1. Roots

0:00Part 1 Young Ludwig Chapter 1 Roots On September 29, 1881, Ludwig Heinrich Edler von Mises was the first in his family to be born a nobleman. A few months earlier, the Austrian Emperor had ennobled Ludwig's great-grandfather Meyer Rachmiel Mises. The family would henceforth bear the new name von Mises. The Emperor also Ludwig's birthplace was the city of Lemberg, the capital of the bygone Kingdom of Galicia and Ludomeria. For centuries Galicia had belonged to Poland before it fell to the House of Habsburg in 1772, when large chunks of Poland were divided among its three mighty neighbours, Russia, Prussia and Austria The Kingdom of Galicia and Lodomeria had not existed before the division of Poland. The Habsburgs chose this name as a quasi-historical justification of the annexation. In the late Middle Ages the Hungarian King Andrew had been a Rex Galiciae et Lodomeriae, that is, a king of the old Ruthenian principalities of Hallitsch and Vladimir. Even though the Habsburgs were the emperors of the German Reich, they never incorporated Galicia into Germany, but kept it the northernmost province

1:35of Austria, the Habsburgs' personal dominion. At the time of Ludwig's birth, the Habsburg Empire was the second-largest political entity in Europe, second only to Russia. Until the end of the seventeenth century, the Habsburg dynasty had also ruled Spain and its overseas These Colonies All Around the World Not long before Mises was born, the Habsburgs had ruled northern Italy, as well as Belgium and the Black Forest region in Germany. By 1881, the Empire had lost these latter dominions, but were still composed of twelve major ethnic groups and hosted six large religious bodies. Young Ludwig grew up in a powerful nation were the rich mix of cultures and a diverse ethnic heritage.

2:21In 1918, Galicia fell back to Poland, and today, Lemberg and the adjacent lands belonged to Ukraine. Other historical names of Lemberg were Lviv, Lvov, Lviv, Lviv, Lvov, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv, Lviv. Even Given by Austrian standards, Galicia was an extreme case of ethnic richness. Most of its citizens were Poles, Ruthenians, Jews and Germans, but there were also substantial numbers of Armenians, Greeks and Italians. While Jews were an often tiny minority in virtually all other Habsburg lands, Eastern Galicia's Jews represented an actual majority. At the time From the time of Ludwig's birth, they were nearly the largest group in the city of Lemberg, second only to the Polish majority. In 1848 the Galician population totalled 5.2 million.

3:20Among them were 2.2 million Roman Catholics, essentially Poles, but also Germans, 2.2 million Greek Catholics, Ruthenians, 333,000 Greek Orthodox, and 333,000 Jews. The city of Lemberg had some 63,000 residents in 1840, of which 30,000 were Roman Catholics, 4,500 Greek Catholics and 25,000 Jews. The Jews had come to the country because the Catholic rulers of Poland, for more than 500 years, had been more tolerant to a Jew than had any other government. Legal protection for Jews started with the statue of Carlitz in 1264 the 14th century King Casimir the Great and his successors upheld and extended these rights during the next 200 years, at a time when Jews were expelled from virtually all other countries of Europe. Over the centuries the Jewish community in Poland gained ever greater legal autonomy, and by the end of the 18th century there was virtually a Jewish state within Poland. This country had become a homeland for the Jews of the entire world, a new Holy By 1750, some 70% of all Jews lived in Poland, a number that grew even during the Polish

4:42partitions. By 1780, Poland was home to more than 80% of all Jews worldwide. Because the early influx of Jews was from Germany, the German-Jewish dialect of Yiddish became the A simulation to the Polish language and culture was slow, if it happened at all. The strongest assimilation occurred among the Jewish intellectual and economic leaders, who shared business ties and other common interests with the Polish ruling class. The eminent Austrian historian and political philosopher Erich Ritter von Kuhnfeld-Ledin claims that this Polish background had an important impact on Ludwig von Mises' early development.

