WEBVTT

NOTE 20. Human Action and Its Consequences

1
00:00:00.000 --> 00:00:08.480
Chapter 20. Human Action and its consequences. By the late 1940s, Mises was well integrated

2
00:00:08.480 --> 00:00:15.360
in the emerging network of American libertarians. His NYU seminar, his lectures at Montpellierin

3
00:00:15.360 --> 00:00:19.760
Society meetings and other conferences, and his writings had established his impact on

4
00:00:19.760 --> 00:00:25.620
the rising generation. And even beyond the circles of organized libertarianism, he had

5
00:00:25.620 --> 00:00:31.180
had gained a nationwide reputation as an economist and social analyst of the First Order, though

6
00:00:31.180 --> 00:00:37.700
for most academics his methods and political orientation smacked too much of times past.

7
00:00:37.700 --> 00:00:43.100
The publication of Human Action in September 1949 produced a quantum leap in his prominence

8
00:00:43.100 --> 00:00:49.040
and impact. Overnight, Mises turned into the central intellectual figure of the entire

9
00:00:49.040 --> 00:00:53.900
American right, an event that was paralleled during the next decade only in the case of

10
00:00:53.900 --> 00:00:59.540
of Atlas shrugged, the novel that catapulted Ayn Rand to even greater fame, at least among

11
00:00:59.540 --> 00:01:04.100
the general public. Mises now appeared to the public not merely as a scholar of the

12
00:01:04.100 --> 00:01:09.020
old school, but as one of the great minds of Western civilization, a creative genius

13
00:01:09.020 --> 00:01:13.420
who had not only mastered all aspects of his science, but had completely transformed this

14
00:01:13.420 --> 00:01:18.980
science to offer a new way of looking at social processes and relationships. Human Action

15
00:01:18.980 --> 00:01:24.260
was a success without precedent. His 1922 treatise on socialism had been a sensation

16
00:01:24.260 --> 00:01:29.260
too, but only because of the general recognition that theoretical socialism offered no help

17
00:01:29.260 --> 00:01:33.860
were the problems of post-war reconstruction. The socialist avant-garde had seized power

18
00:01:33.860 --> 00:01:39.300
in Germany and Austria but then had no idea what to do, and this crisis quickly turned

19
00:01:39.300 --> 00:01:44.220
from a theoretical one to a political one when socialist governments drastically aggravated

20
00:01:44.220 --> 00:01:49.420
conditions rather than improving them. Mises's comprehensive analysis in Gemeinwirtschaft

21
00:01:49.420 --> 00:01:54.860
delivered a breathtakingly lucid explanation of this mess. But while the book provoked outrage

22
00:01:54.860 --> 00:01:59.580
and fury in the socialist camp and initiated a paradigm shift in the thinking of an entire

23
00:01:59.580 --> 00:02:05.580
generation, it had not become the rallying banner of a movement. Its author had been a relatively

24
00:02:05.580 --> 00:02:10.860
junior economist and no institutions were in place to concentrate and organize the readers

25
00:02:10.860 --> 00:02:16.140
The book had convinced. American ground was more fertile. It had been prepared by a long

26
00:02:16.140 --> 00:02:21.340
tradition of individual liberty and a recent reorientation toward that tradition. There

27
00:02:21.340 --> 00:02:26.220
were, in effect, the makings of a movement just waiting for human action to form its

28
00:02:26.220 --> 00:02:32.220
intellectual nucleus. And just as important, there were institutions and individual promoters

29
00:02:32.220 --> 00:02:38.060
eager to accelerate it. Moreover, Mises himself was already one of the intellectual leaders of

30
00:02:38.060 --> 00:02:43.100
of this grassroots movement. He knew writers and journalists who would promote his book,

31
00:02:43.100 --> 00:02:47.900
and there were men who stood ready to sponsor his subsequent work. Supporters now came in

32
00:02:47.900 --> 00:02:52.840
droves, asking Mises to give lectures and seminars, wealthy businessmen sought his advice

33
00:02:52.840 --> 00:02:57.820
and often did what he recommended, and The Freeman, the first libertarian journal of

34
00:02:57.820 --> 00:03:02.100
a distinctly Misesian flavour, might never have seen the light of day without the glory

35
00:03:02.100 --> 00:03:05.220
that Human Action brought to its author.

36
00:03:05.220 --> 00:03:10.300
Mises now became the true spiritual rector at FEE, which had previously featured him

37
00:03:10.300 --> 00:03:17.100
as one among several consultants. To get a taste of the pre-1949 character of FEE, consider

38
00:03:17.100 --> 00:03:21.860
the case of Murray Rothbard, the man who had become Mises' most important disciple, had

39
00:03:21.860 --> 00:03:27.140
learned about FEE through a small brochure with the title Roofs or Ceilings Attacking

40
00:03:27.140 --> 00:03:33.540
Rent Control Laws. Leonard Reid had printed 500,000 copies. The authors of the brochure

41
00:03:33.540 --> 00:03:38.780
were two young Chicago economists by the names of Milton Friedman and George Stigler. This

42
00:03:38.780 --> 00:03:45.140
was in September 1946. Rothbard continued to read FEE publications and attended their

43
00:03:45.140 --> 00:03:50.140
conferences, yet in the spring of 1948 the future pillar of the Misesian renaissance

44
00:03:50.140 --> 00:03:55.220
had never even heard of Austrian economics. It appears that neither Lennart reads FEE,

45
00:03:55.220 --> 00:03:59.440
nor for that matter any of the other emerging libertarian organisations, had placed any

46
00:03:59.440 --> 00:04:13.600
First Reactions Neither Mises nor his friends expected the

47
00:04:13.600 --> 00:04:19.320
success the book would have. After his return from Mexico, Mises left for a two-week vacation

48
00:04:19.320 --> 00:04:23.680
in the Berkshire Mountains. The book was released to the bookshops while he was away

49
00:04:23.680 --> 00:04:30.360
on September 14, 1949. In his weekly Newsweek column, Henry Hazlitt announced and praised

50
00:04:30.360 --> 00:04:34.800
it, anticipating the role it would play in subsequent events.

51
00:04:34.800 --> 00:04:39.680
Human Action is, in short at once, the most uncompromising and the most rigorously reasoned

52
00:04:39.680 --> 00:04:45.540
statement of the case for capitalism that has yet appeared. If any single book can turn

53
00:04:45.540 --> 00:04:50.760
the ideological tide that has been running in recent years so heavily towards statism,

54
00:04:50.760 --> 00:04:55.880
Socialism and Totalitarianism, Human Action is that book.

55
00:04:55.880 --> 00:05:01.000
This was almost a self-fulfilling prophecy. Not three months later, by December 6th, more

56
00:05:01.000 --> 00:05:06.760
than 4,000 copies had been sold, and the book was in its third printing. With the reports

57
00:05:06.760 --> 00:05:12.460
of ever more sales, Mises's euphoria lasted for months. The only dark cloud was that Margit

58
00:05:12.460 --> 00:05:18.080
had been ill in November. His NYU seminar addressed fundamental problems and theorems

59
00:05:18.080 --> 00:05:23.640
of Economics and Their Relationship to Philosophical, Historical and Political Ideas.

60
00:05:23.640 --> 00:05:29.000
It started on his birthday, September 29. When Ludwig and Margit spent New Year's

61
00:05:29.000 --> 00:05:35.040
Day in 1950 with Haslett, Schütz and Hayek at their Manhattan apartment on West End Avenue,

62
00:05:35.040 --> 00:05:40.940
it was already clear that Human Action was a phenomenal success, especially for a 900-page

63
00:05:40.940 --> 00:05:46.880
scientific treatise. Even his ideological opponents had to admit that the 68-year-old

64
00:05:46.880 --> 00:05:58.280
Many other reviews followed over the course of the next several months. Most of these

65
00:05:58.280 --> 00:06:03.800
were insubstantial and their criticisms boiled down to copying at the book's pontifical

66
00:06:03.800 --> 00:06:09.160
style. In private correspondence, Oscar Morgenstern declared that he could not agree with Mises's

67
00:06:09.160 --> 00:06:14.000
statements on game theory. He did not explain why he disagreed, but said that the matter

68
00:06:14.000 --> 00:06:31.240
This was certainly helpful.

69
00:06:31.240 --> 00:06:35.160
Mises must have been somewhat bemused, however, that Morgenstern did not quite remember the

70
00:06:35.160 --> 00:06:39.160
title of the book that he professed to have read to a great extent.

71
00:06:39.160 --> 00:06:44.560
In his letter he thanked Mises for having sent him a copy of Economic Action. One reviewer

72
00:06:44.560 --> 00:06:49.560
had the audacity to complain that as a reader of the work one continually has the sense

73
00:06:49.560 --> 00:06:56.600
of being argued out of existence, but other reviews were receptive to its monumental contributions.

74
00:06:56.600 --> 00:07:01.580
Young Murray Rothbard praised Human Action as a masterpiece of original synthesis. The

75
00:07:01.580 --> 00:07:07.000
book contained a complete structure of economic science, which was firmly grounded in praxeology,

76
00:07:07.000 --> 00:07:12.760
and the General Principles of Individual Action. Similarly, Richard C. Conwell highlighted

77
00:07:12.760 --> 00:07:16.720
that Mises had integrated value and price theory and was therefore in a position to

78
00:07:16.720 --> 00:07:22.800
defend capitalism without basing his reasoning on such fictions as homo economicus. The book

79
00:07:22.800 --> 00:07:27.360
also found an exceptionally friendly reception in Germany, where Cologne University Professor

80
00:07:27.360 --> 00:07:33.720
Armin Spithaler published a long review in the Weltwirtschaftliches Archiv. In South Africa,

81
00:07:33.720 --> 00:07:38.120
A young professor adopted Mises' epistemological point of view without reservations in his

82
00:07:38.120 --> 00:07:44.840
Fall 1950 inaugural lecture at the University of Witwatersrand in Johannesburg. The man who

83
00:07:44.840 --> 00:07:49.600
lectured on economics as a social science, Ludwig Lachmann, was a graduate of the London

84
00:07:49.600 --> 00:07:54.480
School of Economics, where he had studied in the 1930s under Hayek and Robbins. Before

85
00:07:54.480 --> 00:07:59.240
that, he had been a student of Werner Zombats in Berlin. Lachmann was already acquainted

86
00:07:59.240 --> 00:08:04.400
with Mises's A-Prioristic Epistemology, which the Vienne economist had first outlined in

87
00:08:04.400 --> 00:08:10.200
his 1933 Grundprobleme der Nationalökonomie, Epistemological Problems of Economics, and

88
00:08:10.200 --> 00:08:15.200
which now for the first time hit the Anglo-Saxon intellectual scene. Lachmann must have sent

89
00:08:15.200 --> 00:08:18.080
Mises a copy of this lecture.

90
00:08:18.080 --> 00:08:23.840
A member of Mises's NYU seminar, George Koerter, arranged for Chapter 35, The Economics of

91
00:08:23.840 --> 00:08:29.160
War, to be reprinted by the New York-based Christian Freedom Foundation, CFF, in September

92
00:08:29.160 --> 00:08:35.280
in 1950 as a reaction to the Korean War, which should soon entail a new round of price controls

93
00:08:35.280 --> 00:08:37.000
and economic regimentation.

94
00:08:37.000 --> 00:08:40.920
Koerter worked at the time both for CFF and for FEE.

95
00:08:40.920 --> 00:08:45.720
The Foundation reprinted the chapter in its fourth nightly newspaper, Christian Economics.

96
00:08:45.720 --> 00:08:51.520
CFF was at the time located on 26 West 58th Street in Manhattan.

97
00:08:51.520 --> 00:08:55.860
Around 1957 his offices moved to 250 West 57th Street.

98
00:08:55.860 --> 00:09:01.340
This publication reached some 100,000 clergymen spread out over the entire country. This might

99
00:09:01.340 --> 00:09:06.260
have been Mises' first contact with CFF and its staff, and it became a productive and

100
00:09:06.260 --> 00:09:11.340
beneficial collaboration that would last a lifetime. George Koetter continued to attend

101
00:09:11.340 --> 00:09:16.580
Mises' NYU seminar for many years and became a personal friend of Ludwig and Margit. After

102
00:09:16.580 --> 00:09:21.020
Ludwig's death, he helped Margit write her autobiographical recollection, My Years with

103
00:09:21.020 --> 00:09:23.260
Ludwig von Mises.

104
00:09:23.260 --> 00:09:28.900
In the 1950s he worked in the New York area first for CFF and FEE, then as an automotive

105
00:09:28.900 --> 00:09:33.580
and transportation editor of Look magazine, and eventually as an economist for the US

106
00:09:33.580 --> 00:09:38.460
Steel Corporation. The latter position is mentioned in a March 1959 letter for Mises

107
00:09:38.460 --> 00:09:44.980
to Hayek. Cota also initiated the creation in 1956 of a Mises bust by his sculptor friend

108
00:09:44.980 --> 00:09:49.660
Mrs Erickson. Thereafter his relationship with the Mises couple quickly turned into

109
00:09:49.660 --> 00:09:54.380
to Fond Friendship. Mises had another disciple and admirer on the

110
00:09:54.380 --> 00:10:00.860
CFF staff, Brooklyn-born Percy Laurie Graves, 1906-1984, was the American self-made man

111
00:10:00.860 --> 00:10:06.620
par excellence. Before he began to work at the Christian Freedom Foundation in 1950,

112
00:10:06.620 --> 00:10:11.660
he had been a bookkeeper, seaman, advertising manager, instructor in economics, financial

113
00:10:11.660 --> 00:10:16.620
editor, ghostwriter, and research assistant to the U.S. Congress, where he had collaborated

114
00:10:16.620 --> 00:10:22.140
in the investigation of the Pearl Harbor attack and in the drafting of the Taft-Hartley Act.

115
00:10:22.140 --> 00:10:27.360
Graves had left Christian economics no later than March 1959. In his job search, he then

116
00:10:27.360 --> 00:10:31.580
presented himself as a leading disciple of Professor Ludwig von Mises, the world famous

117
00:10:31.580 --> 00:10:36.780
analyst of socialist fallacies and leading exponent of the free market society. By then

118
00:10:36.780 --> 00:10:43.240
he had met Bettina Bean. Graves had previously been married in 1930 and had three children.

119
00:10:43.240 --> 00:10:47.760
Mises faithfully attended all sessions of Mises' NYU seminar and, together with his

120
00:10:47.760 --> 00:10:52.880
future wife, Bettina Bean, wrote minutes for each one of them. Eventually he made a career

121
00:10:52.880 --> 00:10:58.180
out of promoting Misesian economics in public lectures and seminars, but most importantly,

122
00:10:58.180 --> 00:11:04.320
the Grazes cared for their professor in the late 1960s and early 1970s, when Mises and

123
00:11:04.320 --> 00:11:11.020
his octogenarian spouse became frail. After Mises died in 1973, they continued to assist

124
00:11:11.020 --> 00:11:16.260
with Margit von Mises. When Percy died, Bettina continued to take care of her revered teacher's

125
00:11:16.260 --> 00:11:23.900
widow until Margit too died in 1993 at the age of 103. Bettina then became the curator

126
00:11:23.900 --> 00:11:28.740
of Ludwig von Mises' literary estate as she still is today.

127
00:11:28.740 --> 00:11:33.460
The president of CFF and editor of Christian Economics was Howard Kirchner, but the man

128
00:11:33.460 --> 00:11:37.420
behind the organisation and its journal was the wealthy Philadelphia industrialist J.

