New Life in America

0:00Ladies and gentlemen, good morning, welcome to the ninth meeting of our seminar on the lifetimes and work of Ludwig von Mises. We are on the last day of our seminar, it's now time to talk about Mises in America. So this is only 20% of our seminar, but it's also only 20% of the book. It might have been justified to talk more about Mises on America, but there were other good studies already available on Mises' time in America, much more personal testimonies and so on. There is a very good book, a very good doctoral dissertation by Julian Delgaudio, published in 1986 by the University of Michigan, which deals with Ludwig von Mises' impact on the intellectual life in the United States and with his life in America, from 1940 to 1986. Well, Mises did not live until 1986, but he examined the impact up until 1986.

1:11So it was not necessary for me to repeat all the things that could be found in this book, but to emphasize the certain elements that were neglected there, and in any case to cut back short in compared to the analysis of his lifetime and work before the American years. So, therefore, a relatively minor quantitative presence of Mises' American years. So, we'll have two lectures today on that period of his life, the last third of his life. We'll first, this morning, talk a little bit about how he started the new life, how he came to be integrated in the American context. and then this afternoon we will talk more particularly about the impact that he had through the publication of Human Action, because Human Action gave birth to a Misesian movement.

2:06Mises arrived in New York City on August 3, 1940. I told you yesterday that he left Lisbon, therefore Europe, with a ship by the name of Europe, July 25th and so on. About a week later he arrives in New York City and it is in this city that he would stay for the rest of his life. Of course he would leave it for vacations and visits and talks and so on, but he became eventually a New Yorker. In New York, he found many friends, so he did not have to start in an emotional or cultural desert.

2:51Many friends and associates from Vienna Times and also from Geneva were already there. And in fact, almost all seminar members, almost all members of his private seminar were at that point in New York City. So you could have resumed the sessions of the seminar, but you did not because there were more urgent things to do. Even the family doctor was there. So there was a context. The difference was of course that in Vienna where everything was much smaller, much more concentrated, it was easier to get together. In New York, a great metropolitan area, people were a little bit more dispersed. So Mises did not mount an American edition of his private seminar, but he had to deal first with a more urgent problem, which was money.

3:44So he arrives there and of course he has some savings from his Geneva years, he had a good salary in Geneva, but now there is no money at all, no income at all. and he has been cut off of other assets that he had held in Austria and in Britain. In Austria, of course, there was his pension funds. He was in early retirement and he had a very decent pension. But with the Nazi takeover of Austria in 1938, they cut off all payments. So, they did not honor the contractual obligations that Mises had with the Austrian government. Very nasty thing, but what do you expect of such bandits?

4:32In Britain, he had some money too, due to his book publications. He had published The Theory of Money and Credit and then Socialism by British publishers in the 1930s. and he had a fairly decent bank account but then of course what happened with the start of the war there was immediate foreign exchange control so you could not export the money anymore. So what do you do? You could use it only within Britain. So Mises gave an authorization to Hayek who was a professor at the London School of Economics and then Hayek, well he could not ship the money to the US but he did something else. He bought a highly marketable good that didn't weigh too much and had a high monetary value per weight unit and shipped it over to the US.

5:32Now the question for you is what might this have been? Something that intellectuals are very close to emotionally. Books, exactly. So Hayek bought rare books. Among other things, the first edition of Adam Smith's Wealth of Nations, two complete sets of Jeremy Bentham's collected works and similar things. And he shipped those over to the US because the American and British authorities had not yet come to the idea that value could be smuggled out of the country in this way. But you see also that Mises must have had quite a sum on his bank account because even in those days already a first edition of Adam Smith's Wealth of Nation was not to be had for nothing.

6:27So this was some money, but it was still not an income, you had to find new sources of income and that was certainly not easy as we can imagine a man of 59 years. Today if I look around in France, some people get fired, they are 35 or so, or 25, what am I going to do now, my life is ruined and so on. and it's even more difficult in the case of intellectuals of course. Intellectuals from the point of view of capital theory are highly specific assets and highly specific factor of production. It's not easy to reconvert them into something else. Mises tried various things and he especially was interested in finding academic employment.

7:15So, he gave various talks and presentations to schools, in particular in New York City, and attended meetings of professional associations, such as, for example, the American Economic Association meeting in December 1940, New Orleans. So we can infer from that he was quite in desperate need of money because he didn't attend many other meetings of this sort later on. Things eased up on the academic job market after December 1941 when the US entered World War II. Then the U.S. government became the largest employer of economists.

8:04So people like Machlub, Morgenstern, Friedman, of course, John Kenneth Galbraith, and in fact thousands of other economists were employed by the U.S. government. But Mises could not really profit from this for reasons that are rather patent. Okay, so first of all he was old. Second, he had already difficulties given his views being employed in his native Austria in World War I. So it's easy to understand that it would have been even more difficult for him to find employment in a foreign country in wartime at a much later stage. So, the US government was not the suitable employer for him, he had to find something else.

8:53There was one little outlet that he found through his new friendship with Henry Hazlitt. American journalist, of course, later on became a famous Austrian, famous proponent of Misesian economics. In those days, Henry Hazlitt worked as a journalist editorialist for the New York Times and he had known Mises not personally but only through his writings and Hazlitt had written in particular a highly sympathetic book review of the English edition of Socialism so Mises was aware of the existence of Hazlitt and one day called him, that was quite a funny incidence, so I will read this for you, how Hazlitt recalled how they met in New York, so Hazlitt, sometime in 1940 I got a telephone call, The voice on the other end said, this is Mises speaking.