5:29Konrad Ledin argues that young Ludwig was influenced by Polish political thought and political institutions, which cherished an aristocratic ideal of republican liberty. Movements for liberty, as a matter of fact, have typically been carried on by the nobility which always opposed centralising pressure and control. We saw this in England with the by the Magna Carta, in Hungary with the Golden Bull, in Aragon by the stubborn Grandes, and in France by the Front. In this respect Poland went further. It became an elective monarchy in 1572 and called itself a republic. One of the slogans of this very independent nobility was, Menace the foreign kings and resist your own. Political power rested with the nobility, which, before the partitions, had no titles, and its claimants comprised a fifth of the population. It was a nobility without legal distinctions, and a proverb said, The nobleman in his farmhouse is equal to the magnate in his castle, and since all noblemen were equals, they could not be ruled by majorities. In the Parliament, the same, the opposition of

6:44This Polish political tradition permeated the culture of the Polish upper class in Galicia and must have had a considerable impact on families such as the Miseses, who strove to be received into the higher social strata at the turn of the 18th and 19th centuries. While his Polish heritage had its impact on the political thought of Ludwig von Mises, The cultural aspirations of his ancestors pointed in a completely different direction. Throughout the 19th century, in fact, the Mises family helped spearhead the Germanisation of their native Galicia. In their eyes, German culture was the embodiment of social progress.

7:29The liberal policies pursued under Joseph II at the end of the 18th century promised to bring greater liberty for the Galician masses and emancipation for the Jews. This This was exactly what left-wing secular Jews had been striving for. At the turn of the 18th and 19th centuries, these groups became pro-German under the determined leadership of wealthy merchants such as the Mises family. They supported the new political administration, they welcomed immigration of non-Jewish ethnic Germans, and they promoted the infusion of secular German culture into Jewish circles. Members of the Mises family played a leading Heinrich Gretz reports Since the wars with Napoleon, there had arisen small circles in the three largest Galician communities of Brody, Lemberg and Tarnopol, banded together for self-culture, the promotion of education and a war of annihilation against racism. In Lemberg, a kind of literary circle After 1772, the Habsburgs imposed a cast of German-speaking bureaucrats on the country, had also encouraged German settlements on land confiscated from the Polish kings, the

9:09Jesuit order and various monasteries. The Germanisation of Poland went on for almost a century, during which the Polish aristocracy repeatedly tried to shake off Austrian rule. After a failed attempt in 1863, the old political establishment of Poland finally came to terms with the Habsburgs, promising loyalty of its Kolopolske, Polish club, to the Austrian crown in exchange for a free hand in ruling Galicia. In 1867 the Polish aristocracy obtained a Galician resolution in the Austrian parliament which granted them a large degree of autonomy in this easternmost part of the empire. The Polenklub in Vienna became one of the main factions supporting the Austrian governments until the eventual disintegration of the empire in 1918. At the same time, the Germanisation of Galicia was rolled back and eventually died out. Only the traditional pillars of German language and culture remained – civil servants and secular Jews.

10:15In 1880 there were some 324,000 Galicians whose first language was German. In 1910 only Until 1867, pro-German orientation was the basis of the Mises family's influence in local political affairs. had made their influence felt even in national circles once the appearance of railroads brought Galicia into ever closer economic ties with the rest of the Habsburg Empire.

11:04It seems that railroad construction was a spin-off of Jewish initiatives to promote the industrialisation of Austria. Thus, William Johnson states that a few years after 1831, Solomon Rothschild persuaded Metternich to promote industrialisation in the Habsburg domains. In the second half of the 19th century, railroads were an advanced technology that profoundly transformed economic, political and social relationships. Railroad companies paid the highest salaries, provided opportunities for rapid career advancement and attracted the most energetic and best-trained young men of the time. Virtually all these men belonged to a new intellectual class that had emerged during the 19th century, the engineers. Typically, the children of bourgeois families, engineers epitomised intelligence, hands-on pragmatism, goal orientation and success.

12:04Railroads came to Austria in the 1820s, and by the early 1840s the government was trying to take them over. During the next ten years many Austrian lines were socialised until until the cataclysmic events of 1848 to 1849 brought the state finances into such disarray that, starting in 1854, a re-privatisation became necessary. Once again under private ownership, the railroads reached Galicia. The Mises family was strongly involved in both of the two major Galician railroad ventures, serving as board members A generation later in the 1870s and 1880s, Ludwig's father Artur Edler von Mises, born on September 6th, 1854, worked for the Czernowitz Railroad Company while his uncle Emil was an engineer for the Karl Ludwig Company. Artur von Mises had married Adele Landau, born on June 4th, 1858, from Vienna. Her family came from Brody, an almost exclusively Jewish A few years later, they had a third boy, Carl, but he died of scarlet fever when Ludwig was twelve years old.