129
00:11:37.420 --> 00:11:42.940
K. Howard Pugh, who had inherited the Sun Oil Company from his father and was an extremely

130
00:11:42.940 --> 00:11:47.900
successful entrepreneur in his own right. Pugh assumed various social responsibilities

131
00:11:47.900 --> 00:11:52.980
besides sponsoring CFF. He was the chairman of the board of Grove City College in Western

132
00:11:52.980 --> 00:11:57.940
Pennsylvania and he owned the Chilton Press, which published the Pathfinder and the Farm

133
00:11:57.940 --> 00:12:03.100
Journal. The Pugh family had a solid track record of opposition to interventionism. It

134
00:12:03.100 --> 00:12:07.100
sold virtually all of its highly profitable European business when confronted with the

135
00:12:07.100 --> 00:12:16.060
Mises had known him at least since March 1945, when the National Association of Manufacturers

136
00:12:16.060 --> 00:12:20.860
sent him the manuscript of a talk in which Pugh had explained how cartels threaten economic

137
00:12:20.860 --> 00:12:25.740
progress. The two men had entered into direct correspondence in November 1948, when Pugh

138
00:12:25.740 --> 00:12:29.700
asked Mises to write a letter to the editor of the New York Times in response to what

139
00:12:29.700 --> 00:12:34.740
they both believed was a shameful column by a certain Edward Collins. Mises declined the

140
00:12:34.740 --> 00:12:40.380
Request responding that any such attempt was futile. First of all, they have the habit

141
00:12:40.380 --> 00:12:44.580
of editing and shortening such letters so that they lose a good deal of their persuasive

142
00:12:44.580 --> 00:12:50.180
power or even become completely garbled. Secondly, the editor or the columnist has the privilege

143
00:12:50.180 --> 00:12:56.140
of the last word. The effect on the uncritical reader is always that his paper is right.

144
00:12:56.140 --> 00:13:02.220
What is needed to fight such allegedly non-docmatic dogmas as those advanced by Mr. Collins and

145
00:13:02.220 --> 00:13:07.820
and a host of other writers, is an independent journal of opinion. Mises later explained

146
00:13:07.820 --> 00:13:12.220
in private correspondence with a reader of Human Action who wondered why the libertarian

147
00:13:12.220 --> 00:13:14.620
message did not make it into the press.

148
00:13:14.620 --> 00:13:19.060
The newspapers and magazines published in this country are either operated on a commercial

149
00:13:19.060 --> 00:13:25.140
basis or are newspapers and magazines of opinion. The publishers and editors of the first group

150
00:13:25.140 --> 00:13:29.500
are anxious not to antagonize the feelings of the majority or a considerable part of

151
00:13:29.500 --> 00:13:44.500
If they cannot refuse printing an article or a letter to the editor which attacks the popular errors concerning the fair deal and similar policies, they edit it. They cut down the arguments of the author in such a way that they become clumsy nonsense.

152
00:13:44.500 --> 00:13:53.500
The effect upon the reader is just contrary of what the author intended. They get the impression that the market economy is advocated exclusively by bunglers and halfwits.

153
00:13:53.500 --> 00:13:58.500
The second group consists almost exclusively of outright communists, half-communists and

154
00:13:58.500 --> 00:14:04.140
other pink publications. There are a few exceptions. One is the Wall Street Journal, another one

155
00:14:04.140 --> 00:14:08.820
is Plain Talk. But the Wall Street Journal is solely read by bankers and businessmen.

156
00:14:08.820 --> 00:14:14.260
Plain Talk does not get sufficient backing and may be forced to go out of business.

157
00:14:14.260 --> 00:14:19.980
Mises had had personal experiences with this type of journalism. In 1944, for example,

158
00:14:19.980 --> 00:14:24.660
The New York Times had published a smear job review of omnipotent government by a notorious

159
00:14:24.660 --> 00:14:28.560
star list who had obviously never read the book.

160
00:14:28.560 --> 00:14:30.320
Pugh was quick to react.

161
00:14:30.320 --> 00:14:35.620
In early December 1948 he met with the team running Plain Talk Magazine, Alfred Kohlberg,

162
00:14:35.620 --> 00:14:41.260
Isaac Don Levine and Eugene Lyons to discuss the advisability of making it into just such

163
00:14:41.260 --> 00:14:42.900
a journal of opinion.

164
00:14:42.900 --> 00:14:48.660
Pugh's idea was to provide a forum for Mises, Hazlitt and other select economists.

165
00:14:48.660 --> 00:14:53.860
These talks did not lead to the desired result, but two years later, one year after the publication

166
00:14:53.860 --> 00:14:58.900
of Human Action, Pugh stood again first in line to finance a libertarian journal of opinion,

167
00:14:58.900 --> 00:15:03.980
The Freeman, which for a few glorious years would spread Austrian economics among a larger

168
00:15:03.980 --> 00:15:04.980
public.

169
00:15:04.980 --> 00:15:10.740
Pugh had the habit of giving away shares of his corporation, Sun Oil, to all of his employees.

170
00:15:10.740 --> 00:15:15.300
Starting in 1951, he also gave such shares to Mises as Christmas gifts.

171
00:15:15.300 --> 00:15:18.300
He did this every year until 1968. He wrote,

172
00:15:18.300 --> 00:15:23.800
While you have been devoting your life to saving the world from those processes which inevitably lead to communism,

173
00:15:23.800 --> 00:15:29.800
the rest of us have been devoting our time to operating industry, to the exclusion of everything else,

174
00:15:29.800 --> 00:15:35.300
so that we have been blinded to the future, and so I hope you will accept from me, at this Christmas season,

175
00:15:35.300 --> 00:15:41.800
a small token of my appreciation in the form of a few shares of stock in the company to which I have devoted my life.

176
00:15:41.800 --> 00:15:47.920
Apparently, the two men had started socializing around October of 1949, when Pugh was a lunch

177
00:15:47.920 --> 00:15:50.720
guest in the Mises's apartment.

178
00:15:50.720 --> 00:15:54.240
Misesians Mises and his circle of friends were not the

179
00:15:54.240 --> 00:15:58.960
only libertarians who had not believed human action could become a bestseller. Herbert

180
00:15:58.960 --> 00:16:03.820
C. Conwell and the people at the Volcker Fund had sensed that the Misesian edifice was too

181
00:16:03.820 --> 00:16:09.120
intellectual to be digested by the general American public. What was needed was a more

182
00:16:09.120 --> 00:16:13.860
or boiled down version of the book which would facilitate the penetration of the message into

183
00:16:13.860 --> 00:16:17.000
the larger public. But who could write such a work?

184
00:16:17.000 --> 00:16:20.760
Conwell thought he had found the right person in Murray Rothbard, who had been in touch

185
00:16:20.760 --> 00:16:27.600
with FEE from at least 1946. Apparently he met Mises for the first time at a FEE lecture

186
00:16:27.600 --> 00:16:33.160
in the summer of 1948. This was an invitation to attend a meeting on July 8th when Ludwig

187
00:16:33.160 --> 00:17:01.160
by the spring of 1948, when he passed his oral exams, he had never heard of Austrian economics, except, as he later recalled, as something that had been integrated into the main body of economics by Alfred Marshall sixty years before. Rothbard had a distinct recollection of his pre-Human Action economic worldview.

188
00:17:01.160 --> 00:17:08.160
I had a definite instinctive feeling, or insight, or whatever, that there was something wrong with all the schools of economics.

189
00:17:08.160 --> 00:17:11.160
I was very unhappy with all the economic theory.

190
00:17:11.160 --> 00:17:20.160
I thought that the institutionalists, when the institutionalists were criticizing the orthodox, Anglo-American economics, that they were right,

191
00:17:20.160 --> 00:17:24.160
and when the orthodox people were criticizing the institutionalists, they were right.

192
00:17:24.160 --> 00:17:41.160
The criticisms were right, and I believed that the simple supply and demand stuff was correct, but I didn't really have a good theoretical base. I wasn't happy with any theories offered. And then when I read Human Action, the whole thing just slipped into place because everything made sense.

193
00:17:41.160 --> 00:17:46.640
Shortly before he left FEE to work for the Volcker Fund, Herbert Conwell asked Mises

194
00:17:46.640 --> 00:17:51.500
to keep an eye on the Columbia University graduate. He called him one of the most outstanding

195
00:17:51.500 --> 00:17:56.460
liberal economics students I know, and mentioned that Rothbard would be interested in attending

196
00:17:56.460 --> 00:18:02.600
the NYU seminar. Some weeks before the publication of Human Action then, Mises and Rothbard seemed

197
00:18:02.600 --> 00:18:07.640
to have discussed Rothbard's project of writing a Misesian textbook on economics, a guide

198
00:18:07.640 --> 00:18:09.680
for the Intelligent Layman.

199
00:18:09.680 --> 00:18:14.300
After Mises' approval of an outline of the proposed book, Rothbard wrote to Cornwell in

200
00:18:14.300 --> 00:18:19.440
November 1949, declaring that he was interested in the subject and that Mises had asked him

201
00:18:19.440 --> 00:18:25.500
to draft a representative chapter on money and banking on the unhampered market.

202
00:18:25.500 --> 00:18:29.440
During those months, Rothbard took part in Mises' NYU seminar, which dealt that winter

203
00:18:29.440 --> 00:18:34.320
with Marxism, and in the spring moved on to the discussion of other schools of thought.

204
00:18:34.320 --> 00:18:39.360
has reinforced the message Rothbard had derived from reading Human Action. From you, I've

205
00:18:39.360 --> 00:18:43.320
learned for the first time that economics is a coherent structure, and I'm sure that

206
00:18:43.320 --> 00:18:47.160
this has been impressed on the other members of the seminar as well.

207
00:18:47.160 --> 00:18:52.440
By early January 1951, less than 16 months after the publication of Human Action, Cornuel

208
00:18:52.440 --> 00:18:57.240
and Mises had received the representative chapter. Cornuel was enthusiastic about the

209
00:18:57.240 --> 00:19:01.440
work, and Mises also thought that Rothbard would be the right person to write a textbook

210
00:19:01.440 --> 00:19:05.440
on Austrian Economics after getting his PhD. He wrote to Cornwell,

211
00:19:05.440 --> 00:19:09.440
I think that Rothbard's chapter on money and banking is very satisfactory.

212
00:19:09.440 --> 00:19:14.720
It certainly proves his ability to write a textbook much better than those I have had an opportunity

213
00:19:14.720 --> 00:19:19.440
to see. I hope he will continue his work as soon as he will have finished his thesis.

214
00:19:20.000 --> 00:19:25.040
But Cornwell did not wait. He offered Rothbard financial support from the Volcker Fund so that

215
00:19:25.040 --> 00:19:31.280
the project could go forward. Rothbard began working for the fund on January 1st, 1952,

216
00:19:31.280 --> 00:19:35.840
and continued his intensive work for them for the next six years.

217
00:19:35.840 --> 00:19:39.720
Murray Rothbard was the first in a long line of whiz kids who found a new intellectual

218
00:19:39.720 --> 00:19:44.720
home in Human Action and in Mises' seminar. Over the next 15 years it happened with great

219
00:19:44.720 --> 00:19:50.760
regularity that highly gifted young men such as George Resch and Paul Cantor suddenly sought

220
00:19:50.760 --> 00:19:56.660
admission to the NYU seminar. Some of them even sought admission to Mises' residence.

221
00:19:56.660 --> 00:20:01.000
One day Mises was ready to go out for dinner when the doorbell rang. Two youngsters were

222
00:20:01.000 --> 00:20:16.000
Mises was standing at the door and offered a subscription to the Freeman magazine. Mises declined the offer, saying he was already on their mailing list. He did not know that this was his first contact with two of his most ardent followers, Ralph Reiko and George Reisman.

223
00:20:16.000 --> 00:20:30.000
Reiko and Reisman were both 15 years old. They had been reading the Freeman for a year or two and had also read some of Mises' books. Inspired, they had established the Cobden Club, an organization of right-wing students to fight the good fight.

224
00:20:30.000 --> 00:20:36.000
One day they decided to pay their hero a visit and came up with the ruse of presenting themselves as salesmen.

225
00:20:36.000 --> 00:20:43.000
Fortunately, they then decided to do things the proper way and paid a visit to the F.E.E. offices in Irvington,

226
00:20:43.000 --> 00:20:49.000
where they met with Ivan Beely, who was so impressed by their knowledge that he asked Mises whether he would be willing to receive them.

227
00:20:49.000 --> 00:20:55.000
Within ten days the meeting was arranged and the old man, who fortunately did not remember their faces,

228
00:20:55.000 --> 00:20:59.960
Mises advised the boys about the proper way to study economics and spend their time in

229
00:20:59.960 --> 00:21:04.600
college. That first meeting took place on February 23rd. He persuaded them that they

230
00:21:04.600 --> 00:21:09.920
had to invest more time learning about economics and liberty, rather than propagandizing theories

231
00:21:09.920 --> 00:21:14.680
that they did not really understand. As a token of his trust in their talents, he invited

232
00:21:14.680 --> 00:21:20.640
them to attend his NYU seminar under condition that they did not make noise. They would attend

233
00:21:20.640 --> 00:21:25.280
and his seminar for many years and become important advocates of Misesian economics.

234
00:21:25.280 --> 00:21:28.260
They both learned German on Mises' advice.

235
00:21:28.260 --> 00:21:33.800
Reiko translated liberalismus into English and Reisman did the same for Grundprobleme,

236
00:21:33.800 --> 00:21:38.840
epistemological problems on economics and the free and prosperous Commonwealth.

237
00:21:38.840 --> 00:21:43.560
The title of the latter book was changed in subsequent additions to liberalism, a socio-economic

238
00:21:43.560 --> 00:21:44.840
exposition.

239
00:21:44.840 --> 00:21:51.560
The Volcker Fund sponsored Reiko's translation, which he began in the summer of 1956.

240
00:21:51.560 --> 00:21:55.240
Speeches and Papers Encouraged by the success of Human Action,

241
00:21:55.240 --> 00:21:59.760
Mises turned again to fighting the prevailing ideology of interventionism.

242
00:21:59.760 --> 00:22:04.800
On April 18, 1950, he attended a reception of New York's University Club, held in honor

243
00:22:04.800 --> 00:22:08.960
of the author of Human Action, and addressed the audience in an after-dinner speech on

244
00:22:08.960 --> 00:22:14.880
and the economics of the middle-of-the-road policy. The talk was a huge success. Two weeks

245
00:22:14.880 --> 00:22:19.400
later the lecture was printed in the Financial and Commercial Chronicle, and at the end of

246
00:22:19.400 --> 00:22:24.080
the year, Frederic Neimeier printed one thousand copies of it as a pamphlet for his campaign

247
00:22:24.080 --> 00:22:28.960
to counter the growing socialism among his fellow Calvinists.

248
00:22:28.960 --> 00:22:33.600
Mises went on to write a series of articles on various aspects of interventionism, which

249
00:22:33.600 --> 00:22:38.480
he published mainly in three journals, Commercial and Financial Chronicle, Plain Talk and The

250
00:22:38.480 --> 00:22:43.800
Freeman. These pieces both drew on the success of Human Action and spurred further interest

251
00:22:43.800 --> 00:22:49.220
in the book within the grassroots libertarian movement, yet Mises certainly harboured no

252
00:22:49.220 --> 00:22:55.200
illusions about their short-run impact. The libertarian tradition was old in America,

253
00:22:55.200 --> 00:23:01.240
and it was still strong, but he was well aware that current trends were eroding it relentlessly.

254
00:23:01.240 --> 00:23:06.040
If interventionism continues to be the policy of the US, this country will before long go

255
00:23:06.040 --> 00:23:14.260
This concern was soon confirmed by the policies adopted in the wake of the Korean War. When

256
00:23:14.260 --> 00:23:19.200
war broke out in the fall of 1950, the US government immediately reinstituted the wartime

257
00:23:19.200 --> 00:23:25.320
regime of price controls and regulations. In the spring of 1950, Mises attended a conference

258
00:23:25.320 --> 00:23:31.560
dedicated to analyzing the impact of the current Korean War mobilization on the American economy.

259
00:23:31.560 --> 00:23:36.880
The conference took place on April 5-8 in White Sulphur Springs, West Virginia and was

260
00:23:36.880 --> 00:23:41.720
sponsored by the William Volcker Fund. He then wrote a lengthy paper for the 1951 Mont

261
00:23:41.720 --> 00:23:46.320
Pelerin Society meeting in Beauvillon. Its subject was the nature of entrepreneurial

262
00:23:46.320 --> 00:23:52.240
profit and loss, which, Mises explained, resulted exclusively from the relative quality of entrepreneurial

263
00:23:52.240 --> 00:23:57.180
decision-making and therefore could not possibly be abolished through legislation or any other

264
00:23:57.180 --> 00:24:02.060
and a form of government intervention. He also demonstrated the social utility of profit

265
00:24:02.060 --> 00:24:07.980
and loss. Profits direct resources into those hands that use them in the way most desired

266
00:24:07.980 --> 00:24:14.420
by consumers. Losses help eliminate incompetent entrepreneurs thus preventing a waste of resources.