10:00Of course he said it somewhat different, this is Mises speaking or whatever. As I've told many of my friends since, it was as if someone had called and said, this is John Stuart Mill speaking. I had referred to Mises as a classic and you don't expect a classic to call you on the telephone. Anyway, that led to our acquaintance, and so Hans-Eck of course perceived the need and he got Mises to write editorials for the New York Times. That was not much. Mises wrote maybe eight or so editorials starting in March 1941, each of which was paid $10. Okay, now we've always got to think, right, $10 to get a rough idea at $35 per ounce of gold.

10:49Okay, so it would have been, whatever, $200 today, which is not bad for a verbal editorial, but it's certainly not something that would keep you going for a long while. So what really saved Mises eventually was, again, his connection to the Rockefeller Foundation. The Rockefeller Foundation funded a position for Mises at the National Bureau of Economic Research. So starting December 1940, Mises was hired by the NBER, but the entire funds came from the Rockefeller Foundation, $2,500 a year. Now, to give you a rough idea of what this meant, well, college professors in those years in the US were paid in the average around $2,000.

11:43Okay, so Mises was a highly paid college professor. At the universities, for full professors, salaries were much higher. Mark Loeb's starting salary at the University of Buffalo in 1935 was $6,500, so it's very different. So this kept him going for a while and he continued at first the writing and research projects that he had already started in Geneva in Geneva when he was finished with Nationale Ökonomie and he continued writing in German. So he definitely had at that point in mind to return to Europe at some point.

12:30There are two projects that we might mention in particular. One is Omnipotent Government, the book that was eventually published in 1944, which he had written in German first. So at NBR they found him a translator and the manuscript was translated and he worked the manuscript over. This happened in those years. And he also worked on a proposal for the political reorganization of Eastern Europe in those days. When he made plans to return to Vienna in 1937, he had written a similar paper in which he explained how and why Austria should seek a political union with other states in the Danube basin, and this in order to preserve political independence.

13:37So, Mises saw that, well, Austria but also the other little countries in the Danube area, that is, Yugoslavia and Hungary, Romania, were just in the middle between three mighty neighbors, Russia, Germany and Italy, each of whom pursued an expansionist and aggressive foreign policy. So it was just a matter of time until they would be conquered and annexed by any of these powers, just like Poland had been conquered and then partitioned among Prussia, Russia and Austria in the late 1700s. So Mises proposed a political union in the Danube area in 1937 and now when he was working at the NBER he worked on a proposal for the establishment of an Eastern Democratic Union which implied the political unification of virtually all of Eastern Europe, not just the Danube Basin but also Czechoslovakia and Poland in particular.

14:49in Poland in particular. So all of Eastern Europe too. The idea was to gain a sufficient mass, a sufficiently large political entity that could withstand aggression from Germany, Russia and Italy, would have enough resources to defend itself. These proposals have recently been published by Liberty Fund, in volumes edited by Richard Eberling, who has collected these documents. Now this is not at all something that we find in Moscow, so this has been available all the time, could have been published 30 years ago or 20 years ago for anybody who cared. These manuscripts have been in the archive of Grove City College, the archive where Mises' entire post-war correspondence is still stored.

15:43and so after Mises' death in 1973, his wife was again in need of money, a very similar situation as in 1970, so she sold his library, the library was acquired by Hillsday College, very beautiful room, so if you ever have the opportunity to travel to Michigan, go visit Hillsday College, go see the Mises Library, they have set up a separate room and wonderful bookshelves, with books in different languages, English is a minority language there, and she sold his correspondence and his files, maybe except for the love letters that she sent him, but some love letters are there too, to Grove City College, so Grove City College is another major source for biographical work of Ludwig von Mises. There we also find these manuscripts.

16:46Fortunately, now they've become available in beautiful editions by the Liberty Fund. So it was a difficult start for von Mises. He must have been very frustrated. They survived. And then things started to improve slowly in the second half of 1941, so about a year later. The first year must have been very hard. In the summer of 1941, he had a first vacation in the US. He spent a vacation in the White Mountains in New Hampshire, which reminded him of the scenery of the Alps. Now, this is something that we did not talk about before. Well, I think I hinted at it, but Mises was a great hiking fan, great mountain hiking fan.

17:36He spent all of his summer vacations in Austria, in the Austrian Alps, in particular in the town of Bad Gastein. It's a resort town in the western Alps of Austria, beautiful setting. And so he always refreshed in mountain air where he could climb and had great views and so on. and so on, that is exactly what he also found in the White Mountains. Margaret von Mises was very happy to see her husband climb a different peak every day, so he gained strength and courage. They also found in that period a permanent home. They moved to an apartment on 777 West End Avenue.

18:21Go visit New York City. Just stroll there. It's not very far away from Columbia University. It's not very far away once you are in the central park, the southern edge of the central park. It's a 10-story building or so. Mises was, I believe, in the top story. And that's where they moved in October 1941 and stayed until his death and beyond his death. Margaret stayed there until she died in 1993. Well, the economic explanation is that there were rent controls, rent control laws, right?

19:06So they continued to pay a rent very similar to the one that they paid in 1940 throughout this time. So it's a splendid location. And in the second half of 1941, he started writing in English. So he must have during the vacation in the White Mountains made new resolves and come to the decision that he would start a new life really in America and not return to Europe. To Hayek he wrote in those days, quote, As I do not want to increase further the collection of my posthumous works, I am writing now in English.

19:53I hope that I will succeed to finish within a year of volume dealing critically with the whole complex of anti-orthodox doctrines and their consequences. He went on praising Hayek's essays on the counterrevolution of science, which were later published in a book with this title, The Counterrevolution of Science. And he said, I am however rather skeptical in regard of the practical result of our endeavors. It seems that the age of reason and common sense is gone forever. However, reasoning and thinking have been replaced by empty slogans. Does this remind you of something? A few days ago, Mises said, Alvin Hansen delivered a lecture on post-war economic reconstruction.

