. 1415.

56 See Ludwig von Mises, “Vom Ziel der Handelspolitik,” Archiv für Sozialwissenschaft und Sozialpolitik 42, no. 2 (1916): 561–85. After Mises’s sudden departure from Vienna, Lederer would eventually read the proof pages (see Mises Archive 4: 37, 217). Mohr Publishers sent a statement of honorarium of 93.75 marks at the end of December, but Mises probably answered this letter only in May 1917. In June, Mohr wired the money to Mises’s Postsparkassen account: 142 kronen and 4 Heller (see Mises Archive 2: 94ff.).

57 See Mises, “Vom Ziel der Handelspolitik,” pp. 564f. Mises also pioneered a comparative criterion for (relative) over-population and under-population: “We consider a country to be over-populated if it is more densely inhabited than it would be if a system of freedom of migration covered the entire surface of the earth” (ibid., p. 576).

58 His interest in the theoretical and political implications of modern migration might have been stirred as early as the Philippovich seminar. Since the 1890s, Philippovich had promoted migration research among German economists, even though he never succeeded in getting the subject discussed at any of the meetings of the Verein für Socialpolitik. See Eugen von Philippovich, ed., “Auswanderung und Auswanderungspolitik,” Schriften des Vereins für Socialpolitik 52 (1892); see also the follow-up study on Austrian migration by one of his students: Leopold Caro, “Auswanderung und Auswanderungspolitik in Österreich,” Schriften des Vereins für Socialpolitik 131 (1909).

59 Mises, “Vom Ziel der Handelspolitik,” p. 567.

60 Ibid., p. 570.

61 He pointed out that industrial workers in the (typically Anglo-Saxon) immigration countries could successfully call for anti-immigration laws because the mass immigration from Europe threatened national unity: “There can be no doubt that all countries will effectively close themselves off against immigration that threatens their national composition, just as the countries settled by white men have long since closed themselves off against yellow immigration” (ibid., p. 574).

62 Ibid., 577.

63 Ibid., p. 578.

64 See Mises Archive 4: 74.

65 See Mises Archive 4: 124ff.

66 See Mises Archive 2: 852ff. They did not reach their position before December 19, probably because of bad roads and enemy action hampering their moves.

67 He wrote back to his friends in Vienna for the first time on January 11, 1917, sending New Year’s greetings. See Mises Archive 4: 38.

68 See Mises Archive 4: 229ff.

69 See Mises Archive 4: 110ff., 115.

70 See Mises Archive 4: 106.

71 See Mises Archive 4: 61f. Pribram later on proved that he had great talents for self-promotion.

72 See Mises Archive 53: 7.

73 See Mises Archive 4: 54f., 95f., 101.

74 See Mises’s May 3 report on his encounter with a German military police officer in Mises Archive 3: 80.

75 Mises, “Der Wiedereintritt Deutsch-Österreichs in das Deutsche Reich und die Währungsfrage.” Michael Hainisch, ed., “Wirtschaftliche Verhältnisse Deutsch-Österreichs,” Schriften des Vereins für Sozialpolitik 158 (Leipzig: Duncker & Humblot, 1919), p. 169.

76 See Mises Archive 4: 18f., 101.

77 Sieghart, Die letzten Jahrzehnte einer Grossinacht, p. 246.

78 See Mises Archive 4: 192, 200f.

79 See Mises Archive 4: 205f.

80 See Mises Archive 3: 41ff., 54, 71f., 95. The documents also refer to the following places: Kozmacz and Prokaraw (3: 52), Prewarskic Rotc (3: 64), Gutin Tomnatek (3: 101), and others (for example, 3: 46, 104, 110). Mises’s code name is Rotwild (3: 64). One of their last engagements in battle seems to have taken place on August 8, confronting Romanian troops (3: 67).

81 The recognition was pronounced on September 3. See Mises Archive 4: 51.

82 Apparently, the hip problem deteriorated considerably during the battle. See the remarks in later letters from Helene Meyerson (Mises Archive 4: 79) and Bettelheim (Mises Archive 4: 6).

83 The pieces were published around August 20 and before. See Mises Archive 4: 102.

84 August 3 letter to Mises in Mises Archive 4: 87ff. The envious feelings might have originated from the fact that she had taken care of a foster child (4: 143ff.), but was not up to the task. She seems to have been convinced, however, that Mises himself was inexhaustible. She urged him to publish, at last, the typology of monetary theories that he had presented in his course on monetary economics of the year before. See Mises Archive 4: 143ff., 225.

85 See Mises Archive 51: 107; 4: 103; 7: 12.

86 The report is dated October 21, 1917. See Mises Archive 4: 15.

87 In Mises’s judgment, the success was due to the inferiority of the Italian soldiers. See Mises, Nation, Staat und Wirtschaft, p. 112 n. In the same work, Mises points out (p. 82) that the Austrian army had never been defeated in battle by Italian forces.

88 Gordon Brook-Shepherd, The Austrians: A Thousand-Year Odyssey (New York: Carroll & Graf, 1997), p. 198.

89 See Mises Archive 2: 12.

90 See Mises Archive 2: 11, 19. Usual abbreviation: 10 K.W. Abt. des k.u.k. KriegsMin. The department was located in the Hotel National in the second Viennese district (the so-called Leopoldstadt) at Taborstrasse 18 (see, e.g., Mises Archive 51: 80).

91 He also seems to have been involved in Kammer activities. See the letters from Schmerling (Mises Archive 51: 23) and Tayenthal (51: 31).