267
00:24:14.420 --> 00:24:19.020
The work was ready by early June and Mises sent it to Neumeier. At the same time he must

268
00:24:19.020 --> 00:24:23.980
have finished at least the first draft of another important work. By June 1951 he had

269
00:24:23.980 --> 00:24:29.940
have written a manuscript on dialectical materialism, a later version of which was probably incorporated

270
00:24:29.940 --> 00:24:32.780
as a chapter in theory and history.

271
00:24:32.780 --> 00:24:38.180
His Calvinist friend immediately recognized its suitability for widespread dissemination.

272
00:24:38.180 --> 00:24:42.180
Even before the Montpilarin Society meeting began, Neymeyer had agreed to publish the

273
00:24:42.180 --> 00:24:47.060
paper and set out to print 5,000 copies, of which the Volcker Fund immediately ordered

274
00:24:47.060 --> 00:24:48.860
1,500 copies.

275
00:24:48.860 --> 00:24:53.940
In his renewed effort to combat interventionism, Mises began by writing on such topics as middle

276
00:24:53.940 --> 00:25:05.300
He believed that it was important to target domestic interventionism. To one correspondent

277
00:25:05.300 --> 00:25:10.400
in Sweden who sought to launch a campaign for free trade, Mises explained why this campaign

278
00:25:10.400 --> 00:25:15.040
could only be based on a preceding campaign focused on domestic policies.

279
00:25:15.040 --> 00:25:19.740
One could take into consideration the abolishment of protectionism in the time of Cobden and

280
00:25:19.740 --> 00:25:24.660
and Chevalier as freedom of commerce existed within each state or it was at least on its

281
00:25:24.660 --> 00:25:29.180
way to it being established. Things are very different in the age of interventionism. Each

282
00:25:29.180 --> 00:25:34.500
country has a system of varying privileges for individual interest groups, pressure groups.

283
00:25:34.500 --> 00:25:38.700
None of these measures would work if foreign countries were to freely supply the domestic

284
00:25:38.700 --> 00:25:44.220
market of this country. Keeping away foreign competition is for this reason an indispensable

285
00:25:44.220 --> 00:25:49.440
complement to domestic economic policy. US representatives occasionally indulge in talk

286
00:25:49.440 --> 00:25:56.620
of Free Trade, this is pure illusion, American agricultural policies, parity prices, subsidies,

287
00:25:56.620 --> 00:26:00.940
limitation of crop services, destruction of supplies, potatoes, among other things, would

288
00:26:00.940 --> 00:26:06.140
collapse overnight if foreign imports were freely allowed into the country. Can you imagine

289
00:26:06.140 --> 00:26:11.460
a present-day England or present-day France with a regime of free trade? The more a country

290
00:26:11.460 --> 00:26:16.580
proceeds to a comprehensive control of all business activities, the more it must close

291
00:26:16.580 --> 00:26:21.160
lose itself to foreign countries. The battle for free trade must therefore first attack

292
00:26:21.160 --> 00:26:27.680
domestic protectionist measures. Similarly, he wrote a few years later to Auger, an interventionist

293
00:26:27.680 --> 00:26:32.440
government can virtually annul all the expected advantages of the disappearance of customs

294
00:26:32.440 --> 00:26:38.320
barriers by domestic intervention. Under the conditions of interventionism, a really common

295
00:26:38.320 --> 00:26:43.000
market can be achieved only by a common government that has the power to delimit strictly the

296
00:26:43.000 --> 00:26:46.920
and the jurisdiction of the various national governments.

297
00:26:46.920 --> 00:26:51.540
Of course, this does not mean that he would now downplay the importance of free trade.

298
00:26:51.540 --> 00:26:55.040
He discussed it in his lectures and occasionally also in correspondence.

299
00:26:55.040 --> 00:27:00.160
A master of concision, Mises sometimes addressed the point better in correspondence than in

300
00:27:00.160 --> 00:27:01.160
his books.

301
00:27:01.160 --> 00:27:04.820
For example, in response to the perennial question of whether free trade would cost

302
00:27:04.820 --> 00:27:06.560
American jobs, he replied,

303
00:27:06.560 --> 00:27:19.560
Wages are cheaper in almost all foreign countries than they are in this country, but total costs of production are for most commodities, practically for all manufactured goods, lower in this country than they are abroad.

304
00:27:19.560 --> 00:27:27.560
What counts in competing on the market is not the height of one item of the total bill of costs, but total costs of production.

305
00:27:27.560 --> 00:27:34.560
There are of course some minor and less important branches of manufacturing which under free trade would lose a part of their customers to foreign competition,

306
00:27:34.560 --> 00:27:58.980
The Freeman

307
00:27:58.980 --> 00:28:05.020
The success of Human Action prompted the creation of another important libertarian institution.

308
00:28:05.020 --> 00:28:10.740
Mises had long been arguing the need for a free market journal of opinion. Now organisers,

309
00:28:10.740 --> 00:28:17.220
journalists and especially financial backers rallied to establish such a journal. Its explicit

310
00:28:17.220 --> 00:28:22.700
purpose would be to promote the ideas Mises stood for. The Austrian economist became the

311
00:28:22.700 --> 00:28:27.700
intellectual standard bearer of the Freeman, which reinforced the infant network of Mises'

312
00:28:27.700 --> 00:28:35.020
NYU Seminar, FEE and the Mont Pelerin Society. Despite its eventual departure from its founding

313
00:28:35.020 --> 00:28:40.060
auspices, the Freeman would play a significant role in the revival of American libertarianism

314
00:28:40.060 --> 00:28:46.340
under new Austrian auspices. Two historians have aptly summarized this role. It is difficult

315
00:28:46.340 --> 00:28:51.420
to convey a sense of the crucial role of the Freeman at the height of its prestige. Between

316
00:28:51.420 --> 00:28:56.940
1950 and 1954, the American left in these years had many well-known and reputable journals

317
00:28:56.940 --> 00:29:03.860
The American right had almost none. By the end of 1955, when new owners changed the nature

318
00:29:03.860 --> 00:29:10.000
of the magazine, a self-conscious and relatively coherent movement had evolved. If creeping

319
00:29:10.000 --> 00:29:16.080
conservatism was the grand trend of the 1950s, then the Freeman had been its professional

320
00:29:16.080 --> 00:29:21.280
and articulate journal of opinion. The Freeman began as a successor to the journal Plain

321
00:29:21.280 --> 00:29:25.920
Talk, which for some time had been in financial trouble and could only survive on subsidies

322
00:29:25.920 --> 00:29:30.960
from New York Businessman Alfred Kohlberg. Initial financing of The Freeman came through

323
00:29:30.960 --> 00:29:35.840
the fundraising efforts of Jasper Crane, which had resulted in a substantial donation from

324
00:29:35.840 --> 00:29:41.000
Herbert Hoover and sizable loans from Howard G. Pugh and Crane himself.

325
00:29:41.000 --> 00:29:46.680
In a note dated October 3, 1952, John Chamberlain called Hoover the principal founder of The

326
00:29:46.680 --> 00:29:51.880
Freeman. Later, Leo Wallman successfully set up an advertisement programme, which was then

327
00:29:51.880 --> 00:29:59.000
The explicit motivation of Pugh and Crane was to provide a forum for the author of Human

328
00:29:59.000 --> 00:30:04.020
Action and like-minded intellectuals, but to ensure editorial independence, all initial

329
00:30:04.020 --> 00:30:09.920
funds came in the form of donations and loans, rather than by stock. Shortly after the establishment

330
00:30:09.920 --> 00:30:14.840
of the Freeman, Frederic Neimeier had written to business friends that Dr. von Mises has

331
00:30:14.840 --> 00:30:20.520
been a prime mover on the programme to put out a truly liberal, meaning by that, laissez-faire

332
00:30:20.520 --> 00:30:25.400
Capitalism, periodical to counter-influence the flood of leftist publications.

333
00:30:25.400 --> 00:30:29.760
The man who finally organized the financial matters for such a publication is Mr. Jasper

334
00:30:29.760 --> 00:30:30.760
Crane.

335
00:30:30.760 --> 00:30:35.640
Crane was at that time a director of DuPont and member of its executive committee.

336
00:30:35.640 --> 00:30:39.680
Leadership of the Freeman was in the hands of its three editors, Henry Hazlitt, John

337
00:30:39.680 --> 00:30:42.200
Chamberlain and Suzanne Lafollette.

338
00:30:42.200 --> 00:30:46.120
Chamberlain became the president and Hazlitt the vice president of the journal.

339
00:30:46.120 --> 00:30:50.620
They published The Freeman as a fourth nightly review, with Mises on an eleven-man board

340
00:30:50.620 --> 00:30:55.440
of directors. The first issue appeared on October 2nd, 1950.

341
00:30:55.440 --> 00:30:59.420
The Freeman had two predecessors by the same name. The first Freeman was published for

342
00:30:59.420 --> 00:31:04.860
a couple of years in the 1920s. The editor was Alfred J. Nark. In the 1930s, then a former

343
00:31:04.860 --> 00:31:10.720
assistant to Nark, Suzanne Lafollette, published a successor for about fourteen months. Lafollette

344
00:31:10.720 --> 00:31:15.880
also joined the editorial team of Chamberlain's and Hazlitt's Freeman in 1950.

345
00:31:15.880 --> 00:31:20.880
Many observers greeted the new publication as the necessary exception in a media landscape

346
00:31:20.880 --> 00:31:25.240
dominated by the left. Raymond Moley explained to his readers in Newsweek,

347
00:31:25.240 --> 00:31:29.700
It is difficult to realize how firmly entrenched in this country are the forces which would

348
00:31:29.700 --> 00:31:34.960
pervert the free institutions of this country into the reality of a socialist state. The

349
00:31:34.960 --> 00:31:39.600
drift toward more state power, particularly federal power, began many years ago under

350
00:31:39.600 --> 00:31:45.120
such names as progressivism or liberalism. This movement, as organized politics, ultimately

351
00:31:45.120 --> 00:31:50.000
captured the Democratic Party under FDR. It pervades most of the economic and political

352
00:31:50.000 --> 00:31:55.440
thinking in our colleges and universities. It has seized ascendancy in our literary criticism

353
00:31:55.440 --> 00:32:02.080
and book reviewing. And finally, through the political arms of the CIO and AFL, it has

354
00:32:02.080 --> 00:32:06.160
measurably brought together into a hardcore the immense financial and voting strength

355
00:32:06.160 --> 00:32:11.480
of the unions. No little credit for this is due to two journals of opinion, The Nation

356
00:32:11.480 --> 00:32:16.320
and New Republic. These journals, once the voice of minority protest, have become the

357
00:32:16.320 --> 00:32:21.600
gospel of what has almost become an established order of thinking. A whole generation of teachers

358
00:32:21.600 --> 00:32:26.840
and other leaders of thought have, to a measurable degree, taken their political bearings from

359
00:32:26.840 --> 00:32:32.520
these journals. The freeman's great role is that of a protest against the new orthodoxy

360
00:32:32.520 --> 00:32:37.480
which holds that all good comes from the state. This new protest has the virtue, however,

361
00:32:37.480 --> 00:32:42.960
of Conformity to the Oldest and Best Traditions of American Freedom, Traditions that if neglected

362
00:32:42.960 --> 00:32:46.120
too long will wither and die.

363
00:32:46.120 --> 00:32:47.840
The journal had an excellent start.

364
00:32:47.840 --> 00:32:55.400
Subscriptions increased from 5,203 in the first issue to 12,200 in May 1951.

365
00:32:55.400 --> 00:33:00.760
By March 1952 Time and Newsweek reported that the new kid on the block distributed close

366
00:33:00.760 --> 00:33:03.120
to 20,000 copies.

367
00:33:03.120 --> 00:33:08.600
At the end of March 1952 Alfred Kohlberg dropped out as treasurer and returned to his important

368
00:33:08.600 --> 00:33:14.480
business. In came Alex Hillman, publisher of Pageant and People Today and other magazines.

369
00:33:14.480 --> 00:33:20.520
This was the first great blossoming of Austro-libertarianism in America. Mises now felt that things had

370
00:33:20.520 --> 00:33:26.560
substantially improved and he wrote in correspondence that the case for liberty had made great progress

371
00:33:26.560 --> 00:33:29.680
since the dark days of 1945.

372
00:33:29.680 --> 00:33:34.120
Casimir Lambert, who left the United States in 1946, had just returned. Mises wrote to

373
00:33:34.120 --> 00:33:37.680
him that meanwhile many things have changed for the better.

374
00:33:37.680 --> 00:33:42.460
The Freeman not only provided Mises with a forum for his ideas, but also with an organisational

375
00:33:42.460 --> 00:33:46.280
basis through which he could reach out directly to students.

376
00:33:46.280 --> 00:33:51.040
At the initiative of Henry Hazlitt, the Freeman sponsored a two-week Mises seminar in the

377
00:33:51.040 --> 00:33:58.280
afternoons of June 25th through July 6th, 1951 in the alumni room of the NYU Faculty

378
00:33:58.280 --> 00:34:02.720
Club on Washington Square. Mises was not in New York during the first three weeks of

379
00:34:02.720 --> 00:34:07.680
June and left New York City again on July 10th, probably for the Montpelerin Society

380
00:34:07.680 --> 00:34:13.160
meeting in Beauvalon. In the first week, Mises dealt with fundamental problems of economic

381
00:34:13.160 --> 00:34:19.040
analysis and in the second turned to monetary economics. Young Leland Yeager, at the time

382
00:34:19.040 --> 00:34:24.680
a graduate student in monetary economics, was one of the 39 participants. The second

383
00:34:24.680 --> 00:34:27.680
The following week would leave a lasting impression on him. He wrote,

384
00:34:27.680 --> 00:34:32.680
Reading your books is very instructive, but seeing and hearing you in person is a genuine inspiration.

385
00:34:32.680 --> 00:34:37.680
You revealed yourself not only as a great economist, but as a great humanitarian too.

386
00:34:37.680 --> 00:34:44.680
The interventionists who cite you as an example of a die-hard reactionary are only showing their own complete ignorance.

387
00:34:44.680 --> 00:34:49.680
What a pity that the world has so few intellectually courageous men like you.

388
00:34:49.680 --> 00:34:52.680
Bettina Bean took lecture notes of this seminar.

389
00:34:52.680 --> 00:35:03.680
In the 1980s, Jaeger held the Ludwig von Mises Chair in Political Economy at Auburn University in Alabama. He is the author of a famous textbook on international monetary relations.

390
00:35:03.680 --> 00:35:10.680
Jaeger was one of the few student participants. Most members of the seminar were teachers, journalists, businessmen and professors.

391
00:35:10.680 --> 00:35:21.680
The two weeks were a great success and led to a second Mises seminar in June and July 1952 in San Francisco's public library before an audience of 46 participants.

392
00:35:21.680 --> 00:35:26.720
There was also another 1951 meeting in White Sulphur Springs which Mises did not like at

393
00:35:26.720 --> 00:35:32.960
all because of the presence of too many statists. Again, the first week was dedicated to fundamentals.

394
00:35:32.960 --> 00:35:38.400
Mises here delivered his analysis of dialectical materialism, which a few years later appeared as

395
00:35:38.400 --> 00:35:43.520
a chapter of his book Theory and History. In the second week he dealt with capital theory,

396
00:35:43.520 --> 00:35:47.920
saving, investment, and the accumulation of capital, the demand for capital, and the economic

397
00:35:47.920 --> 00:35:50.320
Forming a Political Significance of Foreign Investment

398
00:35:50.320 --> 00:35:56.020
Again, this seminar was very successful, but it did not go to his head. When invited to

399
00:35:56.020 --> 00:35:59.000
appear on television in California, he declined, saying,

400
00:35:59.000 --> 00:36:04.800
My foreign accent prevents me from appearing on television or radio. These media of communication

401
00:36:04.800 --> 00:36:08.980
intensify the shortcomings of the speaker's pronunciation.