20:45The old stories about full employment, scarcity of foreign exchange, the need for foreign exchange control and planning, more self-sufficiency, etc. He did not even mention the problem of capital shortage. He seems to believe that taxing the rich would make it possible to maintain the pre-war standard of living of the masses. Two centuries of economic theory were in vain, as they could not kill the mercantilist prejudices. The audience, many ex-members of the Verein für Sozialpolitik, German Association of Economic Policy, expressed full agreement with the lecturer." So, but still, right, so he went on, was not very encouraging, we'll talk a little bit later about this, but he went on.

21:31Things also improved, at least from his perspective, when in December 1941 the US joined the war. And so there was therefore the prospect to get rid of the most aggressive socialistic government, namely the Nazi government in Germany and its allies. Now, Mises must have taken the resolve to start a new life in America, but there was one attractive alternative, could at least have potentially given another outlet for him, and this would have been a career in Mexico.

22:19In 1941 he renewed his acquaintance with a Mexican businessman by the name of Montes de Oca, Senor Montes de Oca. They had met in the pre-war times in Europe at meetings of the International Chamber of Commerce and Montes de Oca had been a great admirer of his and he proposed that he was very happy to meet Mises in New York, in New York, Siem over in the Americas, and so they, he proposed Mises two projects. First one was to arrange for a Spanish translation of socialism. And the second one was to come as a visiting professor to New York City, to Mexico City in 1942.

23:06So both projects realized. Maybe in this context a little bird on translations, so Mises was outright horrified at most translations of his work. We already mentioned the problem of the somewhat inadequate translation of the title of his money book. But he said in correspondence relating to this Spanish translation of socialism, he said, and Socialism, he said, well, most of these translations are bad, there are many distortions and many counter-senses in these translations and he praised only one translation as really good, which was the French translation of his book Socialism.

23:53So this was a good work and therefore he also proposed that the Spanish translation be done from this French edition because Montes de Oca could not read German, but he could read French. So it was done from the French edition. So for you, Mises students, this means, well, always be careful, always be careful when you read translations from his German works of the time, but you can trust the French edition of socialism. So, Mises went to Mexico for six weeks in late January to March 1942. And even before he arrived there, Montesioca wrote him and said, well, we actually would like to hire you.

24:39We'd like you to do exactly what you did in Vienna, be a leading chief economist of the Chamber of Commerce. In fact, there were several chambers of commerce in Mexico City, It was proposed to be the chief economist of two chambers of commerce and then teach also at the university. Whichever university you wish, pick a university and you will teach there. Mises said, okay, well, this sounds very interesting. I would like to first become acquainted with the conditions on the spot and so didn't commit to anything. went to Mexico City and talked to people of excellent state and received great generosity and attention and stayed in the local ritz. So it was good old times again. And so Mises gave a seminar in English and also a couple of lectures in French.

25:34The School of Economics was a school of law, both taught at both places, and he talked to the representatives of the chambers of commerce. and did still not commit to anything and said, well, okay, I've got to think this over. And they agreed that he should start off by writing a study on economic conditions, present economic problems in Mexico. What should be the economic strategy for Mexico? And that's what he did in the coming months. So eventually, when his host, Montes de Oca, sensed that, well, Mises was not too enticed, well, he was interested but not really enthusiastic about this, he propped up his offer and said, well, we could also do something else, we could establish an institute of the social sciences, purely economic outfit and could bring in people that you like.

26:32Now this was much more to the liking of Mises and in the early 1940s there would have been, in fact, a real possibility of setting up something like this because many European intellectuals were available, many European intellectuals had to come to the US and did not have found a suitable employment. Later on, they would. At the end of the war, most of them were accommodated very well, such as Mises, but in 1940, 1941, 42, 43, things looked different. It would have been possible to set up such an institution in Mexico City with the first world-class faculty. So, people like Werff, Mises, Arnold Plant, Röpke and so on, they were available.

27:27But eventually did not come to this. Mises did not go to Mexico City. The Institute of the Social Sciences did not see the day and so on. So, these were from his point of view at the time, so he was torn a little bit. So let's look back to New York and his activities in the Big Apple and his professional integration there. Before we come to the steps that fully paved the way to his integration into American life, There was one last activity that also kept him or drew him back to Europe, although he had already made the resolve to stay in the US, namely his cooperation with Austrian expatriate groups.

28:21So there were many expatriates there where they had to flee the Nazi government and they were making plans for the eventual political economic reconstruction of Austria after World War II. Always thinking that, wow, the Germans would lose the war, which eventually also happened. Now, among these expatriate groups there was one group led by monarchists and which set up an Austrian national committee in which Mises cooperated.

29:10Now, Mises did not cooperate because he was a monarchist, but because this was the only patriotic group, that is the only group of expatriates that prepared the restoration of an independent Austrian Republic after World War II. And the fact is that, well, only right-wingers were doing this at the time. The social democrats still strove in those days for the integration of Austria or the continued integration of Austria in Germany. Of course, they didn't like Hitler, but they at least wanted to keep the possibility open that after the war, there would still be a greater Germany, including Austria, this time led by social democrats. So the only group that strove for an independent Austria, which was also what Mises was aiming at, was led by monarchists.

30:04Now the monarchist movement was very strong in Austria before the war. This had not been apparent during the 1920s because the government actively, or the various governments, actively suppressed this monarchical movement. Movement, and they did this at the behest of the Austrian neighbors, Czechoslovakia, Yugoslavia, Hungary and so on, and in particular at the behest of the former war enemies, France, Britain, the US, all of them did not want to have an Austrian monarchy, did not want to have the restoration of the House of Habsburg. Now this suppression ceased under the authoritarian Dolfus government, which came to power in 1933-34, and as soon as the suppression ceased, well, they sprang into life a very active monarchical movement.

31:07movement. His leader was of course the dolphin, the prince Otto von Habsburg, who was until the mid 1930s, so in the few years from 1933 to 1936-1937, he had become an honorary citizen of 1,540,000 There were approximately 140 communal towns out of a total of 4,500 in Austria. One out of three Austrian towns had made him an honorary citizen, so that is a good indicator for the strength of this movement.