13:32There's native Brody was in those days a free trade zone for commerce with Poland and Russia. Her family had made good use of the profit opportunities and become affluent and influential. Her marriage with Arthur was not only a matter of love, it was also meant to cement a more encompassing alliance between two of the leading families of Eastern Galicia. Significantly, at the 1873 elections to the Austrian Parliament, all three Jewish MPs from Galicia had family ties. Joachim Landau was elected for the city of Brody, Natan Kallia joined the Parliament as a representative of the Brody Chamber of Commerce, and Ludwig's uncle Herrmann was elected for the county of Drohobitz. Joachim Landau was the brother Father of Ludwig von Mises' grandfather on the maternal side. Ludwig's grandmother on the maternal side was a cullier, his grandfather a landal.

14:31More than any other male family member of this generation, Hermann Mises featured the virtues that had made the Mises family so successful, and which a generation later would also characterise his nephew Ludwig – enthusiasm, determination, intelligence, love for his fatherland, leadership and unpretentious and clear writing. After directing a branch office for a large insurance company and exploring for petroleum in Galicia, Hermann moved to Vienna in the early 1870s to work for a major newspaper, the Morgan Post. In 1873 he became a one-term member of the Reichsrat, the Austrian parliament, for the Galician district of Sombor Strych Drohobitsch, then returned to journalism, writing for another major paper, the Wiener Allgemeine Zeitung, where he was a tireless advocate for the industrialisation of Galicia.

15:27There seems to have been an oil boom in what came to be called the Galician Pennsylvania, Hermann's election district around Drohobitsch, an area south-west of Lemberg. At the turn of the 19th and 20th century, Galicia was the number four producer of petroleum worldwide, of Russia, the United States and the Dutch West Indies. Hermann and his brothers and cousins continued a tradition of achievement that can be traced back at least to their great-grandfather Ludwig's great-great-grandfather Ephraim Fischl Mises. Fischl was a large-scale fabric merchant and real estate owner in Lemberg. After the Polish partition of 1772, the inhabitants of this poor rural area greatly profited from the The new Austrian rule, which brought unprecedented liberties for the rural population and also for the cities, even though Maria Theresa, Empress at the time of the partition, was not a champion of Jewish liberties. Some of her most important consultants, the famous Sonnenfelds, for example, were of Jewish origin, but she would not tolerate Jewish residents in Vienna. Jews are expelled from Vienna under Leopold I in 1669-1670. A few years later

16:42these measures were rescinded rather half-heartedly, and so things remained as in 1670. As far as Maria Theresa is concerned, cultural historian Robert Cahn states, Within the first five years of Maria Theresa's reign, the Jews were driven out of Bohemia, 1745, and Less than three years before her death, less than five years before Joseph II issued the famous tolerance patent in 1777, she wrote these words, In the future no Jew shall be allowed to remain in Vienna without my special permission. In the cities that did tolerate Jewish residents, such as Lemberg, Jews were forced to live within special areas, the Judenviertel, they were generally prohibited from trading in and the forbidden districts of the Empire, and even those who had permission to trade there on business days could not stay overnight. So it remained from her reign well into the 19th century. Despicable as the system of regulations was, it allowed for exceptions. Thus the city of Lemberg would authorise Jewish residents outside of the Judenwörter if the person in question fulfilled three conditions. He had to be wealthy,

17:59He had to be educated, and he could not wear traditional Jewish clothes. A case in point was Fischer in Mises, who enjoyed the privilege of living and trading in the forbidden district of Lemberg, where he also acted as the president of the secular organisation of local Jews, the Jewish Cultural Community, Israeletische Kultursgemeinde. On June 23, 1800, Fischer's wife gave birth to the true founder of the Mises dynasty, The inexhaustible polymath Meyer Rachmiel Mises. The boy quickly proved to be successful in many fields, and his father made him a partner in his firm early on. He also arranged a suitable marriage with Rosa Halberstam, whose father ran an important German-Russian export business. Barely thirty years old, Meyer became president of the Lemberg Jewish When his father died in 1842, he set up his own trade firm. Still in his forties he was not only a successful businessman, but also an influential social leader, elected several times into the Lemberg City Council, founder of an orphanage, of a Jewish school and a

19:22and a Jewish kitchen for the poor. He also created several institutions providing funds for scholarships and other public welfare-oriented purposes. These activities must have played a decisive role in his eventual ennoblement. Throughout Franz Josef's reign, contributions to public objectives or the creation of public welfare-oriented funds were instrumental in the ennoblement of wealthy industrialists, merchants or bankers. Mayer was the leader of the Secular Pro-German Wing within the Lemberg Jewish Religious Community, in which he held various positions beginning in 1840. The top three items on the agenda of the enlightened Jewish faction under Meyer were 1. spreading the German language, 2. creation of a Deutsch-Israelisches Beethaus, a progressive synagogue in which services were held in German, and 3. the creation of a German-Language Jewish School. The main stumbling block for these projects was the local rabbi, a leader of the Orthodox Ashkenazi. After the death of this man in the early 1840s, the Mises faction brought in Rabbi Abraham Korn, who was well known for his progressive