402
00:36:08.980 --> 00:36:14.640
Mises left Manhattan for San Francisco some days after June 18. After the seminar, he

403
00:36:14.640 --> 00:36:19.240
He spent a vacation in California and returned to Manhattan after Labor Day. The fall term

404
00:36:19.240 --> 00:36:25.120
started on September 22nd. In the tradition of Plain Talk, one of the concrete goals of

405
00:36:25.120 --> 00:36:31.920
the Freeman was to expose Communism as a totalitarian scheme. Anti-Communism also provided a unifying

406
00:36:31.920 --> 00:36:36.400
theme for dealing with foreign policy and domestic policies, which could be denounced

407
00:36:36.400 --> 00:36:42.840
as Communist-inspired. Yet there was no fundamental agreement on the strategic role of anti-Communism.

408
00:36:42.840 --> 00:36:48.280
Chameleon and Lafollette saw in it the very essence of their mission. For Mises and Hazlitt,

409
00:36:48.280 --> 00:36:53.160
Communism was just a particularly gruesome species of the more general disease of statism,

410
00:36:53.160 --> 00:36:59.020
which manifested itself most notably in domestic government interventionism. Many of the Freeman

411
00:36:59.020 --> 00:37:03.680
articles in the decisive early years dealt with American foreign policy, especially for

412
00:37:03.680 --> 00:37:09.420
the role of the United States in confronting the Soviet-led East Bloc. The focus on anti-Communism

413
00:37:09.420 --> 00:37:14.740
in Foreign Policy, was certainly convenient in that it allowed the editors to expand their

414
00:37:14.740 --> 00:37:20.040
readership without offending those who were both anti-communist and pro-interventionist.

415
00:37:20.040 --> 00:37:25.340
Even on the issue of foreign policy, however, there was no unity in a libertarian camp.

416
00:37:25.340 --> 00:37:30.380
One faction advocated political isolationism combined with cultural and commercial openness

417
00:37:30.380 --> 00:37:35.500
to foreign countries. On the other side, there were the interventionists who championed American

418
00:37:35.500 --> 00:37:40.540
and Government Opposition to Communism on a Worldwide Scale. The latter tended to be

419
00:37:40.540 --> 00:37:45.700
less interested in combating Communism by intellectual and educational means, focusing

420
00:37:45.700 --> 00:37:51.980
instead on the denunciation of Communist infiltrators, the prosecution of domestic traitors and military

421
00:37:51.980 --> 00:37:57.860
action against Communist troops abroad. The confrontation crystallised in a semi-public

422
00:37:57.860 --> 00:38:03.340
correspondence between Leonard Reed and Lawrence Furtick. Reed had championed the resolute

423
00:38:03.340 --> 00:38:08.060
Anti-War Stands, because he recognized that war was the great mainspring of government

424
00:38:08.060 --> 00:38:09.060
power.

425
00:38:09.060 --> 00:38:10.060
Frederic commented,

426
00:38:10.060 --> 00:38:15.860
Your philosophy seems to trend toward non-resistance and even slightly toward anarchism. I believe

427
00:38:15.860 --> 00:38:20.940
that the raising of an army is a perfectly legitimate function of government. Your implication

428
00:38:20.940 --> 00:38:26.200
that we must wait on these shores before striking back at an aggressor makes no sense to me.

429
00:38:26.200 --> 00:38:30.860
Your statement that a man in the army shooting communists in Korea is just as girly as a

430
00:38:30.860 --> 00:38:36.780
The man blowing the head off a baby in Centreport is a statement that I reject completely.

431
00:38:36.780 --> 00:38:40.600
And he went on to say that the fundamental problem cannot be coercion per se, because

432
00:38:40.600 --> 00:38:45.020
taxes are, after all, coercively levied on the citizenry.

433
00:38:45.020 --> 00:38:50.660
Reid replied, Personally, I am unable to concede that there is any right that comes into being

434
00:38:50.660 --> 00:38:54.100
by reason of you and me acting collectively.

435
00:38:54.100 --> 00:38:58.660
From a moral standpoint, can the collective be right in doing what is wrong for the person?

436
00:38:58.660 --> 00:39:03.940
I concede that you have a moral right to protect your life and property against violence otherwise

437
00:39:03.940 --> 00:39:04.940
initiated.

438
00:39:04.940 --> 00:39:08.620
Collectively, we have the same right, but no more.

439
00:39:08.620 --> 00:39:12.620
This reasoning is not anarchical, nor is it pacifistic.

440
00:39:12.620 --> 00:39:17.940
It is nothing more than the limitation of force to what I think is its proper scope.

441
00:39:17.940 --> 00:39:21.580
Mises' views on the issue are revealed in a letter that he wrote some years later to

442
00:39:21.580 --> 00:39:27.000
Anthony Fisher, the founder of the neoliberal Institute of Economic Affairs in England.

443
00:39:27.000 --> 00:39:31.180
is deplored to the pro-socialist leanings of public opinion on the western side of the

444
00:39:31.180 --> 00:39:35.920
Iron Curtain, which paralyzes all political actions of the West and makes it possible

445
00:39:35.920 --> 00:39:41.440
for the Russians to do what they want in Hungary, Poland and the Near East.

446
00:39:41.440 --> 00:39:45.560
The average American intellectual condemns England and France as aggressors, but he does

447
00:39:45.560 --> 00:39:49.120
not consider as aggression what the Russians are doing in Hungary.

448
00:39:49.120 --> 00:39:54.320
He admits that the Russians are rather harsh in Hungary, but he excuses this harshness.

449
00:39:54.320 --> 00:39:59.480
It is, he thinks, rather unrealistic to apply to Eastern affairs the yardstick of Western

450
00:39:59.480 --> 00:40:04.480
civilization. What in America would have to be qualified as brutality is in the East merely

451
00:40:04.480 --> 00:40:10.160
behaving as everybody does. Otherwise Mises did not get involved in these debates. In

452
00:40:10.160 --> 00:40:14.560
liberalism he had argued that the Russians should be allowed to do in their own country

453
00:40:14.560 --> 00:40:19.120
whatever they wished, that they should be free to spread their ideology in the West,

454
00:40:19.120 --> 00:40:23.720
even with the help of clandestine hirelings, and that businessmen and other citizens of

455
00:40:23.720 --> 00:40:28.640
of the Western countries should be free to make loans to Bolsheviks in Russia and elsewhere.

456
00:40:28.640 --> 00:40:34.080
What he opposed was Western governments actively supporting the destructive policies of Communism,

457
00:40:34.080 --> 00:40:38.280
whether through premiums paid on exports to the Soviet Union or through propaganda on

458
00:40:38.280 --> 00:40:43.160
their behalf. He had espoused this position a quarter century earlier, and he had not

459
00:40:43.160 --> 00:40:48.180
retracted a single word. He was convinced that Communism first and foremost posed an

460
00:40:48.180 --> 00:40:53.400
intellectual challenge and had to be fought with the weapon of the mind. Mises wanted

461
00:40:53.400 --> 00:40:57.720
Friedman to run more articles and book reviews dealing with economic principles, but he was

462
00:40:57.720 --> 00:41:03.080
aware that the journal lacked the manpower to do so. The dispute over American foreign policy

463
00:41:03.080 --> 00:41:08.040
foreshadowed dividing lines within the American libertarian movement that have continued to the

464
00:41:08.040 --> 00:41:14.600
present day, but in the early 1950s it was only a sideshow in the unfolding drama that led to the

465
00:41:14.600 --> 00:41:20.120
early demise of The Freeman. The main factor in this drama was a disagreement between Hazlitt

466
00:41:20.120 --> 00:41:26.120
and Chameleon on strategic issues of editorial policy. Then, too, there was the fact that

467
00:41:26.120 --> 00:41:31.240
Hazlitt, who had the backing of the main sponsors, was unwilling to give up his position at Newsweek

468
00:41:31.240 --> 00:41:37.800
to run the Freeman full-time. Conflicts between the Hazlitt-Mises camp and the Chameleon-Lafollette

469
00:41:37.800 --> 00:41:42.920
camp were inevitable, given their different outlooks on what the Freeman was and should be.

470
00:41:43.480 --> 00:41:48.600
For Mises and Hazlitt, the essential mission of the journal was to educate the larger public,

471
00:41:48.600 --> 00:41:52.800
not to take part in the daily strife of political factions.

472
00:41:52.800 --> 00:41:57.200
As I see it, the function of the freemen is to make it possible for dissenters to challenge

473
00:41:57.200 --> 00:41:59.120
the ideas of the left.

474
00:41:59.120 --> 00:42:04.040
The issue is not so much to fight communism, as this task is to some extent accomplished

475
00:42:04.040 --> 00:42:05.920
by other media of communication.

476
00:42:05.920 --> 00:42:11.960
What matters is to expound sound economics and to expose current economic fallacies.

477
00:42:11.960 --> 00:42:16.720
In contrast, Tamalin favoured a more aggressive tone, both attacking and endorsing specific

478
00:42:16.720 --> 00:42:21.920
of Persons, Parties and Political Candidates. With an eye on Mises, Webker and other academic

479
00:42:21.920 --> 00:42:27.800
contributors, he later argued against sterile journalism. We believe that it was the intention

480
00:42:27.800 --> 00:42:31.640
of the founders that the Freeman should be a comprehensive fourth-nightly review of the

481
00:42:31.640 --> 00:42:36.320
contemporary scene and not merely a journal of classical economics, allowing a selected

482
00:42:36.320 --> 00:42:41.480
group of economists to talk to each other via their papers. In short, Chamberlain held that

483
00:42:41.480 --> 00:42:47.520
The magazine must have crusading zeal, wit, satire, and editorial bite.

484
00:42:47.520 --> 00:42:53.440
Hazlett replied, Exactly, but one man's crusading zeal is merely another man's vehemence.

485
00:42:53.440 --> 00:42:57.160
One man's wit and satire merely another man's trivial wisecracks.

486
00:42:57.160 --> 00:42:59.160
One man's editorial bite.

487
00:42:59.160 --> 00:43:01.760
Merely another's vituperation.

488
00:43:01.760 --> 00:43:05.000
After two years of experience, Hazlett found his concerns confirmed.

489
00:43:05.000 --> 00:43:09.120
He quoted Chicago economist Frank Knight, who had told him in correspondence that the

490
00:43:09.120 --> 00:43:13.960
The Freeman seems to scream in a way that may tickle the ears of those already converted

491
00:43:13.960 --> 00:43:19.360
or over-converted, but it would hardly convert anybody or at least nobody open to reason,

492
00:43:19.360 --> 00:43:22.440
and they are the only ones I'm personally interested in.

493
00:43:22.440 --> 00:43:25.000
This seems to have been a widely shared perception.

494
00:43:25.000 --> 00:43:29.760
One company executive explained why he would advertise in The Freeman in 1953, but not

495
00:43:29.760 --> 00:43:33.720
in 1952, when the old editorial team was still in place.

496
00:43:33.720 --> 00:43:37.840
We did consider The Freeman last year, but at that time it was too inflammatory and not

497
00:43:37.840 --> 00:43:49.880
Hazlitt himself was later reported to object, to putting out the kind of magazine in which

498
00:43:49.880 --> 00:43:54.640
McCarthy is a sacred character, and Furtick was quoted in the same source saying that

499
00:43:54.640 --> 00:43:59.480
the Freeman should have convinced by logic and reason with less shrillness, less direct

500
00:43:59.480 --> 00:44:01.080
hysteria.

501
00:44:01.080 --> 00:44:06.800
Hazlitt stated his opinion in October 1952, a libertarian journal of opinion is only worth

502
00:44:06.800 --> 00:44:10.960
Publishing, as I see it, if it can have a real effect in turning the tide of national

503
00:44:10.960 --> 00:44:15.960
thought in this crucial era. To have such an effect it must command the respect of the

504
00:44:15.960 --> 00:44:21.020
intellectuals, even, in fact, particularly of those we are trying to convert, and it

505
00:44:21.020 --> 00:44:25.420
cannot command this respect unless it has dignity and a note of authority. Of course

506
00:44:25.420 --> 00:44:31.160
the magazine must also be lively to reach as wide an audience as possible without sacrificing

507
00:44:31.160 --> 00:44:35.740
these qualities. Even though Haslitt was only a part-time editor, his work with the Freeman

508
00:44:35.740 --> 00:44:38.740
proved to be a severe drain on his energies.

509
00:44:38.740 --> 00:44:44.580
By May 1952 he brought a new man onto the editorial team, Forrest Davis, a former Washington

510
00:44:44.580 --> 00:44:50.180
editor for the Saturday Evening Post, but just a few days after his arrival it was clear

511
00:44:50.180 --> 00:44:53.100
that Davis was not to be Hazlitt's man.

512
00:44:53.100 --> 00:44:58.220
Isolated in his editorial stance, Hazlitt resigned in June, officially he took a leave

513
00:44:58.220 --> 00:45:02.600
of absence of four months at the request of Mises, Furtick and other friends on the board

514
00:45:02.600 --> 00:45:07.760
Part of directors who did not want to abandon control of the Freeman to the remaining editors.

515
00:45:07.760 --> 00:45:11.760
So far so good for Chamberlain, La Follette and Davis. Their major problem in the wrong

516
00:45:11.760 --> 00:45:16.360
run was to find funding independent of the financial fathers of the magazine, Pugh and

517
00:45:16.360 --> 00:45:22.120
Crane, who backed the Hazlitt line. This problem seemed to find a convenient solution in the

518
00:45:22.120 --> 00:45:26.920
form of a fundraising dinner at the occasion of the Freeman's second anniversary. One

519
00:45:26.920 --> 00:45:31.680
month before the event, however, the Hazlitt camp started torpedoing the dinner preparations.

520
00:45:31.680 --> 00:45:36.920
It is not entirely clear what prompted them to this action. The following scenario seems

521
00:45:36.920 --> 00:45:41.080
most likely. During Hazlitt's leave of absence, Howard Pugh had made it clear to both the

522
00:45:41.080 --> 00:45:45.320
Chamberlain camp and to the members of the board of directors that he stood ready to

523
00:45:45.320 --> 00:45:50.880
finance the Freeman single-handedly if it focused on the communication of broad principles

524
00:45:50.880 --> 00:45:56.040
of the free market philosophy rather than engaging in partisan attacks on persons and

525
00:45:56.040 --> 00:46:01.140
programs, that is, if it followed the Hazlitt editorial line.

526
00:46:01.140 --> 00:46:06.540
When Chamberlain and his associates did not yield, Mises and the others started a last

527
00:46:06.540 --> 00:46:11.860
desperate attempt to direct the freemen toward Hazlitt's position by scuttling the fundraiser

528
00:46:11.860 --> 00:46:16.120
that would have made the editors financially independent of Pugh and Crane. The struggle

529
00:46:16.120 --> 00:46:21.800
got uglier and more personal. Chamberlain now wrote nasty letters accusing Hazlitt of

530
00:46:21.800 --> 00:46:27.760
being Pugh's lap dog, and in a heated board meeting in October 1953, Mises said Chamberlain

531
00:46:27.760 --> 00:46:31.840
and Lafollette were second-rate journalists compared to Hazlitt.

532
00:46:31.840 --> 00:46:37.160
On October 31st, 1952, a vote of confidence in favour of the present editors brought to

533
00:46:37.160 --> 00:46:42.560
light the composition of the two factions. A yes vote came from the three editors themselves

534
00:46:42.560 --> 00:46:47.960
and from Hillman, Peters and Kohlberg. A vote of no confidence came from Reid, Furtick,

535
00:46:47.960 --> 00:46:53.780
Mises and Robinsons. Hazlitt himself resigned both from the Board of Editors and as Vice

536
00:46:53.780 --> 00:47:00.360
President on October 8, 1952, as he had intended since May. Meanwhile, Crane and Furtick lined

537
00:47:00.360 --> 00:47:05.960
up a majority behind their position, and at a Board meeting on January 21, 1953, Hazlitt

538
00:47:05.960 --> 00:47:12.400
was elected editor-in-chief, whereupon Chamberlain, Lafollette and Davis resigned immediately.