31:52Otto von Habsburg had proposed that he take over the government in the big crisis that led to the annexation of Austria in 1938, Shushnick did not do this while Otto was a young man also at the time, he was in his early 30s. And then he had to leave Europe, he also went to the US and also stayed in New York City and coordinated there on the one hand the cooperation of various patriotic expatriates and also established diplomatic ties with the US government and its war allies, aiming at the preparation of Austrian independence after the war.

32:38And he was very successful in these endeavors, so first great success was that in late 1943, The Western Allies, including Russia, agreed on the recognition of Austrian independence after the war. The US established also an Austrian day, a feast day, and so on. There were still conflicts among these ex-patriots, and these concerned, well, most notably the question of the form of state. and in particular also of the scope of state. Form of state, should it be a monarchy or a republic? The monarchy, should it be based on popular consent or should it be based on legitimacy grounds, hereditary rights?

33:31There was a very strong legitimist faction within this group. One of its main representatives was a former colleague of Mises at the University of Vienna. Degenfeld was his name. And Mises, of course, did not at all agree with this. Well, we talked already about his theory of democracy, his economic theory of democracy. And for the crucial role that Mises stressed that democracy had was to pacify the nation and help prevent violent conflicts over the question which type of government we should have and who should be in the government and so on. So when Otto von Habsburg asked Mises his opinion about the most suitable form of state that also should have after World War II and in particular about the possibility of re-establishing the monarchy, Mises said, well, okay, monarchy would be fine, but it would have to be based on popular consent.

34:39Otherwise, we just enshrine conflict into the Constitution from the very outset. But his biggest disagreements concerned not with Otto von Habsburg, who was fairly a classical liberal, so he was a minimal status, But other members of these expectorate groups concerned the scope of the state. Many of them, well, wanted to run the country, didn't want to run it like the social democrats, didn't want to run it like the Nazis, but they wanted to run it nevertheless. So strong interventionist government and so on, and Mises saw no fruitful base for cooperation here. and some disgust, as you said in the mid-1940s, well, the Austrians are like the French Bourbons, the ruling house of France until the early 1830s. They have learned nothing and forgotten nothing.

35:36So he discontinued cooperation with the Austrian National Committee in late 1942 and 1943, and then fully turned to board US organizations, so he left all this European trouble behind and then sought integration into American society. Here we have then a transition. His contract with NBER, funded by Rockefeller, ran out in 1944.

36:24So it was extended two times, one time after a year and then another, so in 1942, for another two years.

36:41Mises then even received a two-year extension under the same conditions as before. It was the normal policy of the Rockefeller Foundation to subsidize the integration of European emigres, The Rockefeller Foundation's chief executive made it clear, and the NBER executive, with Mises Rettoburg, made it even more stark, that this extension would be the last one. However, it was to be the very end of their cooperation. The second year's bonus was a not-so-subtle goodbye. The Rockefeller Foundation's chief executive made it clear, and the NBER executive, with Mises Rettoburg, made it even more stark, that this extension would be the last one. and the last one. Fortunately for Mises, about exactly the same time, he found a more amenable source of support, independent of the Rockefeller Foundation, namely the National Association of Manufacturers, NAM.

37:38The NAM leadership opposed the New Deal and other status projects. They were determined to prepare a counterattack, starting a large-scale campaign to educate the American public about the benefits of what they called the free enterprise system. NAM needed intellectual leadership from people who were conversant both in the world of business and in the world of ideas. By February 1943, they had discovered what they were looking for in the person of Ludwig von Mises. Many years in the Vienna Chamber of Commerce had accustomed him to dealing with businessmen and to communicating effectively his economic and political insights to this audience. Just when the Rockefeller Foundation made it clear that they were no longer interested in supporting him, Supporting him, NAM immediately stepped in and offered to hire Mises as a consultant, starting today.

38:34Mises became a member of the Economic Policy Advisory Group, as was the name, Economic Policy Advisory Group. He later also became a member of NAM's Economic Principles Commission and of its Advisory Group on International Economic Relations. The contract provided for an annual honorarium of $3,000, more than its previous contract at NBER. The contract was extended on an annual basis. In the 1944-45 period, Mises' honorarium increased to $3,600. He worked closely with NAM Secretary Noel Sargent, who in 1943 commissioned a study from him on international monetary reconstruction after World War II.

39:26This study too has recently been published in a volume edited by Richard Eberling. By the fall of the year, Mises had written a 68-page memorandum on the subject, in which he advocated a return to the gold standard and criticized reconstruction plans that Harry Dexter White and John Maynard Keynes had made in preparation for the 1944 Bretton Woods Conference. A few months later he took part in a NAM-sponsored expert meeting to discuss the Keynes and White proposals. By June 1944, Mises had prepared another memorandum, this time on monopoly.

40:20A few months later he addressed two advisory committee luncheons on the West Coast. Now that was to be faithful. At that point he had already acquired a solid reputation reputation through the publication of two books, Omnipotent Government, English translation of the German manuscript that he had written about 1938-39, by the way the German manuscript of the original was published only many years later in the 70s, it was a posthumous publication, so there was Omnipotent Government and another book, Bureaucracy, which presents an economic theory of bureaucracy that he had just outlined and socialism and a few passages and then 10 or so pages in his critique of interventionism.

41:07So this he then turned into a full book. And accordingly, so these were his first two American publications and he was presented as, quote, the most eminent and uncompromising defender of English liberty and the system of free enterprise, which has reached its highest development here in the United States." Mises addressed the local NAM chapters in San Francisco and Los Angeles. So this was October 1944. And there he met, as he said, such excellent men as Leonard Reed, Orville Watts and R.C. Hoyles. Now these are three names that we should remember because they were very important allies for Mises in the succeeding years, not immediately thereafter but then the corporation would kick in with full force in the 1950s.

