Kammer

Daily work for the Pelzer law firm was somewhat less rewarding than his early scholarship. Mises kept an eye out for more convenient career opportunities, and one came sooner than expected. His friend Victor Graetz, who was employed as an economic counselor at the local chamber of commerce, proposed Mises as his successor.

Graetz had worked a few years for the executive office of the Niederösterreichische Handels- und Gewerbekammer (Lower Austrian Chamber of Commerce and Industry, hereafter Kammer). Along with some other young economists such as Alfred Tre-ichl, he had been hired when the Kammer made the strategic decision to strengthen its executive office to increase its leverage on Austrian economic policy²⁶ The new strategy of the Kammer was a reaction both to the expansion of government interventionism in the first decade of the twentieth century, and to the simultaneous elimination of the Kammer from the Austrian parliament. Until 1907, the sixty Austrian chambers of commerce had been directly represented in the Austrian parliaments, according to the older parliamentary model where “representation” referred to predefined interest groups, such as the nobility, the clergy, the city dwellers, but also “commerce and industry.” Then the introduction of universal suffrage supplanted the old system and the Vienna Kammer, which had traditionally been the hub of the whole network of chambers of commerce throughout the country, suddenly found itself without any direct political influence.²⁷

Fortunately for the Kammer, however, the hyperactive new parliamentarians were completely ignorant of economic and legislative matters. Incapable of anticipating the impact of the new laws on the market process, they also lacked the ability to formulate laws in such a way as to ensure their proper enforcement through the bureaucracy. The parliament's incompetence was obvious and embarrassing, but to the Kammer executives it was an opportunity. They started offering technical assistance to the various committees and bureaus involved in the preparation of new economic legislation. The services of the Kammer, coming from the official representatives of the Austrian business world, were readily accepted and quite influential. The Kammer's Executive Office was once again a major player on Austria's economic-policy scene.²⁸

This had positive personal consequences for the members of the executive office. In early 1909, most of them had been offered attractive positions within the higher strata of the government bureaucracy and in major corporations. Treichl had left the Kammer in March 1909 for one such. Shortly thereafter he moved on to become vice chairman of one of the major banks.²⁹ Treichl's friend Graetz had accepted a position as chairman of a large printing company and recommended Mises for the now vacant post at the Kammer. Mises applied in February 1909, mentioning his scholarly publications and stressing practical skills such as his command of English and French (as well as Polish and some Italian) and of stenography according to the Gabelsberger system. It is unlikely that the Kammer received many applications of this caliber; in fact most candidates with Mises's qualifications sought careers in the more prestigious civil service. He was hired on the spot and began work on the first of April.³⁰ After three years of wandering, Mises had finally found an agreeable occupation that would support his after-hours scholarship. He remained in this position for the next twenty-five years.³¹

The Kammer offered me the only field in which I could work in Austria.... I have created a position for myself. Officially I was never more than an officer (Beamter) in the Kammer's executive office...; I always had a nominal superior and colleagues. [But:] My position was incomparably greater than that of any other Kammer official or of any Austrian who did not preside over one of the big political parties. I was the economist of the country.³²

The chambers of commerce fulfilled three main functions: they provided the political establishment with a certain level of control over any emerging commercial power; they provided the commercial establishment with representation in the state apparatus; they helped protect established commercial interests from new competition. Accordingly, the Vienna Kammer had gained its greatest direct impact on Austrian politics in the years 1884–1901, when it most visibly acted as the cartelizing agent of Austrian industry and opposed free trade in industrial products.³³ In the wake of this campaign, the Kammer acquired so much regulatory power that it was increasingly perceived as an arm of the central-state administration.³⁴

It would be a mistake to think that Mises had quit a bureaucratic life to join a business organization. His job did include some of the benefits of private institutions, but it also maintained some of the characteristics of the civil service—both the prestige and the constraints. The main benefit of his new job was something no government agency could offer: latitude for the creative employment of individual energies, and a personal impact on public debate. Mises made ample use of these opportunities to reanimate the spirit of capitalism in an institution where it had become a dead letter.

Mises joined the first section of the Kammer as an analyst³⁵ at the very moment the Austrian tax law was undergoing its first major revision since Böhm-Bawerk and his team of economists had reformed direct taxation in 1896. The Böhm-Bawerkian reforms had established a plan for government finance up to 1909. In 1908, the Ministry of Finance had presented a “reform plan” that did not change anything in the structure of taxation, but increased personal and corporate taxes. Mises's main role within the Kammer in the prewar years was to lead an extended campaign against the official proposal.³⁶ Even though he was a newcomer, he soon surpassed all expectations. Early on he was entrusted with leading the negotiations with the representatives of the Ministry of Finance. He eventually obtained a compromise that reconciled the government's endeavor to increase tax revenue with the interests of the commercial and industrial circles organized in the Kammer.

His first mission was to study the impact of the proposed taxation of beer and other alcoholic beverages. He took part in a mid-May 1909 Kammer conference on the consequences of the increase of the beer tax. The participants criticized the increase with standard economic arguments, pointing out that it would annihilate marginal business.³⁷ But when another Kammer meeting was held two months later on the taxation of alcoholic beverages, the Kammer's attitude had undergone a seismic shift. Mises had taken the bull by the horns and, in the first of many reports he would write in the coming years, raised not only the familiar issue of marginal business, but also the politically delicate issue of the agricultural interests underlying the proposed legislation. Mises pointed out in great detail the existence of inequitable sales quotas for commercial and agricultural producers, and of special subsidies for the agricultural production of alcohol. The meeting denounced these practices, basing all its resolutions on Mises's report.³⁸

Mises then turned to proposed legislation concerning private inheritance and donations as well as corporate taxation and corporate law. He reported on the former topic to a plenary Kammer meeting in early December 1909.³⁹ Mises pointed out that the higher taxation and the complicated procedures of the planned law would hurt business life, and he emphasized again that the stipulations of the new law would treat the agrarian population better than urban circles in commerce and industry. But he also brought more far-reaching considerations into play, noticing that the legislation would subject Austria's courts to the control of the financial administration.

Other young economists also gave reports at the meeting, but theirs did not have as great an impact on the public or the press.⁴⁰ Mises's reports set new standards both for analytical scope and rigor and for their political audacity. The wind of change blew through the Kammer. Even though Kammer executives did not always share the views expressed in the reports of their new employee,⁴¹ they benefited politically from the fact that his seemingly extreme positions were always backed up with such thorough research, that the Kammer was able to reach more favorable compromises in the political process.