539
00:47:12.400 --> 00:47:16.120
Chamberlain eventually became an editor of National Review, as well as of the Princeton

540
00:47:16.120 --> 00:47:20.380
panel and a regular contributor to the Wall Street Journal.

541
00:47:20.380 --> 00:47:24.900
But this was only a symbolic victory. More than six months of quarrel had brought the

542
00:47:24.900 --> 00:47:29.100
Freeman to the verge of bankruptcy, Jasper Crane desperately tried to raise new money

543
00:47:29.100 --> 00:47:33.420
with fundraising letters, and Frederic Neimeyer tried to acquire new advertisers but to no

544
00:47:33.420 --> 00:47:40.280
avail. Henry Regnery's response to Crane was symptomatic. I think this is the last cause.

545
00:47:40.280 --> 00:47:44.700
After a few months, Hazlitt, who still continued to write for Newsweek and to fulfil other

546
00:47:44.700 --> 00:47:55.180
In 1955, the magazine was taken over by the Irvington Press, a subsidiary of FEE, with

547
00:47:55.180 --> 00:48:00.620
Frank Chodoroff as editor. Mises contributed an article on Inequality of Wealth and Income

548
00:48:00.620 --> 00:48:05.780
to the first issue, May 1955. By January of the next year, the Freeman was officially

549
00:48:05.780 --> 00:48:11.080
the journal of FEE. Paul Poirot would be its editor for the next few decades, and it would

550
00:48:11.080 --> 00:48:15.880
would continue to publish the work of Mises and promote the economics of the Austrian School,

551
00:48:15.880 --> 00:48:19.720
but it never reached a mass audience.

552
00:48:19.720 --> 00:48:22.440
The Neumayr Connection

553
00:48:22.440 --> 00:48:26.560
Frederick Neumayr had printed 1,000 copies of The Economics of the Middle of the Road

554
00:48:26.560 --> 00:48:32.040
Policy, which he distributed for free among his fellow Calvinists. The campaign had a

555
00:48:32.040 --> 00:48:37.960
resounding echo. A few months later, the Edison Company ordered 3,100 copies, the Norfolk

556
00:48:37.960 --> 00:48:42.400
and Western Railway Company ordered 800 copies and other orders followed.

557
00:48:42.400 --> 00:48:45.760
Following instructions from Mises, Neumeyer published the piece under the title

558
00:48:45.760 --> 00:48:48.800
Middle of the Road Policy Leads to Socialism.

559
00:48:48.800 --> 00:48:52.000
Mises received a 10% royalty on the sales.

560
00:48:52.000 --> 00:48:54.720
The number of copies Neumeyer printed was 10,000.

561
00:48:54.720 --> 00:49:00.440
Shortly after the end of 1961, when a stock of 1,380 copies was left,

562
00:49:00.440 --> 00:49:05.440
there was a reprint and another reprint of 30,000 copies in 1965.

563
00:49:05.440 --> 00:49:11.260
At least one copy had found its way over the Atlantic and fell on fertile ground. The young

564
00:49:11.260 --> 00:49:16.120
English businessman Anthony Fisher asked that 48 copies be sent to him as a gift because

565
00:49:16.120 --> 00:49:20.800
of the foreign exchange controls which he duly received. Nymeyer wrote, Mr. Fisher's

566
00:49:20.800 --> 00:49:24.860
request may be a racket, but my assumption is that he is an advocate of free and competitive

567
00:49:24.860 --> 00:49:30.080
markets and that the use he makes of this pamphlet will promote a good cause. And Latin

568
00:49:30.080 --> 00:49:34.920
America, the Federation of Mexican Chambers of Commerce, planned to translate the piece,

569
00:49:34.920 --> 00:49:44.600
What I find revealing is the fact that such of his pamphlets as I received from you had

570
00:49:44.600 --> 00:49:48.680
to be published at all in a country which is supposed to be the only remaining fortress

571
00:49:48.680 --> 00:49:53.640
of free enterprise. If the Americans themselves are to be told about the benefits of free

572
00:49:53.640 --> 00:49:58.240
enterprise by Austrians of all people, it seems to me that the world's malady is pretty

573
00:49:58.240 --> 00:50:04.080
far gone. In the fall of 1950, spurred by the success of his campaign, Neumeier set

574
00:50:04.080 --> 00:50:09.800
and up the publishing company Consumers Producers Economic Service in South Holland, Illinois.

575
00:50:09.800 --> 00:50:14.920
This would later become the Libertarian Press, which still exists today. Throughout the 1950s,

576
00:50:14.920 --> 00:50:18.760
Nijmijer came to New York for two or three days at the beginning of each month and had

577
00:50:18.760 --> 00:50:23.720
regular dinner and lunch meetings with Mises. They never became close friends, but there

578
00:50:23.720 --> 00:50:28.000
were more than mere professional ties between the Jewish agnostic and the Dutch American

579
00:50:28.000 --> 00:50:33.520
Calvinist. Nijmijer eventually convinced himself that Mises was the greatest living champion

580
00:50:33.520 --> 00:50:36.460
of the Innermost Rampart of Christianity.

581
00:50:36.460 --> 00:50:40.040
In various letters to Howard Puneim, I have summarized many years of reflection on the

582
00:50:40.040 --> 00:50:43.400
significance of Mises's work for Christianity.

583
00:50:43.400 --> 00:50:48.260
If there is to be a re-reformation, it will have to be, in my opinion, on the basis of

584
00:50:48.260 --> 00:50:53.160
what the praxeological and the natural sciences have contributed to human knowledge since

585
00:50:53.160 --> 00:50:55.540
the days of the Reformation.

586
00:50:55.540 --> 00:50:59.560
In regard to questions of ethics, I have come to the conclusion that the economics of Doctor

587
00:50:59.560 --> 00:51:11.200
When that kind of a synthesis is made, one turns out to be an extraordinarily conservative

588
00:51:11.200 --> 00:51:17.000
adherent of the Christian religion, but also some of the absurdities are removed.

589
00:51:17.000 --> 00:51:22.640
Neimeyer's publishing venture began, as all start-ups do, small-scale with big ideas.

590
00:51:22.640 --> 00:51:27.380
At first he published copies of Mises' middle-of-the-road policy leads to socialism, but he already

591
00:51:27.380 --> 00:51:31.660
Hayek had larger-scale projects in mind. In particular, he planned an American edition

592
00:51:31.660 --> 00:51:36.660
of The Theory of Money and Credit, and a translation of the final edition of Boehm-Bawerk's three-volume

593
00:51:36.660 --> 00:51:42.220
magnum opus. Nijmeyer was also in touch with Hayek, who recommended Boehm-Bawerk's Macht

594
00:51:42.220 --> 00:51:47.680
oder ökonomisches Gesetz, control or economic law, for translation. Nijmeyer then made inquiries

595
00:51:47.680 --> 00:51:53.580
about the copyright for a 1931 translation by John Richard Metz. Mises warned him that

596
00:51:53.580 --> 00:51:59.260
The major problem was not to print good books, but to spread the message in a hostile environment.

597
00:51:59.260 --> 00:52:03.300
As conditions are today in this country, such books would be boycotted by the universities,

598
00:52:03.300 --> 00:52:06.900
the libraries, and the influential newspapers and periodicals.

599
00:52:06.900 --> 00:52:11.020
It seems to be that the main problem is to raise the money for counteracting such a boycott.

600
00:52:11.020 --> 00:52:15.260
Neumeyer knew Mises was right, and he knew what to do about it.

601
00:52:15.260 --> 00:52:19.980
Many years of networking in American industrial circles had filled his address book, and he

602
00:52:19.980 --> 00:52:24.820
He was astonishingly capable of bypassing the distribution channels of established publishers

603
00:52:24.820 --> 00:52:26.780
to reach the public directly.

604
00:52:26.780 --> 00:52:28.220
Mises was impressed.

605
00:52:28.220 --> 00:52:32.900
He started giving serious thought to Neumeier's plan to hire a qualified German-English translator

606
00:52:32.900 --> 00:52:34.580
for Boehm-Bawerk's work.

607
00:52:34.580 --> 00:52:39.460
Mises now remembered a young man from Germany who had been attending his NYU seminar for

608
00:52:39.460 --> 00:52:40.460
some time.

609
00:52:40.460 --> 00:52:44.860
He had come to the United States a year earlier as one of the first immigrants after the German

610
00:52:44.860 --> 00:52:48.260
quota had been opened in the summer of 1949.

611
00:52:48.260 --> 00:52:53.020
Mises's son, Zenholz, had already studied economics in Marburg and Cologne, and he had

612
00:52:53.020 --> 00:52:58.020
received a PhD in economics from the University of Cologne in the spring of 1949. In Marburg,

613
00:52:58.020 --> 00:53:03.320
a fellow student had advised him to read the treatise on money by that sharp Jew from Vienna,

614
00:53:03.320 --> 00:53:08.220
so when Zenholz decided to continue his studies, he recognized Mises's name in the faculty

615
00:53:08.220 --> 00:53:13.480
list of the New York University. He attended his seminar with great enthusiasm, and after

616
00:53:13.480 --> 00:53:23.960
In his twenty-four years at the New York University, Professor Mises sponsored only four candidates

617
00:53:23.960 --> 00:53:30.200
who wrote their dissertations under his tutelage, Zenholz, Spardaro, Kirzner, Reisman. When

618
00:53:30.200 --> 00:53:35.160
I first broached my plans to study with him and earn the degree, he bluntly rejected me.

619
00:53:35.160 --> 00:53:40.120
Many would like me to sponsor them, but only very few are qualified. I was stunned and

620
00:53:40.120 --> 00:53:51.400
Professor Mises was not about to sponsor a potential failure, in fact, the four he actually

621
00:53:51.400 --> 00:53:56.600
accepted may have been his full share of successful candidates. When I repeated my request six

622
00:53:56.600 --> 00:54:01.640
weeks later, he reacted quite differently. He readily and courteously accepted me as

623
00:54:01.640 --> 00:54:06.960
his candidate and even suggested a number of topics for my dissertation. He probably

624
00:54:06.960 --> 00:54:10.320
Mises changed his opinion about me when he learned that I was a German doctor with a

625
00:54:10.320 --> 00:54:14.960
degree from Cologne University, which I had earned at the age of 27 after nearly seven

626
00:54:14.960 --> 00:54:21.600
years in the armed services, November 15, 1939, September 14, 1946.

627
00:54:21.600 --> 00:54:24.920
During the following years, Zenholz would not only write his doctoral dissertation but

628
00:54:24.920 --> 00:54:30.280
also translate Boehm-Bawerk. At Mises' suggestion, Neimeyer also hired native English speaker

629
00:54:30.280 --> 00:54:36.400
George D. Hunk as a co-translator. By December 1952, conflicts had arisen between the two

630
00:54:36.400 --> 00:54:42.320
2 Translators. Many years later the Neumeier-Zenholz connection proved to be important in maintaining

631
00:54:42.320 --> 00:54:47.320
the mission of libertarian press when Zenholz took over the company. Neumeier had another

632
00:54:47.320 --> 00:54:52.040
publishing idea that proved to be highly successful. He had given much thought to the question

633
00:54:52.040 --> 00:54:57.080
of how Mises' ideas could be presented to the greater public in a more accessible form

634
00:54:57.080 --> 00:55:03.400
than a 900-page treatise. He found the answer when, in 1952, this libertarian press published

635
00:55:03.400 --> 00:55:08.920
a collection of articles that Mises had written during the previous seven years.

636
00:55:08.920 --> 00:55:13.760
About a year later, Neumeier had another idea, suggesting that human action be made more

637
00:55:13.760 --> 00:55:18.480
accessible by the creation of a glossary. Later on, Percy Graves put this idea into

638
00:55:18.480 --> 00:55:23.120
practice. The book was titled Planning for Freedom. This was also the title of the first

639
00:55:23.120 --> 00:55:28.020
essay which Mises had written in 1945 in reaction to Hayek's phrase of government planning

640
00:55:28.020 --> 00:55:33.380
for competition. The other chapters criticised various aspects of interventionist theory.

641
00:55:33.380 --> 00:55:38.300
History and Practice. They also contrasted the interventionist record for the operation

642
00:55:38.300 --> 00:55:43.440
of the free market. Each chapter could be read independently of the others and thus

643
00:55:43.440 --> 00:55:50.580
the total made for an excellent, light introduction to Misesian economics. Sales proved very satisfactory.

644
00:55:50.580 --> 00:55:55.100
One order came from the Soviet Union, Mises commented, I hope that the purchase of Planning

645
00:55:55.100 --> 00:56:00.500
for Freedom will complete the Moscow collection of my publications.

646
00:56:00.500 --> 00:56:03.740
A New Edition of The Theory of Money and Credit

647
00:56:03.740 --> 00:56:07.580
The success of Human Action paved the way for a new edition of The Theory of Money and

648
00:56:07.580 --> 00:56:13.620
Credit in 1953. By the late 1940s the book had been out of print for some years. Nymeyer

649
00:56:13.620 --> 00:56:17.780
was willing to publish a new edition, but Mises chose a more prestigious Yale University

650
00:56:17.780 --> 00:56:22.580
Press, which was interested in publishing more of its best-selling author. In true Christian

651
00:56:22.580 --> 00:56:27.580
spirit Nymeyer promoted the book through a flyer campaign. Five thousand flyers were

652
00:56:27.580 --> 00:56:42.100
Mises used the opportunity to add a new fourth part to the book on monetary reconstruction,

653
00:56:42.100 --> 00:56:47.540
which argued for reintroducing the gold standard. Here he restated ideas he had expressed in

654
00:56:47.540 --> 00:56:53.100
previous works, but greater intellectual majority had made the exposition simpler. He combined

655
00:56:53.100 --> 00:56:57.780
These older, more technical ideas were the case against the only possible alternative

656
00:56:57.780 --> 00:57:02.380
to the gold standard, namely inflation. Mises thought that the United States was on the

657
00:57:02.380 --> 00:57:07.240
verge of this steep decline of inflationism and interventionism he had seen in Europe.

658
00:57:07.240 --> 00:57:12.940
In only one respect did the American situation differ from Germany in 1914 and 1923, the

659
00:57:12.940 --> 00:57:17.620
presence of a vocal opposition against this decline. But he also added two crucial insights

660
00:57:17.620 --> 00:57:21.140
he had gained since the last edition of his book.

661
00:57:21.140 --> 00:57:26.500
The first of these insights was that there was not even an emergency case for inflation.

662
00:57:26.500 --> 00:57:31.060
The champions of emergency inflation agreed that there is no economic case for this policy

663
00:57:31.060 --> 00:57:36.220
under normal circumstances, but they argued that inflation was justified as a last resort

664
00:57:36.220 --> 00:57:40.980
when a national emergency such as war required the continued operation of the government

665
00:57:40.980 --> 00:57:46.520
and taxation and debt failed to do the job, he observes. This political argument is only

666
00:57:46.520 --> 00:58:02.760
Mises noticed that if a majority of citizens truly stood behind the government and its

667
00:58:02.760 --> 00:58:07.980
project, no inflation would be necessary. In this case, the political determination

668
00:58:07.980 --> 00:58:13.400
of the majority would come to be expressed in higher taxation. There was only one conceivable

669
00:58:13.400 --> 00:58:37.760
He had raised this point already in 1923, at the height of the German hyperinflation,

670
00:58:37.760 --> 00:58:43.340
but his wording then was cautious, and he did not insist on the point. In 1954 he stated

671
00:58:43.340 --> 00:58:49.000
unambiguously that inflation was the financial aspect of tyrannies. It is not an instrument

672
00:58:49.000 --> 00:58:53.600
of legitimate revenue, but an instrument of oppression. There is no need to raise the

673
00:58:53.600 --> 00:58:58.100
question whether the government's or the majority's opinion is right. Perhaps the

674
00:58:58.100 --> 00:59:03.500
government is right. However, we deal not with the substance of the conflict, but with

675
00:59:03.500 --> 00:59:09.500
the methods chosen by the rurus for its solution. They reject the democratic way of persuading

676
00:59:09.500 --> 00:59:14.700
In the majority, they aggregate to themselves the power and the moral right to circumvent

677
00:59:14.700 --> 00:59:16.100
the will of the people.