42:06Leonard Reed or Watts was a Reed employee and R.C. Hoyle was a publisher in Orange County and the newspaper that he ran was the predecessor of what is today, is this the Orange County Register? Is this the name of the paper today? So that's Hoyle's set up. Mises' encounter with Leonard Reed was a fateful one. They may have met a few years earlier, shortly after his arrival in the United States. At any rate, Reed later recalled such a first meeting in 1940. Maybe also that his memory escaped him, but okay, that's something that I could not tell from the records. In any case, at this first meeting he had been much impressed by the purity of Mises' opposition to any government power beyond the minimum necessary for the preservation of domestic peace and the market.

43:02Mises had reportedly attended a party in Reed's home. One of the guests asked him, quote, all of us agree with you that we are headed for troubled times, but Dr. Mises, let's assume that you were the dictator of these United States and could impose any changes you think appropriate. What would you do? And Reid clearly recalled the answer. He said, quick as a flash, Mises replied, I would abdicate. Okay, so this made a very strong and positive impression on these West Coast men. And Leonard Reid eventually moved in 1946, 1945, he moved to the East Coast, moved to the New York area.

43:51and one year later set up the Foundation for Economic Education, which we'll talk a little bit later. Shortly thereafter, then, Mises became an American citizen. That was also one of the reasons why he did not visit more with his new friends in Mexico. in Mexico, he could not leave the country during the application period, and he finally received citizenship in January 1946. At that point there were no plans to return to Europe, but he finally got access again to his pension fund from the former Chamber of Commerce in Vienna. Finally, with the new government, they started honoring again the contract, only with a little problem that they had, of course, foreign exchange controls.

44:44So you could not export the money from the country. We are today so much blessed, because we can just wire money from one country to another and bring money from one country to another. That was not possible. And as a concept, that was the reason why Mises eventually came to spend a couple of vacations in Austria. In Austria, what else do you do? You go there and stay in nice hotels and maybe you buy books and other marketable, highly marketable goods that have a high purchasing power per weight unit and that's all you can do. Now, the intellectual situation in his new country was of course bleak.

45:33Mises was well aware while he was convinced at that point that things were, from an economic point of view, from an intellectual point of view, of course, still better than in Europe, but from an intellectual point of view, very similar. In fact, the American literature on economics was, if anything, worse than the European one. This is what he wrote in a letter to a young Austrian economist, well, a young economist in Austria, let's say, in those years, 1946. He said, there is a great enthusiasm in the U.S. for unbalanced budgets, deficit spending, low interest rates and all sorts of regimentation.

46:19Those who dare to disagree are simply brushed aside as orthodox and reactionary." Again, this reminds us of something. And on the same theme he continued in another letter, the intellectual ravages caused by Keynesianism are very bad. For example, everyone here is delighted the national income has increased from 77 billion dollars in 1940 to 161 in 1945. That's a nominal increase, simply because the money supply has been increased so much, so all prices increase. It doesn't mean that the nation has really become richer, just because nominal spending has gone up.

47:09But the forces of resistance were slowly emerging. There was a seedbed of libertarian opposition, A network of leaders, thinkers and organizers, some alone, others in small groups, who were preparing the counter-attack. I've already mentioned the NAM before. One historian has called these years the nadir of individualistic Jeffersonian thought in the United States. Yet the nadir was only in political practice, the thinking was no longer in disarray but in the initial phase of a long-term resurgence. It is true that these thinkers and organizers were still scattered. They had only to find one another. There were journalists like Henry Hazlitt, Lawrence Fertig, Frank Chodorow, Susan Lafollette, Garrett Garrett, John T. Flynn and John Chamberlain.

48:04By the way, we have in the library a couple of reprints of books by John T. Flynn and Garrett Garrett and others. There were writers like Albert J. Nock, also here, Isabel Peterson, Rose Wilder Lane, Ayn Rand, no we don't have her here, and Felix Morley. There were organizers such as Leonard Reed, Frederic Neumeyer and Lauren Miller. There were businessmen ready to sponsor educational ventures to promote laissez-faire policies, such as Jasper Crane, Harry Earhart, Alfred Kohlberg, Howard Pugh, Claude Robinson, Pierre Goodrich and William Volcker And there were academics such as Benjamin Anderson, Davenport, Fred Fairchild, Leo Wolman, Frank Knight, Henry Simons and Ludwig von Mises.

48:58These men and women reversed the course of events in a mere 15 years. They were not strong enough to rid America of its creeping statism, but they succeeded in slamming the brakes on the brakes and reorienting public debate. This is what's happening from 1945 to 1960. By the beginning of the 1960s, classical liberalism had risen from the ashes, and it had done so under the decisive impact and intellectual leadership of Mises. These 15 years of his life saw a last great blossoming of his creative powers, which paved the way for a new liberty in the western world. During this period, Mises' impact was amplified and deepened through several new organizations that rallied a hitherto desperate and unaware public around the banner of liberty.

49:53And for the first time in his life, Mises worked with a group of students who had learned economic science through his writings. These first Misesians, we'll talk about them this afternoon more, became even more coherent and radical advocates of laissez-faire than the master himself. Something unprecedented for Mises. In his Vienna seminars he had been in the awkward position of being more radical than his students. Now, the potential of the seedbed of libertarian networks broke to the fore for the first time in 1944 with the enormous success encountered by Hayek's Road to Serfdom.