92 See Mises Archive 54: 2. The book written as Imperialismus would later be published as Nation, Staat und Wirtschaft (Nation, State, and Economy).

93 See Mises Archive 51: 47.

94 His Banktheoretische Übungen (exercises in the theory of banking) are mentioned in letters from Käthchen Pick (May 17, 1918; see Mises Archive 51: 32) and one Bermann (June 27, 1918; see ibid. 51: 32). The list with the subjects dealt with is in Mises Archive 17: 15. The list of participants is in Mises Archive 17: 22. Mises had research-related correspondence with Schöndorf (51: 1), anonymous (51: 5), Louise Sommer (51: 21f., 61f., 86), Gama (51: 40f.), and Hilde Oppenheimer (51: 46).

95Ausserordentlicher Universitätsprofessor. The promotion followed an imperial decision of May 7.

96 In November 1919, Weber lived at Jaffé’s place since his own apartment had to be repaired (73: 57). Some years after Weber’s death, Mises contributed to Rickert’s sculpture of Weber (December 1928, 73: 35f.), which can still be admired in Heidelberg University.

97 See Mises, Erinnerungen (Suttgart: Gustav Fischer, 1978), p. 5.

98 We will deal with this influence in more detail in a subsequent chapter.

99 An August 29, 1918 letter by a certain Irene Schmerling is revealing. She wrote: “Frau Singer recently told me that you had asked for me (I suppose you were interested in food?—I have only got ersatz honey!)” (“Fr. Singer erzählte mir kürzlich, dass Sie nach mir gefragt hätten (wohl um Lebensmittel?—es ist nur Kunsthonig da!”). Mises’s annual salary in November/December 1918 was 1,120.51 kronen (see Mises Archive 51: 52). This corresponded to US$71.05, according to data given in Mises, “Austrian Empire. Finance and Banking,” Encyclopedia Britannica, 12th ed. (1921), vol. 30, pp. 323f.

100 Mises helped among others the following persons: the brother of his fellow 1/22–officer Greifs (Mises Archive 51: 45, 72), one Petschek (51: 65f.), one Steiner (51: 74f.), one Skiem (51: 80ff.), one Sattler (51: 87), one Sussmann (52: 2), and possibly also Richard von Strigl (51: 59f.). Other friends of Mises had a very different reputation. Greifs, who had also approached Kelsen to help place his brother Karl, wrote to Mises: “If you see Kelsen, please tell him that I am not astonished about his silence, but embarrassed I am” (Mises Archive 51: 91). But even complete strangers approached him. Leo Fishman many years later recalled his visit with Mises. See Fishman to Mises, letter dated November 11, 1950; Grove City Archive: “F” file.

101 See Mises Archive 51: 78; 52: 2.

102 “Wandlungen der österreichischen Finanzpolitik.” The invitation came from Wilhelm Wieselthier and Julius Löw. See Mises Archive 51: 4; 56: 16.

103 See “Finanzreform und Vermögensabgabe,” Neues Wiener Tagblatt (January 23, 1918); a copy is in Mises Archive 106: 16.

104 See Mises Archive 2: 4.

105 See “Über Kriegskostendeckung und Kriegsanleihen,” copy in Mises Archive 10. Mises commented:

In the summer of 1918 the Army supreme Command organized a course for officers who were to offer patriotic instruction for the troops.... My lecture was published from stenographic notes without giving me the opportunity to read the proofs. (Notes and Recollections [Spring Mills, Penn.: Libertarian Press, 1978], pp. 66f.)

106 See Mises Archive 8: 2ff., 31ff., 36ff.; 9: 14, 162ff. The economic exploitation of occupied territories to finance the war effort has a long tradition. However, World War I added the instrument of all-around planning. See Georg Holzbauer, Barzahlung und Zahlungsmittelversorgung in militärisch besetzten Gebieten (Jena: Gustav Fischer, 1939), pp. 1–18.

107 Dated August 25, 1918; see Mises Archive 51: 69ff.

108 Interestingly, it was the bank director Katz who approached Mises on behalf of a political mission. Apparently, Katz was known to have close ties to top political circles in Vienna, for Mises took his proposals seriously and answered in a letter dated June 20, 1918 (see Mises Archive 51: 104). Presumably Katz had been asked to look out for a suitable currency expert because as a bank director he was supposed to be knowledgeable in monetary matters.

109 See Mises Archive 51: 104ff.:

But such a position cannot be accepted by a Captain of the artillery, a charge I hold, neither outwardly, nor within the context of the inner workings of the administration. In my view, the position in question ought to be comparable to that of the Bosnian secretary of state.

110 Mises Archive 51: 108ff.

111 See Oberst Linoch to Mises (in Bad Gastein), letter dated July 20, 1918; Mises Archive 51: 50ff.

112 His leave was extended through August 25. Mises stayed in the Hotel Badeschloss (see Mises Archive 2: 17f.).

113 See Mises Archive 8: 2ff., 9, 26; 18.

114 See Mises Archive 8: 9.

115 See Mises Archive 8: 20f.

116 See “Bemerkungen betreffend die Einrichtung einer ukrainischen Notenbank” (Remarks Concerning the Establishment of a Ukrainian Central Bank) in Mises Archive 51: 114ff. The report was printed without indication of authorship. However, style and content reveal it to be a pure product of Mises’s pen. See also the various study materials in Mises Archive 51: 95ff.

117 Ibid.