20:37views. Once in Lemberg, Korn was adamant in pursuing his agenda and must have driven his In September 1848 he was murdered. Gretz remarks, In almost every large community there arose a party of the Enlightenment or the Left which had not yet broken with the old school, but whose action bordered upon secession. By the ultra-orthodox they were denounced as heretics on account of their preference for pure language and form, both in Hebrew and European literature. Meyer Rachmiel Mises was probably among those who, after 1846, successfully led the country's bloody insurrection against the Polish nobility. These aristocrats had tried to re-establish the ancient custom of robot, part-time serf labour for the nobility that had slowly declined after the Austrian takeover of Galicia at the end of the 18th century. Two years later, when revolutionary insurrections broke out in Paris, Berlin and Vienna, Meyer helped bring the fight to Galicia. He was one of the four Jewish signers of a March 1848 Galician petition to the Emperor, demanding, among other things, legal equality for all social

21:54classes, emancipation of the Jews, the creation of a Galician militia and of a Galician parliament. The petition had been initiated by the Polish politicians Smolka, Tymilkowski and Kulczycki. It also demanded the introduction of the Polish language in public schools and civil service. As an initial result, all forms of serfdom in Galicia were affirmatively abolished on April 17, 1848, though the Polish aristocrats received some compensation from the public treasury. In the same year, Mayer Rachmiel Mises was elected to the Galician parliament. He had now become a visible member of the unofficial Jewish nobility and was actively He may even have been one of the democratic agitators who caused such headaches for the defenders of the monarchy.

22:53This was more than enough for a lifetime, one would think, but the most active and challenging part of his life still lay ahead. It came when the railways which had begun crossing the European continent in the 1840s Reached Galicia in the mid-1850s. Meyer and his son Abraham positioned themselves in this business and were contracted by the Austrian army to transport wheat from Galicia in 1859. The army was preparing for its Italian campaign. The wheat deal brought them in touch with the financial empire of the Rothschild family. In 1855 Anselm von Rothschild had established The Credit-Anstalt Bank, which specialized in financing industrial ventures and would soon become the largest bank on the Vienna stock exchange. One of its first major operations was to finance the Italian campaign. The deal must have gone well for in 1860 Abraham accepted a position as director of Credit-Anstalt's new Lemberg branch office.

23:57Meyer had moved to banking three years earlier, becoming a director of the Lemberg branch Anselm von Rothschild's son, Albert, became a general counsellor to the Austrian-Hungarian Bank and was commonly regarded as the key figure in the Austrian financial market. It is likely that his father played a similar, though less publicised, role in the National Bank The thorough repositioning of the Mises family was complete when Meyer's younger son Hirscher, Ludwig von Mises' grandfather, became a partner and managing director of the Hallerstein and Nierenstein Bank, and his firstborn grandson Hermann rose to the directorship of the Lemberg office of the Phoenix Insurance Company. Hirscher Mises was married to a member of the Nierenstein family, Marie Nierenstein.

24:55The Mises' economic interests, starting in a provincial trade company, had now shifted to the most profitable national industries, railroads and banking. In April 1881 Emperor Franz Josef granted Meyer a patent of nobility, and in September of the same year granted him and his lawful offspring the right to bear the honorific Eidler, a lonely patriarch, Meyer Rachmiel Eidler von Mises survived both of his sons and his youngest daughter Kara. When he died on February 28, 1891 in Lemberg, all of his grandsons had left for Vienna. This exodus was by no means exceptional. Tens of thousands of Jewish families from the eastern provinces had seized the opportunities provided by the The liberal post 1867 regime, which had abolished all legal impediments to Jewish migration, and established themselves in Vienna. Most of them held more secular views than those who remained in Galicia. Liberal Vienna held the promise of escape from the restrictions of small religious communities and of secular integration into the larger world. Before After 1867, city life in Lemberg and other major towns could offer similar prospects

26:19in Galicia, but by giving cultural supremacy in Galicia to the Polish club, the Galician resolution had quickly destroyed these prospects. The Polish aristocracy was adamant in suppressing any threat of social change. Liberalism and capitalism were not welcome. Neither were German language schools, the great harbingers of Social Change in the preceding decades. In the Lemberg Jewish community, the rollback of German cultural supremacy was completed in 1882, when a pro-Polish president was elected to the Jewish cultural community. In the case of Ludwig's father Artur, however, the crucial circumstance prompting his departure for Vienna may have been more prosaic. Austrian state Finances had recovered in the 1870s and in the 1880s the government again took control of the railroad industry. The lines that had the greatest military importance were nationalised first including those connecting Vienna with the borders of Russia in Galicia. In the wake of this takeover Artur von Mises was accepted into the civil service as a construction councillor to the Railroad Ministry in Vienna. Other family members had followed in the same path.