50:47So Frederic August von Hayek published his famous book, The Road to Serfdom, first in Britain and then in the United States. While in Britain there was a reserved, well attentive, but reserved reception, in the US the reception was enthusiastic, it was a nuclear bomb that went on here. So Hayek came to a trip to the US, wanted to give one talk, But then as sales increased, tens of thousands of copies, he himself was very surprised, and his publisher too, because they had just had the English experience. And then he stayed in the US for months and gave one talk after another, one presentation after another. So what happened here was simply that you had these latent forces, these latent individuals and networks, and they brushed forth with this initial event of the publication of the Road of Serfdom.

51:51Mises was enthusiastic and very hopeful, very encouraged by this reception, although of course he did not fully agree with Hayek's analysis. Hayek, as we have said yesterday, was part of the emerging neoliberal movement, was a central agent of this neoliberal movement and Hayek in those days, he changed this, he became more radical later in his life, in those days fully subscribed to the neoliberal agenda So he subscribed to this division of market processes that should play themselves all freely within an institutional framework whereas the institutional framework itself should be set up by the government.

52:42So the government should be planning for freedom, should be planning for free competition. competition. So there was a positive role for planning, positive again meaning the government should take care of it. Now Mises criticized it again without naming Hayek, so without naming names, but he criticized the idea in a paper with the title Planning for Freedom that he presented shortly thereafter which then also became the title of a book, collection of essays that was first published in 1952, is still available today, in which he said, well, so the crucial question is, who is doing the planning? Of course, we always need planning, but the question is, who is doing the planning?

53:28Do we need the government to do the planning or should private persons and associations do the planning? But again, this could not diminish his joy and enthusiasm for the success encountered by Hayek's book. Mises then was integrated in this libertarian seatbed through his association with NAM, which stopped in 1946, but then especially through three individuals respectively, organizations, namely New York University, Leonard Reed and Friedrich Nehmeyer, I'll talk a little bit about these three now. So starting in 1945, Mises obtained a position as a visiting professor at New York University.

54:28So he gave a class, in particular a seminar. The money was essentially paid out of private funds. Funds, a couple of friends who raised money for him, especially Lawrence Furtick and Hazlitt were involved. And he never obtained a permanent position, so he was somewhat in the same position in which he had been at the University of Vienna. He was an extraordinary professor, in this case a visiting professor, and he would be visiting the University of New York University for 24 years, 24 years in a row visiting them. Now the New York University seminar was the central vehicle, the cradle, we might say, of the emerging Mises School.

55:19This school emerged in particular after the publication of Human Action in 1949. So here we had then the training ground for people who received their economic formation through Mises himself and in particular on the basis of his treatise on economics. All the great post-war Austrians, virtually all of them, have come out of the seminar. So we have Murray Rothbard, Hans Zenolds, Israel Kirzner, George Reisman, Ralph Raico and so on. You have it, you name them. So some of them are still fortunately with us. So, for example, Ralph Reichow will be teaching next week at the Summer University.

56:05Oh, by the way, since we are at it, we have in this room here two people who knew Mises, have known Mises personally. It's, of course, not me because I was a baby at the time. So, we have Lew Rockwell, met him once or twice. And we have Richard Perry, who was a member of Mises Seminar in the late 1960s, at the very end. And he was also the first person, as I learned only yesterday, who typed human action onto a computer file. Okay, so Richard, could you just raise your hand so that everyone can see? So this is one of our remaining links to Ludwig von Mises, remaining living links. Okay, so there was New York University and then there was Leonard Reed, who Mises had encountered during the war years, as we have seen.

56:52and Leonard Reed in 1945 comes to the US and he first works for a libertarian policy organization which was not fully effective because they pursued the policy, they arranged debates and also publications but in whatever debates they arranged they pursued a policy of hearing every voice. So they would invite somebody defending a libertarian position and then also to be equitable invited a pro-government advocate. Now Reid found that was completely pointless because the other side was being heard constantly in all the journals, the radio, publications, the schools.

57:42The other side that is the pro-government, the interventionist, the socialist position was constantly explained, championed, analyzed. So what was needed was an institution entirely dedicated to the explanation and defense of the libertarian position. And therefore, so he quit this other organization and set up his own outfit, namely the Foundation for Economic Education. Reit could do so because he had an address book, so we are talking about the time before the internet, before telephone books even. So he had a fully stuffed address book, excellent contacts to the business world because he had been for many years the chief executive of the largest chamber of commerce in the world, of the World, the Chamber of Commerce of the Los Angeles area.

58:40And so he had the necessary wherewithal and the necessary connections. He set up this new institution and Mises was one of his main intellectual allies. But Mises was not the number one economist, Phyllid was one among others. He turned into number one only again after the publication of Human Action in 1949. So fee was not set up as a cradle of the Austrian School, it turned into the cradle of the Austrian School, an institution dedicated to the promotion of Austrian economics later on. The third main vehicle for the promotion of Mises intellectual impact on America was Frederic Niemeyer or Neimeyer.

59:36Neimeyer was a Chicago businessman who in the early 1920s had worked at Harvard University, setting up the Harvard Business Barometer, He was acquainted with methods of business cycle analysis and so on, and he was also a dedicated Christian, a Calvinist, supporting several publications, Calvinist publications and so on. Now he came across Mises through the English edition of his Theory of Money and Credit. And he was very impressed by this book and started correspondence with Mises. And came then increasingly to the conviction that, well, this was the way to go.

1:00:25The Austrian School and Mises in particular are the most important intellectual vehicle to the promotion of liberty in the Americas and in particular they are fully compatible with Christian concerns, Christian morals and Christian theology. So, Neumeier in the following years arranged for and funded the translation of Boehm-Bawerk's Capital in Interest. The work had already been translated, the first two volumes had been, the first edition had been translated in the 1890s, William Smart at the time, but then the final edition, the third edition had not been translated, in particular the third volume that Boehm-Bawerk had created.