678
00:59:16.100 --> 00:59:20.340
They are eager to win its cooperation by deceiving the public about the costs involved in the

679
00:59:20.340 --> 00:59:22.280
measures suggested.

680
00:59:22.280 --> 00:59:26.800
While seemingly complying with the constitutional procedures of representative government, their

681
00:59:26.800 --> 00:59:32.740
conduct is in effect not that of elected office-holders, but that of guardians of the people.

682
00:59:32.740 --> 00:59:36.260
The elected executive no longer deems himself the people's mandatory.

683
00:59:36.260 --> 00:59:38.220
He turns into a furor.

684
00:59:38.220 --> 01:00:03.180
The second insight Mises added to the 1954 edition also represents a departure from his

685
01:00:03.180 --> 01:00:08.920
is thinking in 1934 and even more so from his views of 1912 when he first published

686
01:00:08.920 --> 01:00:09.920
the book.

687
01:00:09.920 --> 01:00:14.620
The insight concerns the necessity of an actual circulation of gold coins.

688
01:00:14.620 --> 01:00:20.120
In 1912 he almost disparaged such metalistic views, but forty years of experience had made

689
01:00:20.120 --> 01:00:21.120
him wiser.

690
01:00:21.120 --> 01:00:25.840
He now emphasized, gold must be in the cash holdings of everybody.

691
01:00:25.840 --> 01:00:30.880
Everybody must see gold coins changing hands, must be used to having gold coins in his pockets,

692
01:00:30.880 --> 01:00:35.200
to receiving gold coins when he cashes his paycheck and to spending gold coins when he

693
01:00:35.200 --> 01:00:39.720
buys in a store. Similarly, he wrote in private correspondence, there is only one effective

694
01:00:39.720 --> 01:00:44.280
method of avoiding inflation. All government expenditure must be covered by taxes and by

695
01:00:44.280 --> 01:00:47.980
borrowing from the public, not by borrowing from the commercial banks.

696
01:00:47.980 --> 01:00:53.080
Of course, Mises had not become a gold bug. He had no fetish about the yellow metal or

697
01:00:53.080 --> 01:00:58.720
any other metal. The point was that only a commodity currency made the citizens sovereign

698
01:00:58.720 --> 01:01:03.360
in Monetary Matters. As long as they had real money in hand, they were truly in charge

699
01:01:03.360 --> 01:01:08.280
of it, and they would immediately notice any departure from sound policies. Any bank or

700
01:01:08.280 --> 01:01:13.040
government refusal to redeem checks would immediately be recognized as fraud. What is

701
01:01:13.040 --> 01:01:17.780
needed is to alarm the masses in time. The working man in cashing his paycheck should

702
01:01:17.780 --> 01:01:22.840
learn that some foul trick has been played upon him. The President, Congress and the

703
01:01:22.840 --> 01:01:28.020
Supreme Court have clearly proved their inability or unwillingness to protect the common man,

704
01:01:28.020 --> 01:01:32.620
The voter from being victimized by inflationary machinations.

705
01:01:32.620 --> 01:01:38.780
The function of securing a sound currency must pass into new hands, into those of the whole

706
01:01:38.780 --> 01:01:39.780
nation.

707
01:01:39.780 --> 01:01:43.980
At the end, Mises noticed that there were no arguments against the gold standard.

708
01:01:43.980 --> 01:01:49.100
There was only the cynical claim that reintroducing it was a utopian undertaking.

709
01:01:49.100 --> 01:01:52.540
He replied very much along the same lines by which he had concluded his critique of

710
01:01:52.540 --> 01:01:53.540
socialism.

711
01:01:53.540 --> 01:02:00.260
Yet, we have only the choice between two utopias, the utopia of a market economy not paralysed

712
01:02:00.260 --> 01:02:05.680
by government sabotage on the one hand, and the utopia of totalitarian all-round planning

713
01:02:05.680 --> 01:02:10.420
on the other hand. The choice of the first alternative implies the decision in favour

714
01:02:10.420 --> 01:02:17.140
of the gold standard. If little doubt that these warnings would go unheeded.

715
01:02:17.140 --> 01:02:22.540
Grey Eminence and Itinerant Scholar The success of human action was not the only

716
01:02:22.540 --> 01:02:27.400
In the instance of Mises' influence on the libertarian movement, and on the American

717
01:02:27.400 --> 01:02:34.760
right in general, another factor was, ironically, his relative isolation among academic economists.

718
01:02:34.760 --> 01:02:40.220
By the late 1940s, Mises was already the odd man out in both his methods of research and

719
01:02:40.220 --> 01:02:46.120
his political orientation. Then Human Action put him in the spotlight, and suddenly his

720
01:02:46.120 --> 01:02:51.500
authority weighed heavily in the decision-making of the few but substantial funds that had

721
01:02:51.500 --> 01:02:54.780
had been created to support free market scholarship.

722
01:02:54.780 --> 01:03:00.020
30 years of social science research funding through the Rockefeller Foundation and others

723
01:03:00.020 --> 01:03:05.740
who pursued an explicit scientific orientation have left their mark on the state of economics

724
01:03:05.740 --> 01:03:12.060
and other disciplines. The money from Rockefeller, Ford, Carnegie and others, was channeled into

725
01:03:12.060 --> 01:03:18.860
the universities through the Social Science Research Council, a 1923 Rockefeller creation.

726
01:03:18.860 --> 01:03:23.580
To the exterior world, the Council represented seven major social science societies, but

727
01:03:23.580 --> 01:03:30.740
in fact it was a self-perpetuating body. In January 1954, Carl E. Ettinger, a private

728
01:03:30.740 --> 01:03:35.960
research consultant, commented on the role of the Council in a letter to Efe Hayek. Quoting

729
01:03:35.960 --> 01:03:41.660
extensively from R. B. Fosdick's History of the Rockefeller Foundation, he concluded,

730
01:03:41.660 --> 01:03:46.460
There seems to be strong evidence that the emergence of an orthodoxy of quantitative

731
01:03:46.460 --> 01:03:51.740
of sociology has been greatly influenced by the magnetism of money and the control of

732
01:03:51.740 --> 01:03:57.800
available funds by a foundation bureaucracy that knew what it wanted and favored the imitation

733
01:03:57.800 --> 01:04:03.860
of the methods of natural scientists by social scientists. The political explosiveness of

734
01:04:03.860 --> 01:04:09.920
these observations stemmed from the tax-exempt status that the big foundations enjoyed. Mises

735
01:04:09.920 --> 01:04:15.480
Mises had known Ettinger at least since 1946. Ettinger coordinated research on consumers'

736
01:04:15.480 --> 01:04:21.000
cooperatives on behalf of the Petroleum Industry Research Foundation.

737
01:04:21.000 --> 01:04:26.480
Only a small number of private individuals and institutions still supported social philosophers

738
01:04:26.480 --> 01:04:32.760
of the old time. Mises knew them all and Human Action had given a great boost to his authority.

739
01:04:32.760 --> 01:04:37.020
The Volcker Fund had been funding him since 1945.

740
01:04:37.020 --> 01:04:41.540
But after the publication of his treaties, the Fund began supporting lectures and extended

741
01:04:41.540 --> 01:04:50.140
seminars for Mises, and it even started funding his students. Thus, from 1955 to 1969, the

742
01:04:50.140 --> 01:04:55.180
Volcker Fund sponsored a one-year fellowship in political economy at NYU's Graduate School

743
01:04:55.180 --> 01:05:01.260
of Business Administration. Mises nominated the recipient. The first recipient was Hans

744
01:05:01.260 --> 01:05:10.620
Hans Zenholz 1955-1956 Israel Kirzner was a laureate in 1956-1957 and Toshio Maruta

745
01:05:10.620 --> 01:05:17.100
in 1959-1960. Upon his return to Japan, he began to spread Mises' theories and also

746
01:05:17.100 --> 01:05:23.200
translated the ultimate foundation of economic science and human action into Japanese. Only

747
01:05:23.200 --> 01:05:27.960
two students received a fellowship for three consecutive years. One of these students was

748
01:05:27.960 --> 01:05:35.140
Robert Guarneri, from 1963 to 1966. Guarneri had been a student of Hans Senholtz's in

749
01:05:35.140 --> 01:05:40.820
Grove City. He later set out for a business career. For some time, Mises also controlled

750
01:05:40.820 --> 01:05:47.960
an annual budget of $12,500 at NYU. These payments started after December 1958. And

751
01:05:47.960 --> 01:05:53.040
other institutions started doing the same thing. For example, the Earhart Foundation

752
01:05:53.040 --> 01:05:57.640
undertook travel expenditures and student scholarships, the National Association of

753
01:05:57.640 --> 01:06:03.440
Manufacturers organized and paid for seminars, and Howard Pugh and others subsidized the

754
01:06:03.440 --> 01:06:10.160
Freeman. For several years funding Mises and his projects was almost a matter of course.

755
01:06:10.160 --> 01:06:14.840
His judgment on persons and projects was often final.

756
01:06:14.840 --> 01:06:20.040
In the fall of 1958, historian of economic thought, Emil Kauder, advised Raymond de

757
01:06:20.040 --> 01:06:24.560
Ludwig von der Ruhr, who was looking for funding of a research project, not to write directly

758
01:06:24.560 --> 01:06:30.040
to the Volcker Fund, but to get first in touch with Mises or Hayek. This sudden concentration

759
01:06:30.040 --> 01:06:35.700
of resources on Mises reflected more than the respect owed to the man. It was also the

760
01:06:35.700 --> 01:06:40.920
sign of an important problem in the free market movement. By the early 1950s, substantial

761
01:06:40.920 --> 01:06:45.840
money was available for scholarship, but there were not many libertarian scholars of Mises's

762
01:06:45.840 --> 01:06:50.840
The situation was quite bleak, as Lawrence Furtick stated in a letter.

763
01:06:50.840 --> 01:07:02.840
Take the Faculty of Columbia University. Aside from Dr. George Stigler and Dr. Leo Wolman, I doubt if there is another member on the entire economics faculty who presents the free-market liberal point of view.

764
01:07:02.840 --> 01:07:11.840
At Yale, out of thirty members of the economics faculty, until recently just two, Professor Henry Fairchild and one other, represented the old liberal point of view.

765
01:07:11.840 --> 01:07:22.840
The Harvard faculty is dominated by men like Professor Seymour Harris, Alvin Hansen, Sweezy, and others like them, who range all the way from Keynesians to outright socialists.

766
01:07:22.840 --> 01:07:35.840
This faculty, NYU, is definitely under the major influence of Keynesians and collectivists, although there are a few eminent men, like John D. Williams and Sumner Stichter, who have not gone entirely that way.

767
01:07:35.840 --> 01:07:41.400
The same is true for smaller colleges, such as Williams, Amherst, etc. The new School

768
01:07:41.400 --> 01:07:45.900
for Social Research doesn't have a single libertarian on its faculty. Sarah Lawrence

769
01:07:45.900 --> 01:07:49.280
College probably couldn't produce a single one either.

770
01:07:49.280 --> 01:07:53.800
The men on Frederic's short list of libertarians were less original than Mises, less radical

771
01:07:53.800 --> 01:07:58.800
and less outspoken in their support of laissez-faire capitalism, the fact that it was obvious to

772
01:07:58.800 --> 01:08:04.700
all parties involved. Mises himself considered many of them to be moderate interventionists,

773
01:08:04.700 --> 01:08:08.300
and an opinion that his financial backers had learned to respect.

774
01:08:08.300 --> 01:08:12.560
He occasionally recommended textbooks written by these other men, for example Fairchart

775
01:08:12.560 --> 01:08:17.800
and Shelley's Understanding Our Free Economy and von Sickle and Rugger's Introduction

776
01:08:17.800 --> 01:08:23.300
to Economics, but the most he could say of these books was that the interventionism advocated

777
01:08:23.300 --> 01:08:28.600
within them was less radical than that promoted in all the other textbooks, which he believed

778
01:08:28.600 --> 01:08:35.160
were totally flawed from a theoretical point of view, Marx, Keynes, econometrics, and

779
01:08:35.160 --> 01:08:40.040
had a radical interventionist, if not outright socialist orientation. In short, there was

780
01:08:40.040 --> 01:08:45.480
no substitute for Ludwig von Mises, and this fact would have unfortunate consequences for

781
01:08:45.480 --> 01:08:50.960
American libertarianism in the following decades. New York Circles

782
01:08:50.960 --> 01:08:56.800
Mises' activities in New York centred on his NYU seminar. By the early to mid-1950s,

783
01:08:56.800 --> 01:09:02.100
Four major groups attended the NYU seminar. First, there was a group of NYU students who

784
01:09:02.100 --> 01:09:07.080
took the seminar for credit. The great majority of them were thoroughly uninterested in scientific

785
01:09:07.080 --> 01:09:12.900
questions of economic analysis, yet there were exceptions. One early student who cooperated

786
01:09:12.900 --> 01:09:19.540
more closely with Mises was Hugh P. King, who from 1951 to 1953 was his assistant and

787
01:09:19.540 --> 01:09:26.540
later became a business counselor. Then there was Morton Cobrin, who in 1952 wrote a 300-page

788
01:09:26.540 --> 01:09:31.540
Master's thesis that condensed some of the main ideas of human action in more accessible

789
01:09:31.540 --> 01:09:38.180
language. Cobrin then attended Mises' seminar on government control and the profit system.

790
01:09:38.180 --> 01:09:42.820
Cobrin had written his master's thesis under the supervision of a Dr. Dorow. But there

791
01:09:42.820 --> 01:09:47.980
were also more important exceptions. At least three regular NYU students would eventually

792
01:09:47.980 --> 01:09:52.980
become important Misesians who, each in his own way, took up where their teacher had left

793
01:09:52.980 --> 01:09:59.620
of Hans Zenholz, Israel Kirzner and George Reisman. Notable but less important were Louis

794
01:09:59.620 --> 01:10:05.220
Spadaro and Edward Foy. Hans Zenholz, who had translated Boehm-Bawerk, received his

795
01:10:05.220 --> 01:10:12.140
American PhD under Mises in 1954 and published his dissertation in early 1955 under the title

796
01:10:12.140 --> 01:10:18.740
How Can Europe Survive? With Mises' support, Zenholz had received a 3,000-ehrhardt research

797
01:10:18.740 --> 01:10:24.680
Grant for the academic year 1953-1954 when the fellowship program started. He was still

798
01:10:24.680 --> 01:10:31.400
the only student Mises had recommended until March 1955. By then Mises hoped that also

799
01:10:31.400 --> 01:10:35.800
other members of my seminar will soon comply with the requirements.

800
01:10:35.800 --> 01:10:41.160
In contrast to Zenholz, young Israel Kirzner had not known anything about Mises before

801
01:10:41.160 --> 01:10:46.360
attending his seminar. He was not even a student of economics, but an accounting major who

802
01:10:46.360 --> 01:10:50.920
Kirzner had to take one economics seminar to fulfil his requirements. Since he knew

803
01:10:50.920 --> 01:10:55.360
nothing of economics, he decided to attend the classes of the most published economics

804
01:10:55.360 --> 01:11:01.720
professor at NYU. Starting in September 1954, Kirzner attended Mises' seminars for many

805
01:11:01.720 --> 01:11:07.420
years, acting eventually as a Volcker-sponsored tutor for the younger students. He switched

806
01:11:07.420 --> 01:11:12.360
from accounting to economics and studied under Mises to obtain his PhD, which he received

807
01:11:12.360 --> 01:11:17.840
in 1957 with The Economic Point of View. Kirzner eventually became a professor of economics

808
01:11:17.840 --> 01:11:23.520
at NYU, a famous theoretician of entrepreneurship with numerous book publications and retired

809
01:11:23.520 --> 01:11:33.280
in 2002. Kirzner was a Volcker Fellow in 1956-1957 and in early 1957 obtained a research grant

810
01:11:33.280 --> 01:11:38.120
from the Earhart Foundation. At that point he had already defended his dissertation and

811
01:11:38.120 --> 01:11:49.000
Mises praised Kirzner as a young man who promises to become a highly competent teacher and author.

