Hans F. Sennholz
Sound money and free banking are not impossible; they are merely illegal. Freedom of money and freedom of banking... are the principles that must guide our steps.
Hans Sennholz (February 3, 1922 - June 23, 2007), professor at Grove City College, was one of a handful of men in intellectual history who were able to perform both of these functions with notable distinction. J. B. Say, Frederic Bastiat, Carl Menger, Eugen von Böhm-Bawerk, Edwin Cannan, the early Lionel Robbins, Henry Hazlitt, William Hutt, Murray Rothbard and Mises himself—these were all men who were blessed with that exceedingly rare combination of abilities needed to conceive new economic truth and to effectively propagate it among the general public.
Not only did they publish academic papers, specialized monographs and scholarly treatises in which they advanced and refined economic theory, they also wrote prolifically for the popular and business press, tirelessly propounding sound economic principles and their applications to the burning issues of the day. Perhaps more impressively, these men wrote so lucidly that even their most specialized works could be read with profit by the educated layman. Without doubt, Sennholz belongs in this august company of economists.
Unfortunately, Sennholz has not always received due recognition, even among fellow Austrian economists, as a first rank economic theorist, especially in the area of money and banking. Part of the blame for this oversight lies with Sennholz himself. He writes so clearly on such a broad range of topics that he is in danger of suffering the same fate as Say and Bastiat. As Joseph Schumpeter pointed out, these two brilliant nineteenth-century French economists, who were also masters of economic rhetoric, wrote with such clarity and style that their work was misjudged by their British inferiors as "shallow" and "superficial."
Happily, their reputations as profound and insightful economic theorists and forerunners of Austrian economics have been finally restored by contemporary Austrian scholars.
Sennholz’s contributions to the rebirth of interest in Austrian monetary and business cycle theory demonstrate the continuing importance of his works today. Along with Mises and Rothbard, Sennholz was one of a handful of academic economists to stand fast against the postwar tidal waves of Keynesian macroeconomics and Friedmanite monetarism that swept over American academia in the 1950s and 1960s and threatened to completely submerge sound monetary economics.
In the late 1960s and early 1970s, a number of now classic works by Sennholz emerged as an island of refuge and hope for a young graduate economics student like myself who was desperately foundering in a sea of unrealistic and contradictory macroeconomic models. These arcane symbols and meaningless equations all led to the same policy conclusion: that the only way to stabilize the economy was for a monopoly central bank to create heaps upon heaps of paper fiat money.
Sennholz refuted these crank models and their quack policy prescriptions in four publications that profoundly influenced my early development as a monetary economist. There were two booklets—The Truth about the Great Depression and Inflation or Gold Standard? published in 1969 and 1973, respectively—and two articles—"Chicago Monetary Tradition in the Light of Austrian Theory" published in 1971 and "No Shortage of Gold" published in 1975.
Together these works provided a clear and systematic exposition of sound monetary theory and its application to contemporary policy issues. Later, in 1979, Sennholz published a valuable book-length treatment of these themes entitled Age of Inflation. He followed up these works in 1985 with Money and Freedom, a book on monetary policy that contained devastating critiques of the monetary policies advocated by "free market" macroeconomic schools of thought then in fashion such as the supply-siders and the monetarists. The book also proposed an original program for returning to sound money.
In all these works, Sennholz displayed a breadth of historical, institutional, and doctrinal knowledge that characterized a bygone generation of monetary economists and is unparalleled among modern hyper-specialized macroeconomic modelers. Furthermore, all of the aforementioned works by Sennholz repay careful study today not only by neophytes in Austrian economics but by seasoned Austrian economists who aspire to advance the frontiers of monetary theory, because Sennholz has been laboring on these frontiers for almost a half century.