1:01:14So Neimeyer funded this and he got one of the translators from Mises, namely Hans Zenholz, and then he arranged for a co-translator who was a native English speaker. Neumeyer also became a publisher of Mises. It was Neumeyer who published this collection of articles that we already mentioned, Planning for Freedom, 1952. He promoted, well, he printed talks, lectures that Mises had given to Montpelerin Society meetings and others, and others, for example, the lecture Profit and Loss, it was printed in several thousand copies and other lectures as well, and he set up finally his own publishing house, Libertarian Press, Libertarian Press, which still exists today, which was eventually taken over by Hans Zenholz, and is today run by Hans Zenholz's son.

1:02:07So all this emerged in those years, in those years, and I've already mentioned the Mont Pelerin Society, so it's appropriate that we talk briefly about the MPS, which was an initiative of Frederic August von Hayek. During the war already, Hayek stayed in Britain, did not go to the US, But he was already considering, well, he thought, well, I cannot just escape from Britain, I have to show my solidarity with the British colleagues and so on. So he stayed on the spot and there are quite funny letters that Hayek wrote from England. He said, well, I mean, look, I mean, these bombs and so on, it's not that dangerous, finally.

1:02:55You get used to it. It's actually quite simple to extinguish a firebomb and so on, if you know how to do it. So he stayed there but then he was making plans for the preparation of libertarian movement after World War II and Hayek was well placed to do this because he was traveling a lot and especially his success with the road of serfdom in the US brought him in touch with virtually all libertarians all over the US and of course he knew his people in Europe So, Hayek was the man, he was the juncture of the intellectual pockets that existed in those years in Europe and the US.

1:03:43So, Hayek prepared as a first attempt to integrate this burgeoning movement, the arrangement of a conference, the organization of a conference. and with the conference to establish a society of libertarian intellectuals. It would not have to be libertarian but more precisely neoliberal intellectuals. That is, the agenda that emerged slowly in the interwar period, in the 1930s in particular, should now be given a more permanent form. In the 1930s, there had been already a conference of this sort. This was a Walter Lipman colloquium that had been organized in 1938 in Paris.

1:04:38Mises took part in this too. But this was a one-time shot. People met there, it was predominantly Europeans, not many Americans. And so Hayek now sought to establish something more permanent, a society of intellectual, well, neoliberal scholars. And his main source of funding was the William Volcker Fund. Now that's important, especially for Mises. One pattern in society is not that important for Mises, but the Volcker Fund is important for Mises. The Volker Fund had been set up by William Volker, V-O-L-K-E-R, was a businessman from Kansas City of German descent who had made a fortune in the US and then finally married at some point in his 50s and well relaxed, laid back and became a philanthropist.

1:05:36So he started funding all kinds of things, set up his own foundation, we also mentioned the constraints of the income tax, which gave him an incentive to set up a foundation, so that's what he did too. And his foundation became the main source of funding for libertarian activities, libertarian organizations in the immediate post-World War II period, that is running from 1945 to 1960 approximately. So this coincided exactly with the main impact that Mises would have on the libertarian movement, a happy marriage. The Volcker Fund was managed by a man with the name of Harold W. Luno, and later on by two brothers by the name of Herbert and Richard Cornuel, who were for some time also employees of Fee, Leonard Reed in New York, and then moved to the Volcker Fund, and the Joker Fund, which then relocated after some years to California and precisely to that county of California where we have today the Center of Libertarian Studies.

1:06:49Is this a pure coincidence? So, Hayek, how did this contact come about? Well, Hayek arranged for this meeting, which was to take place, the first meeting was to take place in Switzerland, close to the Mont Pelerin, a mountain in southern Switzerland, therefore the society that came out of this meeting was also called the Mont Pelerin Society. Mises came into touch with the Volker Fund because somebody had to buy his plane ticket and pay the hotel bills. So that was the Volker Fund. Mises arranged this through them. Now what about the meeting itself? Well, it became a neoliberal meeting, but it was a very interesting constellation.

1:07:37In his opening address, so we're talking about spring 1947, Hayek set the agenda for the post-war ideological reconstruction of the classical liberal movement. It involved, Hayek explained, on the one hand purging traditional liberal theory of certain accidental accretions which have become attached to it in the course of time. And on the other hand, facing up to some real problems which an oversimplified liberalism has shirked, which have become apparent only since it has turned into a somewhat stationary and rigid creed. As later developments would show, the concrete meaning of this program was first to exculpate classical liberalism liberalism from certain widely held criticisms, for example, that the policies it had inspired had led to mass misery, and second, to distinguish the modern liberalism or new or neo-liberalism from its laissez-faire predecessor.

1:08:53Some of the other scheduled talks, however, were more neo and less liberal. For example, the German economist Walter Eucken explained that anti-monopoly legislation was not sufficient to combat monopolies. Further legislative inference was needed in the field of corporate law, patent law and trademark law. He championed two maxims of economic policy. First, although there was to be freedom of contract, this freedom was not to be allowed to limit in any way the freedom of contract of others. Second, monopolistic market participants should be forced to behave as if they were in competition, produce the same quantities and sell them at the same prices that would prevail under competition, which meant the model of perfect and pure competition.

1:09:42In short, Eugen dished up the same interventionist agenda that had already dominated the Libman colloquium in 1938. At that time, Mises had been on his honeymoon in Paris, which might explain why his contributions to the discussions had been unusually tame. 9 years later, 1947, the honeymoon was over. Mises reacted with great determination and defended his laissez-faire position so vigorously that many years later his friend Lawrence Fertig still recalled the debate. There was another source of comment on this first meeting, namely Milton Friedman. Milton Friedman concurred with this observation. He said the following.

1:10:30Our sessions were marked by vigorous controversy over such issues as the role of religion and moral values in making possible and preserving a free society, the role of trade unions and the appropriateness of government action to affect the distribution of income. I particularly recall a discussion of this issue in the middle of which Ludwig von Mises stood up, announced to the assembly, you're all a bunch of socialists, and stomped out of the room an assembly that contained not a single person who by even the lowest standards could be called a socialist, unquote. It's a quite vigorous debate. Friedman did not specify what he meant by the lowest standards.