812
01:11:49.000 --> 01:11:53.440
The third important Misesian from the ranks of Mises's regular students was George Reisman,

813
01:11:53.440 --> 01:11:59.760
who got a PhD under Mises in 1963 for a theoretical study of interest rates with the title The

814
01:11:59.760 --> 01:12:03.540
Theory of Aggregate Profit and the Average Rate of Profit.

815
01:12:03.540 --> 01:12:09.260
His lifelong research project was the creation of a great synthesis between classical economics,

816
01:12:09.260 --> 01:12:14.940
Austrian economics and Ayn Rand's objectivist social philosophy. As a result of these endeavours,

817
01:12:14.940 --> 01:12:20.660
he eventually published his magnum opus, Capitalism, 1996. He is now an emeritus professor at

818
01:12:20.660 --> 01:12:23.560
Pepperdine University in California.

819
01:12:23.560 --> 01:12:28.200
The second group at the seminar was composed of professionals and businessmen. This group

820
01:12:28.200 --> 01:12:32.840
The group included personal friends of Mises's, such as Henry Hazlitt, Lawrence Furtick and

821
01:12:32.840 --> 01:12:37.640
George Cota, but there were also men such as Dr. Richard Freund, a commander in the

822
01:12:37.640 --> 01:12:42.940
US Navy, who had come to know Mises through his publications and who seized the opportunity

823
01:12:42.940 --> 01:12:49.080
to attend this seminar session from the end of 1954 to the end of 1961.

824
01:12:49.080 --> 01:12:53.960
The third group came from FEE. It included foundation staff and students who had been

825
01:12:53.960 --> 01:13:08.860
The fourth group was a spin-off of the FEE crowd. It was composed of radical young free

826
01:13:08.860 --> 01:13:14.520
marketeers around Murray Rothbard, including Ralph Reiko, George Reisman, Leonard Ligio

827
01:13:14.520 --> 01:13:20.400
and Robert Hessen. They called themselves the Cirque de Bastia. When Rand's novel Atlas

828
01:13:20.400 --> 01:13:26.920
Shrugged appeared in 1957. It had a deep impact on the Cirque de Bastille and also impressed

829
01:13:26.920 --> 01:13:33.440
Mises and other senior members of his seminar. In 1954, Rothbard began to socialise with

830
01:13:33.440 --> 01:13:40.160
Ayn Rand's group and then backed away, having decided that she was not really a libertarian.

831
01:13:40.160 --> 01:13:44.800
After Atlas Shrugged came out, however, there was a temporary reprochement and the Cirque

832
01:13:44.800 --> 01:13:50.360
de Bastille was introduced to Rand. This eventually led to the break-up of the Cirque de Bastille.

833
01:13:50.360 --> 01:13:56.360
Rothbard read the novel that fall and discussed it endlessly with Reisman. They also had continuing

834
01:13:56.360 --> 01:14:01.640
discussions on the question of whether capital accumulation implied a declining interest rate.

835
01:14:02.280 --> 01:14:06.840
For Reisman, these discussions were the point of departure for a lifelong research program.

836
01:14:07.720 --> 01:14:13.480
By all standards, the seminar was of very high quality. In its first 10 years, it featured

837
01:14:13.480 --> 01:14:18.520
Mises at the peak of his teaching career. One participant, who had attended the session from

838
01:14:18.520 --> 01:14:24.880
from the very start in 1945, wrote a thank-you note in 1952, stating that he had been especially

839
01:14:24.880 --> 01:14:27.280
impressed by two facts.

840
01:14:27.280 --> 01:14:31.680
First it has attracted a serious-minded group of individuals whose varied occupational and

841
01:14:31.680 --> 01:14:35.760
professional interests serve to stimulate a fruitful discussion.

842
01:14:35.760 --> 01:14:41.260
Secondly, unlike most seminars, each succeeding year of attendance builds upon the intellectual

843
01:14:41.260 --> 01:14:47.040
acquisitions of the past one, without leaving any impression that the student is repeating

844
01:14:47.040 --> 01:14:53.200
What makes the seminar especially important for the later dissemination of Mises' ideas

845
01:14:53.200 --> 01:14:58.360
is that it brought together a group of excellent students for whom Human Action was the starting

846
01:14:58.360 --> 01:15:00.880
point for further intellectual work.

847
01:15:00.880 --> 01:15:05.600
No previous group of his students had had this privilege and it had a noticeable effect

848
01:15:05.600 --> 01:15:09.580
on their further intellectual development and on the schools they created.

849
01:15:09.580 --> 01:15:15.400
It is revealing to contrast the cases of Zenholz and Rothbard with the case of Fritz Machlub,

850
01:15:15.400 --> 01:15:21.980
who had been Mises' star student in the 1920s and early 30s. All three men were high-calibre

851
01:15:21.980 --> 01:15:27.440
intellectuals, but only the former two became genuine Misesians. A possible difference lay

852
01:15:27.440 --> 01:15:33.280
in the existence of the treatise. As he had done with his students in Vienna and Geneva,

853
01:15:33.280 --> 01:15:38.800
Mises inspired his American students to apply rigorous, deductive reasoning to the analysis

854
01:15:38.800 --> 01:15:44.840
of politically relevant subjects. But they did more. They followed the logic to its politically

855
01:15:44.840 --> 01:15:46.960
Radical Conclusions

856
01:15:46.960 --> 01:15:51.420
Murray Rothbard, in his youthful exuberance, once boasted that his forthcoming defence

857
01:15:51.420 --> 01:15:56.600
of the market economy will be far more right-wing than Mises because of its grounding in welfare

858
01:15:56.600 --> 01:16:02.040
economics, which theory I've basically set forth in my festrift article. Rothbard had

859
01:16:02.040 --> 01:16:08.840
written a precursor to this paper in 1954 and submitted it unsuccessfully to Economica.

860
01:16:08.840 --> 01:16:13.240
It is unthinkable that one of Mises's Vienna students would have boasted that he was more

861
01:16:13.240 --> 01:16:18.000
Before libertarian than his professor, the Vienna students thought Mises tended to exaggerate

862
01:16:18.000 --> 01:16:24.080
the case for the market economy. But Rothbard was merely an extreme case of the entire species

863
01:16:24.080 --> 01:16:29.440
of Misesian students in a post-human action period. Their favourite sport was to find

864
01:16:29.440 --> 01:16:35.440
statist arguments and premises in Mises's works. They relished in unveiling his socialism

865
01:16:35.440 --> 01:16:40.040
and had a good laugh when Rothbard called the old master a member of the non-communist

866
01:16:40.040 --> 01:16:41.040
and Left.

867
01:16:41.040 --> 01:16:45.240
This new radicalism radiated beyond Mises' NYU seminar.

868
01:16:45.240 --> 01:16:51.240
Inspired by human action, several authors set out to defend liberty, property and capitalism

869
01:16:51.240 --> 01:16:54.340
as absolute principles of social order.

870
01:16:54.340 --> 01:16:58.960
The best known case is Ayn Rand, who shocked the political correctness of her day for the

871
01:16:58.960 --> 01:17:04.480
proud assertive defence of individualism and capitalism that announced itself right in

872
01:17:04.480 --> 01:17:10.840
The title of her books, works such as Capitalism, The Unknown Ideal and The Virtue of Selfishness,

873
01:17:10.840 --> 01:17:16.080
were inspired by Human Action, an intellectual debt that she graciously acknowledged. Yet

874
01:17:16.080 --> 01:17:22.140
Rand's case was no exception. In September 1955, Mises received a massive manuscript

875
01:17:22.140 --> 01:17:28.560
with the title The Capitalist Manifesto. The author, a certain Joe Abramson, asked him

876
01:17:28.560 --> 01:17:34.060
for comments. Mises replied he hoped soon to find the leisure to study it carefully.

877
01:17:34.060 --> 01:17:39.340
It was the work of an enthusiastic amateur, but it showed wherever more of his readers

878
01:17:39.340 --> 01:17:41.300
were headed.

879
01:17:41.300 --> 01:17:46.220
The high point of these glorious years was the publication of a festschrift for Mises

880
01:17:46.220 --> 01:17:51.180
on the occasion of the 50th anniversary of the doctorate that Mises had earned at the

881
01:17:51.180 --> 01:17:54.100
University of Vienna in 1906.

882
01:17:54.100 --> 01:17:59.380
Mises received the book at a celebration on March 7, 1956, in Manhattan.

883
01:17:59.380 --> 01:18:02.620
Hans and Mary Zenholz organised the event.

884
01:18:02.620 --> 01:18:08.340
Hayek and Machloub had thought about undertaking a festrift for Mises's 70th birthday in 1951,

885
01:18:08.340 --> 01:18:12.900
however, none of them was willing to make the effort, and thus they turned to Hazlitt

886
01:18:12.900 --> 01:18:17.580
to do all the technical work connected with the editing of such a volume.

887
01:18:17.580 --> 01:18:21.860
Hazlitt was too busy to become a part-time assistant to Hayek and Machloub, but the decisive

888
01:18:21.860 --> 01:18:25.420
obstacle was financial, no publisher could be found.

889
01:18:25.420 --> 01:18:29.960
Roughly a year before the celebration they had invited contributions from seminar members

890
01:18:29.960 --> 01:18:35.060
such as Hazlitt, Rothbard and Sennholz, and from various other intellectuals who had in

891
01:18:35.060 --> 01:18:40.840
some way been close to Mises. Fausto Balvé had received the request to make a contribution

892
01:18:40.840 --> 01:18:46.760
by March 1955, Louis Roger withdrew his contribution because he thought it was poorly translated

893
01:18:46.760 --> 01:18:52.740
into English, and Alfred Müller-Armack declined, saying he had no time. The Sennholzes took

894
01:18:52.740 --> 01:18:58.120
pains to avoid any closer involvement of Mises' former students and colleagues from Vienna,

895
01:18:58.120 --> 01:19:03.760
whose political orientation was considerably less radical than that of the NYU Seminar.

896
01:19:03.760 --> 01:19:09.120
Among the twenty contributors, only three, Röpke, Machlup and Hayek, had been friends

897
01:19:09.120 --> 01:19:10.840
with Mises in Vienna.

898
01:19:10.840 --> 01:19:17.480
The Asterfestrift became a faithful reflection of the change of Mises' intellectual environment.

899
01:19:17.480 --> 01:19:22.440
It was to be a celebration of the intellectual case for human liberty and the free market,

900
01:19:22.440 --> 01:19:26.260
and of the man who had done so much to develop this case.

901
01:19:26.260 --> 01:19:32.000
The title made it clear, on freedom and free enterprise. This does not mean that critical

902
01:19:32.000 --> 01:19:37.460
voices were banished. William Rappard contributed an important critique of Mises's theory of

903
01:19:37.460 --> 01:19:44.500
interventionism. Rappard here published thoughts he had long since expressed in private correspondence.

904
01:19:44.500 --> 01:19:47.000
A Misesian Treatise

905
01:19:47.000 --> 01:19:52.460
It was in these high years of the New American Misesians, the human action years, that Murray

906
01:19:52.460 --> 01:19:58.660
Murray Rothbard completed his textbook rendering of Austrian economics. At first, he stuck

907
01:19:58.660 --> 01:20:04.620
to the original project of a mere popularization of human action, trying to do for Mises what

908
01:20:04.620 --> 01:20:10.600
McCullough did for Ricardo. But by October 1952, he had already decided to pursue a more

909
01:20:10.600 --> 01:20:16.340
independent exposition of economic science. Rothbard ended up writing an entire treatise

910
01:20:16.340 --> 01:20:22.220
of economic science, covering in some 900 pages the theory of the market economy and

911
01:20:22.220 --> 01:20:27.900
of Government Interventionism. The work was a masterpiece and had a deep impact on subsequent

912
01:20:27.900 --> 01:20:33.880
generations of Misesian economists. During the winter semester of 1952, Rothbard presented

913
01:20:33.880 --> 01:20:39.620
several chapters of his work in Mises' seminar. It was here that he might have defended, for

914
01:20:39.620 --> 01:20:44.380
the first time, some of the doctrines that set him apart from Mises. The professor handled

915
01:20:44.380 --> 01:20:49.420
the situation in his usual manner, namely with scholastic laissez-faire. He encouraged

916
01:20:49.420 --> 01:20:55.180
Rothbard to follow the path he had chosen. This might have to do with the specific American

917
01:20:55.180 --> 01:20:59.820
flavour of the exceptions Rothbard took to Mises's approach. For example, Rothbard had

918
01:20:59.820 --> 01:21:04.860
come to believe that there was a science of rational ethics based on human nature and

919
01:21:04.860 --> 01:21:10.140
what is good for human nature. Thus he had abandoned Max Weber's position, which Mises

920
01:21:10.140 --> 01:21:15.660
cherished, that there can be no science of ethics but only subjective value judgements.

921
01:21:15.660 --> 01:21:20.940
Rothbard had probably come to adopt this new viewpoint under the influence of discussions

922
01:21:20.940 --> 01:21:26.140
with Ayn Rand's group. In the first version of his manuscript of Chapter One, where he

923
01:21:26.140 --> 01:21:32.180
explained the first principles of human action, Rothbard had adopted the Weberian position,

924
01:21:32.180 --> 01:21:37.620
which was the standard position at Columbia. Probably, therefore, Rothbard attended meetings

925
01:21:37.620 --> 01:21:43.260
of Rand's group during 1952 and in the course of these encounters changed his mind on the

926
01:21:43.260 --> 01:21:48.340
and the question of scientific ethics. There were indirect contacts between Rothbard and

927
01:21:48.340 --> 01:21:55.860
Rand ever since November 1947. By May 7th, 1953, Rothbard was asked to introduce Reisman

928
01:21:55.860 --> 01:22:01.300
and Reiko to Ayn Rand, which suggests that at that point he was a regular member of her

929
01:22:01.300 --> 01:22:05.960
group. Rothbard also took exception to the philosophical pessimism that seemed to form

930
01:22:05.960 --> 01:22:11.400
the foundation of Mises's theory of human action. Mises had asserted that man acts to

931
01:22:11.400 --> 01:22:17.880
to Relieve Dissatisfaction, which implied that man did not act when he was happy. Rothbard

932
01:22:17.880 --> 01:22:23.340
thought that such a view was contrary to the natural state of man, which is at its happiest

933
01:22:23.340 --> 01:22:28.000
precisely when it is engaged in productive activity.

934
01:22:28.000 --> 01:22:32.480
But Rothbard would soon disagree with Mises on a more fundamental issue. During the winter

935
01:22:32.480 --> 01:22:38.800
semester 1953, he was in the process of reviewing conventional price theory, which stressed

936
01:22:38.800 --> 01:22:44.200
Cost Curves and other remnants of classical objective price theories. His rejection of

937
01:22:44.200 --> 01:22:50.240
these approaches had led him to some original conclusions. Rothbard became convinced that

938
01:22:50.240 --> 01:22:55.580
the entire neoclassical theory of monopoly prices relied on a completely unwarranted

939
01:22:55.580 --> 01:23:01.920
fiction namely that it was possible to distinguish these monopoly prices from competitive prices.

940
01:23:01.920 --> 01:23:07.580
He believed that Mises too had fallen prey to this fiction. Mises held indeed that the

941
01:23:07.580 --> 01:23:13.340
Sovereignty of Consumers was impaired in the presence of monopoly prices. Rothbard disagreed.

942
01:23:14.060 --> 01:23:20.060
I have come to the conclusion that this theory is outright nonsense. I do not differ with Mises

943
01:23:20.060 --> 01:23:25.820
rashly on matters of economic theory, but in this particular case I think he has not freed himself

944
01:23:25.820 --> 01:23:32.300
from the shackles of the old neoclassical approach. The key question here is, how do we know what the

945
01:23:32.300 --> 01:23:39.900
If we go to the illustration of this approach in, for example, Federer's Economic Principles,

946
01:23:39.900 --> 01:23:45.500
we find the competitive price and the monopolist assessing his demand curve at this price.