27:38By the 1890s, at least three of Arthur's brothers and cousins, Emil, Felix and Hermann, had left for Vienna too. Felix was a chief physician at the Vienna General Hospital and Hermann was a reputable journalist and politician. In those days, joining the civil service in in Vienna was a big improvement in any man's career. Employment in public administration was comparatively rare and far more prestigious than any other field of activity. The family moved into an apartment at Friedrichstrasse 4, its home for the next 15 years. Adele had a maid and a cook to assist her in running the household, standard in bourgeois families, while her main duty and passion was the education of her sons. This involved most notably placing The Miseses had become a typical Jewish family for the Vienna of that time, as described by cultural historian William Johnston. It was characteristic of them that a businessman father would marry a wife who was more cultivated than he was. Together the couple would settle

28:47in Vienna, often in the Leopoldstadt district, where he established a career while she supervised and the education of the children. The cultural ambition of the wife was then passed on to the sons who aspired to excel their fathers by entering one of the liberal professions. By all human standards, Adele von Mises did an outstanding job educating her two sons. Each did far more than just surpass his father. They both turned out to be scientific geniuses Studies, Ludwig in the Social Sciences and Richard in the Natural Sciences. Ample administrations of motherly love provided the foundation for their astounding achievements, but there was more. Adele taught her sons to care for others. Charitable works were a quintessential part of her upbringing. She taught them to be modest and frugal. Ludwig was a rigorous bookkeeper throughout his life. He kept track of his income and daily expenditure in a personal ledger. She taught them to honor truth and virtue more than the encomiums of the world. She taught them the art of writing, and she taught them always to strive for excellence.

30:03In all of their later endeavors Ludwig and Richard would be thorough and systematic. In their professional lives this was a matter, of course, but it also permeated all their other activities. Ludwig, for instance, sought instruction even in popular sports, such as Mountain Hiking, and when he played tennis it was always with a trainer. Like their mother, Ludwig and Richard wrote with a clear and unpretentious style. From childhood they set for themselves the highest standards, and as they developed taste and expertise, they would judge their own achievements and those of others in the light of these standards. Ludwig was especially adamant in his refusal to allow social or political considerations As a mature man, he would openly despise the great majority of his professorial colleagues, not for their errors, but for their dilettantism.

31:09About the typical German economist, he wrote, such studies of economic state science necessarily They repelled young people with intelligence and thirst for knowledge. Instead, it strongly attracted simpletons. They were deletants in everything they undertook. They pretended to be historians, but they scarcely looked at the collaborative sciences, which are the most important tools of the historian. The spirit of historical research was alien to them. They were unaware of the basic mathematical problems in the use of statistics. They were were laymen in jurisprudence, technology, banking and trade techniques. With amazing unconcern they published books and essays on things of which they understood nothing.

31:56His complete inability to suffer fools would make him many enemies and almost ruin his career. It gained him the reputation of a stubborn doctrinaire. Mises nevertheless got were not along on his rocky road, thanks to his outstanding gifts, among them the natural gifts from his native Galicia. In this respect, too, he was a typical case. Jewish lawyers, doctors, professors and journalists abounded after 1880, and there were not a few ranches like Stefan Zweig or Otto Weininger. These men, who had attended gymnasium and university Society in Vienna often had grandparents who had lived in villages in Galicia or Moravia, close to the soil and to traditional Jewish culture. However ardently these young sophisticates might try to secularise themselves, they could not cut off all the roots in the Jewish villages.

32:52They retained an earthly energy, a love of nature, a breadth of horizon that served them well and accorded with Vienna's traditions. After 1860 Vienna's Jews were not products Newcomers of generations in an urban ghetto like that of Berlin or Frankfurt. They were newcomers to the city who brought an energy, an ambition, an appetite for culture that made them capable of astonishing innovations. Earthly energy, breadth of horizon, ambition and appetite for culture also characterised young Ludwig and these qualities would lead him to astonishing innovations. The next chapters show how this newcomer conquered first Vienna and eventually the world of ideas.