1:11:18In any case, while Mises was able to hold socialists in high esteem, he believed in their honest attitude, the incident showed that he had little patience with socialists parading as liberals. The exchange between Mises and his neoliberal opponents set the tone in the Mont Pelerin society for years to come. Willem Röpke would later pay a friendly tribute to Mises, even though the letter made, as he said, sarcastic comments upon the unenlightened spirit of so many of its members, including himself. Although the libertarians around Mises were a small minority, It was they who had the financial backing of the main American sponsors, such as the Volcker Fund, without which the society would quickly have died out in the early years.

1:12:10In fact, by 1953, the Volcker Fund was paying the membership fees and even travel expenses of virtually all European members. Now imagine what this means, well it means that without the Volcker Fund there would have been no MPS in the first ten years or so. And this of course means that even though Mises and his fellow Manchesterists from New York, essentially the New York fraction was Mises, Fertig, Hazlitt, Reid and others were the radicals. Well, even though they were a numerical minority, they had a very strong impact on the agenda, on the discussions of the society.

1:12:59Everybody knew, well, I mean, without these guys, we cannot go on. Society will quickly die out. Okay, so this was the situation until about 1947-48. This afternoon we'll talk about what happens with the publication of Human Action and the succeeding years. We have now some 13 minutes for questions. Did you send him to a reason that he didn't move down to Mexico City or was he just really interested? I didn't find any document in which he would explain in detail why this is. At the beginning it might have been that the material conditions, the financial conditions were not good enough.

1:13:49He later wrote to his host, Montes de Oca, he said, well, because then he made a very attractive offer later in the 1940s and Mises said, well, if I were 10 years younger, or whatever, 50 or 20 years younger, I would accept it immediately, but it's not clear to me whether he said this out of politeness or whether he genuinely believed this. I have no reason to believe that he lied, but he never explained in detail why he didn't do it the first time. He certainly considered it very seriously, but then things improved steadily also for him in the U.S. One thing that was very important for him was that he didn't want to go to a province somewhere.

1:14:37He wanted to be in an intellectual center. Now, New York City was definitely, well, the intellectual world center in the post-war period, at least in the first 20 years or so. So before, there were European competitors and Vienna was one among them, Paris, Paris, another. But after the war, clearly, New York was a financial, intellectual, cultural center, so he felt very much at ease. It's very similar to the life, well different of course, but similar in principle to the life he had led in Vienna to the capital city, well not political capital, that was rather advantageous, financial capital, cultural, intellectual, that's exactly how he founded in Vienna, plus as I said many of his friends, wartime acquaintances were still there so he could in a way build on what had already existed, he was not completely deracinated.

1:15:36Bert sometimes, there was a talk of consideration, should he go to a different university, but he never actively pursued this. So he wanted to stay there even if he could have got maybe more money or a more prestigious position somewhere else. Who wanted to re-translate Boehm-Bawerk's volumes? It was not Mises who brought this up, it was Neumeier. Nijmijer said, well, we need to translate all of the major Austrian works into English.

1:16:21What's the best thing to start? What's the most important thing to translate? And then Mises said, well, we would need to have a full translation of Boehm-Bawerk. Well, because this was the first edition Boehm-Bawerk had worked over, it revised this first edition. The first edition, so the third edition was the final, it was a different edition, and plus there was a third volume also, so this had to be translated anyway. It's very revealing, right? I mean, Mises would have said, well, we have, whatever, my important work from the 1920s, right? They need to be translated first, whatever, critique of interventionism or liberalism and so on, but no, he did not say this.

1:17:09Well, we need to have Boehm-Bawerk first. He had a very, very high opinion about the importance of Boehm-Bawerk's book.

1:17:22Why is Ayn Rand not seen as popular here? I mean, we just don't have a book on her, I believe, I'm not even sure about this, it might be that we have an Ayn Rand book, but I didn't see it. Ayn Rand, as far as our subject is concerned, in the early days, was not a main figure. Ayn Rand really burst to the scene with the publication of Atlas Shrugged. And then, of course, she became a main figure in the libertarian movement. and indeed was the only one who could rival the impact of human action.

1:18:12I was wondering if Mises ever commented on the early associations between religion and pre-market ideas in the early post-war Americans? No, he did not. I mean, there's no critical analysis of these connections and so on. Well, he respected these religious beliefs. He emphasized in two books which crowned his reflections on epistemological problems, Mises and Boehm's Theory and History, Ultimate Foundation of Economic Science, 1957-1962. He talked a lot about religion, so that's the place to look for this.

1:18:59And his position was that religion plays a very important role. It's important for man because it gives us answers to questions that we cannot find anywhere else. His activity was of course science. Religion had nothing to do with science, so he believed. But he very clearly saw the limits of science. So you only can go so far. And what comes beyond this? Well, I mean, you need religion, therefore you turn to prayer and so on. He did not at all disparage this. He was very respectful and many of his promoters and also friends were Christians, We have, for example, so we have a Neumeier here, but they were among his New York students, and in the 1950s there were two that initially came from a Christian organization, a Christian social analysis organization, namely George Coulter, who had been here, I've been around until very recently.

1:20:08Josh Coulthard was almost 100 years old, he was 99 years old. He died last year or earlier this year. So I met him, still a very charming man. He has been around. So he came from this Christian organization first. And also Perry Greaves, a big time Misesian in the 1960s and 1970s, In the 1970s, a big promoter of Austrian economics, Misesian economics in particular, the husband of Bettina Bingreeves was still around. He came from the same organization. So Mises attracted these people too. And well, he liked their association. It was not because somebody was religious that he would avoid contact.

1:20:56Okay, no more questions. We meet again this afternoon.