947
01:23:45.500 --> 01:23:48.620
But in reality, we never know the competitive price.

948
01:23:48.620 --> 01:23:52.460
The competitive price is a result of action and not a given.

949
01:23:52.460 --> 01:23:57.500
Even if we can observe a man restricting his investment and production in a product and

950
01:23:57.500 --> 01:24:02.400
and Raising the Price. We can never know if this is a movement from competitive price to

951
01:24:02.400 --> 01:24:08.240
monopoly price or from sub-competitive price to competitive price. As Mises has told us

952
01:24:08.240 --> 01:24:14.200
again and again, a concept divorced from real action and employed as an actual reality and

953
01:24:14.200 --> 01:24:19.260
even an ideal is invalid. Therefore, the whole concept of competitive price versus monopoly

954
01:24:19.260 --> 01:24:24.880
price has to go by the board. On the free market, there is only the free market price,

955
01:24:24.880 --> 01:24:29.760
which in turn is competitive since buyers and sellers freely compete with each other.

956
01:24:29.760 --> 01:24:34.560
And this is true not only for the individual seller but also for a cartel, for I have come

957
01:24:34.560 --> 01:24:39.080
to the perhaps even more revolutionary conclusion that there is nothing in the world wrong with

958
01:24:39.080 --> 01:24:41.920
a cartel when it is voluntary.

959
01:24:41.920 --> 01:24:45.240
When many firms merge or form a cartel, what happens?

960
01:24:45.240 --> 01:24:50.120
In effect, the assets of many individuals are pooled and directed by them all in accordance

961
01:24:50.120 --> 01:24:53.760
with their proportionate ownership and their contract.

962
01:24:53.760 --> 01:24:58.120
And how does this process differ from the formation of an ordinary corporation when

963
01:24:58.120 --> 01:25:04.000
different individuals pool their capital and assets according to their voluntary contract?

964
01:25:04.000 --> 01:25:10.760
Not in the slightest. Another year later, at the beginning of the academic year 1954-1955,

965
01:25:10.760 --> 01:25:15.840
Mises concentrated in his NYU seminar on price theory and other aspects of the theory of

966
01:25:15.840 --> 01:25:20.760
the market economy, possibly because he sensed that Rothbard was in a decisive phase of his

967
01:25:20.760 --> 01:25:28.140
He had Rothbard deliver several presentations, in particular on Robinson's and Chamberlain's

968
01:25:28.140 --> 01:25:33.640
theory of monopolistic competition and on selling costs. Rothbard was better prepared

969
01:25:33.640 --> 01:25:39.440
than ever. He had spent the summer discussing economics for endless hours with young George

970
01:25:39.440 --> 01:25:44.000
Reisman. In the course of these discussions they developed an important extension of Mises's

971
01:25:44.000 --> 01:25:49.420
theory of economic calculation, starting from the question of how extensive the number of

972
01:25:49.420 --> 01:25:54.320
If firms in the economy must be in order to have calculation, they came to the conclusion

973
01:25:54.320 --> 01:25:58.780
that for every vertical integration within a firm, in order for the firm to allocate

974
01:25:58.780 --> 01:26:04.380
costs, etc., internally, there would have to be a market for that area external to the

975
01:26:04.380 --> 01:26:09.940
firm. Thus, the inability of a socialist government to calculate is a special case of the inability

976
01:26:09.940 --> 01:26:15.940
of any firm to calculate for departments internal to itself, if there is no external market

977
01:26:15.940 --> 01:26:21.680
to which to refer. Combined for the Mises seminar, this intensive exchange gave a decisive

978
01:26:21.680 --> 01:26:27.980
boost to Rothbard's writing to the point that, by July 1955, the manuscript had almost

979
01:26:27.980 --> 01:26:34.540
reached the form it would have when it was eventually published in 1962. Most important,

980
01:26:34.540 --> 01:26:39.060
Rothbard had by then completed the chapter explaining the conceptual framework within

981
01:26:39.060 --> 01:26:44.260
which he would analyse both the operation of the market economy and government intervention.

982
01:26:44.260 --> 01:26:50.120
In distinct contrast to all previous economists, with the notable exception of Gustave de Molinarie,

983
01:26:50.120 --> 01:26:55.560
the Dean of the French 19th century laissez-faire school, Rothbard did not present the modern

984
01:26:55.560 --> 01:27:00.920
state as an integral part of society. Rather, he distinguished between two types of production

985
01:27:00.920 --> 01:27:07.220
of security, coercive and free. The former was characteristic of the modern state, whereas

986
01:27:07.220 --> 01:27:13.080
the latter would exist only in a hypothetical free society. These statements, which Rothbard

987
01:27:13.080 --> 01:27:19.380
made in his July 1955 report to the Volcker Fund must have set off alarm bells with Luno

988
01:27:19.380 --> 01:27:25.260
and other Volcker Fund people. For the first time, Rothbard had spelled out his thoroughly

989
01:27:25.260 --> 01:27:30.300
anti-statist worldview and tried to prove that this view found support in the tenet

990
01:27:30.300 --> 01:27:35.760
of economic science. This brazen display of political anarchism was apparently too much

991
01:27:35.760 --> 01:27:40.440
even for the Volcker Fund. Rothbard was given another extension of his research grant which

992
01:27:40.440 --> 01:27:46.680
which he used during the academic year 1955-1956 to polish his manuscript. By July 1956 it

993
01:27:46.680 --> 01:27:52.920
amounted to 1,900 typed pages, and finally to finish his PhD in economics at Columbia

994
01:27:52.920 --> 01:27:56.920
University. But it must have been made clear to him that he could not count on Volcker

995
01:27:56.920 --> 01:28:02.160
Fund support in the future, at least not to the extent he had enjoyed it in the past.

996
01:28:02.160 --> 01:28:07.480
By April 1956 he applied for a new research grant for work on the Great Depression, this

997
01:28:07.480 --> 01:28:12.440
This time from the Earhart Foundation. The Earhart Foundation grant, which Rothbard duly

998
01:28:12.440 --> 01:28:17.120
received, made up for the ending of the Volcker Fund grant, which had supported his writing

999
01:28:17.120 --> 01:28:23.840
of the treatise. Mises supported him unequivocally, stating that he was fully convinced that Rothbard

1000
01:28:23.840 --> 01:28:29.040
will one day be counted among the foremost economists. Rothbard's treatise was put on

1001
01:28:29.040 --> 01:28:33.600
hold. He worked part-time for FEE writing a short book on money, what has government

1002
01:28:33.600 --> 01:28:38.360
done to our money, and he continued to polish the manuscript of his treatise for the next

1003
01:28:38.360 --> 01:28:42.860
few years. The directors of the Volcker Fund needed quite some time to ponder the question

1004
01:28:42.860 --> 01:28:47.740
of what to do with this explosive material which threatened to disintegrate the nascent

1005
01:28:47.740 --> 01:28:53.520
libertarian movement. In May 1959, Rothbard reported completion of the manuscript in a

1006
01:28:53.520 --> 01:28:58.960
letter to Mises. He also expressed his regret that he had only rarely been attending Mises's

1007
01:28:58.960 --> 01:29:05.160
The version of the manuscript was passed on to the Volcker Fund's Frank S. Maier, ostensibly

1008
01:29:05.160 --> 01:29:09.420
in an effort to bring the project to completion, or the decision might have been related to

1009
01:29:09.420 --> 01:29:15.440
already existing plans to close down the fund. Maier was no Rothbardian. He was chosen as

1010
01:29:15.440 --> 01:29:20.040
a third party or objective opinion on the merits of the book. He delivered a report

1011
01:29:20.040 --> 01:29:25.200
that would allow both the author of the book and his sponsor to agree on how to proceed

1012
01:29:25.200 --> 01:29:27.080
without losing face.

1013
01:29:27.080 --> 01:29:31.240
Meyer said the book was one of the two or three most important discussions of economics

1014
01:29:31.240 --> 01:29:36.280
to be written in this century, and he lavishly praised it for its radical break with the

1015
01:29:36.280 --> 01:29:41.240
traditional utilitarian underpinnings of economic theory, a break that opened the prospect

1016
01:29:41.240 --> 01:29:46.480
of integrating the economic rationale against collectivism into certain strands of conservative

1017
01:29:46.480 --> 01:29:47.480
thought.

1018
01:29:47.480 --> 01:29:52.600
On the other hand, Meyer admonished that certain chapters were fundamentally political in their

1019
01:29:52.600 --> 01:29:57.600
and Written from the point of view of an uncompromising anarchism.

1020
01:29:57.600 --> 01:30:03.600
These chapters should be removed and their economic content be collected into a single chapter.

1021
01:30:03.600 --> 01:30:12.600
And so it happened. Rothbard's treatise, with anarchism excised, was published in 1962 as Man, Economy and State.

1022
01:30:12.600 --> 01:30:21.600
His discussion of a stateless market society would eventually appear eight years later in a separate book with the title Power and Market.

1023
01:30:21.600 --> 01:30:22.600
1.

1024
01:30:22.600 --> 01:30:27.280
Zenholz at Grove City College While Rothbard was still busy writing and

1025
01:30:27.280 --> 01:30:32.160
polishing the manuscript of his magnum opus, Hans Zenholz was already a quality product

1026
01:30:32.160 --> 01:30:34.880
of Mises' NYU seminar.

1027
01:30:34.880 --> 01:30:40.720
He had written a very thorough doctoral dissertation and published it in 1955 with Jasper Crane's

1028
01:30:40.720 --> 01:30:42.880
Vernostrand Company.

1029
01:30:42.880 --> 01:30:48.320
And in distinct contrast to Rothbard, who spent nights working or discussing with friends,

1030
01:30:48.320 --> 01:30:53.320
Leapt through much of the day, missed deadline after deadline, and tended to be messy and

1031
01:30:53.320 --> 01:30:59.560
disorderly, Zenholz featured the teutonic personal virtues of punctuality, orderliness,

1032
01:30:59.560 --> 01:31:06.400
and reliability. By the mid-1950s he was visibly Mises's most important student. Zenholz was

1033
01:31:06.400 --> 01:31:12.920
not only an intellectual heir to the Austrian tradition, but also had the vision, the drive,

1034
01:31:12.920 --> 01:31:17.560
and the enthusiasm to lead the Austrian school and the burgeoning libertarian intellectual

1035
01:31:17.560 --> 01:31:23.200
movement into the second half of the 20th century. Not only did he realise that the

1036
01:31:23.200 --> 01:31:27.920
decisive battle in politics was the battle of ideas, and that for the time being this

1037
01:31:27.920 --> 01:31:32.820
battle was mainly fought in institutions of higher learning, but he also saw quite clearly

1038
01:31:32.820 --> 01:31:38.360
that there was no hope whatsoever in turning around mainstream academia from within. The

1039
01:31:38.360 --> 01:31:42.800
success of the libertarian movement depended on its ability to set up parallel academic

1040
01:31:42.800 --> 01:31:46.960
Institutions to compete with the socialist academic establishment from the outside.

1041
01:31:47.680 --> 01:31:53.120
The tragedy for Senholtz and for the libertarian movement at large was that most of his initiatives

1042
01:31:53.120 --> 01:31:59.280
to establish parallel libertarian institutions did not find the necessary support. For example,

1043
01:31:59.280 --> 01:32:05.280
starting in August 1955, he tried for some years without success to establish a libertarian journal,

1044
01:32:05.280 --> 01:32:10.400
and at the end of the 1950s he tried to establish an American School of Economics with the mission

1045
01:32:10.400 --> 01:32:15.840
of producing future university professors equally without success. These failures might have been

1046
01:32:15.840 --> 01:32:21.600
due to the timidity of potential donors or to Xenholz's youth and assertiveness. He was a born

1047
01:32:21.600 --> 01:32:28.080
leader who could not suffer subservience. He needed to be his, Hans Xenholz's, own man in all of his

1048
01:32:28.080 --> 01:32:34.080
endeavors. For some time he threw himself into working for FEE and took up residence in Irvington

1049
01:32:34.080 --> 01:32:39.280
on Hudson, but the presence of another great ego then at Reeds made it impossible for Xenholz to

1050
01:32:39.280 --> 01:32:43.720
to turn FEE into the instrument of his far-reaching plans.

1051
01:32:43.720 --> 01:32:49.160
After completion of his Ph.D. in 1955, he began looking for a new position.

1052
01:32:49.160 --> 01:32:53.920
It was not easy for Zenholz to find academic employment because of a triple disadvantage.

1053
01:32:53.920 --> 01:32:57.920
He was an old-fashioned economist, a libertarian and a German.

1054
01:32:57.920 --> 01:33:00.440
Wader Horsch tried to place him at Yale.

1055
01:33:00.440 --> 01:33:04.920
Eventually, however, he found a position at Grove City College, a liberal arts college

1056
01:33:04.920 --> 01:33:10.040
Research in Western Pennsylvania that had been sponsored by the Pugh family for generations.

1057
01:33:10.040 --> 01:33:14.920
It was once again the long-standing connection between Mises and J. Howard Pugh that proved

1058
01:33:14.920 --> 01:33:21.680
so useful. When Zenholz first saw the facilities, he could hardly believe his eyes. The chapel

1059
01:33:21.680 --> 01:33:27.760
is fashioned after European Gothic cathedrals. Its beauty is superb. The reception room in

1060
01:33:27.760 --> 01:33:33.200
the library would have flattered European royalty, with thick Persian rugs on the floor

1061
01:33:33.200 --> 01:33:38.800
and expensive originals on the wall, the furniture French antique style, the indoor swimming pool

1062
01:33:38.800 --> 01:33:44.680
is built according to Olympic standard, only Esther Williams is missing, the bowling alley

1063
01:33:44.680 --> 01:33:49.920
is patterned according to Westchester club standards, the girls dormitory boasts a gold-leaf

1064
01:33:49.920 --> 01:33:55.240
Steinway piano besides other beautiful furniture, I am beginning to understand why most professors

1065
01:33:55.240 --> 01:33:59.840
go to Grove City and are never heard of again.

1066
01:33:59.840 --> 01:34:05.080
On the other hand, Zenholz did not wax enthusiastic about the students, who did not nearly live

1067
01:34:05.080 --> 01:34:09.360
up to the hopes of Pew and other sponsors, who had wanted their contributions to help

1068
01:34:09.360 --> 01:34:15.400
educate the future champions and supporters of a free society. In spite of all the splendour

1069
01:34:15.400 --> 01:34:23.020
offered by a few capitalists, the 1,300 students constitute the usual sample of 75% collectivists

1070
01:34:23.020 --> 01:34:28.920
and 25% without opinion. He went on to urge the establishment of a new graduate school

1071
01:34:28.920 --> 01:34:33.040
School for the Education of Future Professors, a school squarely built on the tradition of

1072
01:34:33.040 --> 01:34:38.240
classical liberalism. During the next few years, Zenholz would spend much time and energy

1073
01:34:38.240 --> 01:34:43.600
on this project, but it did not materialise, mainly due to financial reasons. In another

1074
01:34:43.600 --> 01:34:48.720
letter he mentions that the plans for establishing a graduate school of economics had been long

1075
01:34:48.720 --> 01:34:55.200
standing with FEE. Clearly there was a lot of work to do. Zenholz grabbed the bull by

1076
01:34:55.200 --> 01:35:00.640
by the horns, and threw himself into the battle of ideas. During the next five decades he

1077
01:35:00.640 --> 01:35:06.120
educated a new generation of Austrian school scholars, among them Walter Grindor, Jeffrey

1078
01:35:06.120 --> 01:35:12.200
Hummel, Alejandro Chafouin, Philippe Natav and Peter Butker. He would publish hundreds

1079
01:35:12.200 --> 01:35:17.720
of articles and dozens of books and booklets. He and Rothbard almost single-handedly created

1080
01:35:17.720 --> 01:35:23.600
a modern Austrian-Misesian literature. Until the early 1960s they were not alone in this

1081
01:35:23.600 --> 01:35:28.920
in this endeavor, Mises himself made a number of contributions that we will discuss in the

1082
01:35:28.920 --> 01:35:29.800
next chapter.