WEBVTT NOTE New Life in America 1 00:00:00.000 --> 00:00:10.000 Ladies and gentlemen, good morning, welcome to the ninth meeting of our seminar on the lifetimes and work of Ludwig von Mises. 2 00:00:10.000 --> 00:00:18.000 We are on the last day of our seminar, it's now time to talk about Mises in America. 3 00:00:18.000 --> 00:00:25.000 So this is only 20% of our seminar, but it's also only 20% of the book. 4 00:00:25.000 --> 00:00:37.000 It might have been justified to talk more about Mises on America, but there were other good studies already available on Mises' time in America, much more personal testimonies and so on. 5 00:00:37.000 --> 00:00:49.000 There is a very good book, a very good doctoral dissertation by Julian Delgaudio, published in 1986 by the University of Michigan, 6 00:00:49.000 --> 00:01:01.000 which deals with Ludwig von Mises' impact on the intellectual life in the United States and with his life in America, 7 00:01:01.000 --> 00:01:11.000 from 1940 to 1986. Well, Mises did not live until 1986, but he examined the impact up until 1986. 8 00:01:11.000 --> 00:01:17.000 So it was not necessary for me to repeat all the things that could be found in this book, 9 00:01:17.000 --> 00:01:24.000 but to emphasize the certain elements that were neglected there, and in any case to cut back short 10 00:01:24.000 --> 00:01:29.000 in compared to the analysis of his lifetime and work before the American years. 11 00:01:29.000 --> 00:01:37.000 So, therefore, a relatively minor quantitative presence of Mises' American years. 12 00:01:37.000 --> 00:01:44.000 So, we'll have two lectures today on that period of his life, the last third of his life. 13 00:01:44.000 --> 00:01:55.000 We'll first, this morning, talk a little bit about how he started the new life, how he came to be integrated in the American context. 14 00:01:55.000 --> 00:02:02.000 and then this afternoon we will talk more particularly about the impact that he had through the publication of Human Action, 15 00:02:02.000 --> 00:02:06.000 because Human Action gave birth to a Misesian movement. 16 00:02:06.000 --> 00:02:14.000 Mises arrived in New York City on August 3, 1940. 17 00:02:14.000 --> 00:02:20.000 I told you yesterday that he left Lisbon, therefore Europe, with a ship by the name of Europe, 18 00:02:20.000 --> 00:02:31.000 July 25th and so on. About a week later he arrives in New York City and it is in this city that he would stay for the rest of his life. 19 00:02:31.000 --> 00:02:38.000 Of course he would leave it for vacations and visits and talks and so on, but he became eventually a New Yorker. 20 00:02:38.000 --> 00:02:51.000 In New York, he found many friends, so he did not have to start in an emotional or cultural desert. 21 00:02:51.000 --> 00:02:57.000 Many friends and associates from Vienna Times and also from Geneva were already there. 22 00:02:57.000 --> 00:03:05.000 And in fact, almost all seminar members, almost all members of his private seminar were at that point in New York City. 23 00:03:05.000 --> 00:03:12.000 So you could have resumed the sessions of the seminar, but you did not because there were more urgent things to do. 24 00:03:12.000 --> 00:03:24.000 Even the family doctor was there. So there was a context. The difference was of course that in Vienna where everything was much smaller, much more concentrated, 25 00:03:24.000 --> 00:03:33.000 it was easier to get together. In New York, a great metropolitan area, people were a little bit more dispersed. 26 00:03:33.000 --> 00:03:44.000 So Mises did not mount an American edition of his private seminar, but he had to deal first with a more urgent problem, which was money. 27 00:03:44.000 --> 00:03:57.000 So he arrives there and of course he has some savings from his Geneva years, he had a good salary in Geneva, but now there is no money at all, no income at all. 28 00:03:57.000 --> 00:04:05.000 and he has been cut off of other assets that he had held in Austria and in Britain. 29 00:04:05.000 --> 00:04:11.000 In Austria, of course, there was his pension funds. He was in early retirement and he had a very decent pension. 30 00:04:11.000 --> 00:04:18.000 But with the Nazi takeover of Austria in 1938, they cut off all payments. 31 00:04:18.000 --> 00:04:28.000 So, they did not honor the contractual obligations that Mises had with the Austrian government. 32 00:04:28.000 --> 00:04:32.000 Very nasty thing, but what do you expect of such bandits? 33 00:04:32.000 --> 00:04:39.000 In Britain, he had some money too, due to his book publications. 34 00:04:39.000 --> 00:04:47.000 He had published The Theory of Money and Credit and then Socialism by British publishers in the 1930s. 35 00:04:47.000 --> 00:04:53.000 and he had a fairly decent bank account but then of course what happened with the start of the war 36 00:04:53.000 --> 00:04:58.000 there was immediate foreign exchange control so you could not export the money anymore. 37 00:04:58.000 --> 00:05:03.000 So what do you do? You could use it only within Britain. 38 00:05:03.000 --> 00:05:09.000 So Mises gave an authorization to Hayek who was a professor at the London School of Economics 39 00:05:09.000 --> 00:05:16.000 and then Hayek, well he could not ship the money to the US but he did something else. 40 00:05:16.000 --> 00:05:32.000 He bought a highly marketable good that didn't weigh too much and had a high monetary value per weight unit and shipped it over to the US. 41 00:05:32.000 --> 00:05:36.000 Now the question for you is what might this have been? 42 00:05:36.000 --> 00:05:45.000 Something that intellectuals are very close to emotionally. 43 00:05:45.000 --> 00:05:50.000 Books, exactly. So Hayek bought rare books. 44 00:05:50.000 --> 00:05:56.000 Among other things, the first edition of Adam Smith's Wealth of Nations, 45 00:05:56.000 --> 00:06:02.000 two complete sets of Jeremy Bentham's collected works and similar things. 46 00:06:02.000 --> 00:06:13.000 And he shipped those over to the US because the American and British authorities had not yet come to the idea that value could be smuggled out of the country in this way. 47 00:06:13.000 --> 00:06:27.000 But you see also that Mises must have had quite a sum on his bank account because even in those days already a first edition of Adam Smith's Wealth of Nation was not to be had for nothing. 48 00:06:27.000 --> 00:06:38.000 So this was some money, but it was still not an income, you had to find new sources of income and that was certainly not easy as we can imagine a man of 59 years. 49 00:06:38.000 --> 00:06:50.000 Today if I look around in France, some people get fired, they are 35 or so, or 25, what am I going to do now, my life is ruined and so on. 50 00:06:50.000 --> 00:06:55.000 and it's even more difficult in the case of intellectuals of course. 51 00:06:55.000 --> 00:07:05.000 Intellectuals from the point of view of capital theory are highly specific assets and highly specific factor of production. 52 00:07:05.000 --> 00:07:09.000 It's not easy to reconvert them into something else. 53 00:07:09.000 --> 00:07:15.000 Mises tried various things and he especially was interested in finding academic employment. 54 00:07:15.000 --> 00:07:34.000 So, he gave various talks and presentations to schools, in particular in New York City, and attended meetings of professional associations, such as, for example, the American Economic Association meeting in December 1940, New Orleans. 55 00:07:34.000 --> 00:07:45.000 So we can infer from that he was quite in desperate need of money because he didn't attend many other meetings of this sort later on. 56 00:07:45.000 --> 00:07:57.000 Things eased up on the academic job market after December 1941 when the US entered World War II. 57 00:07:57.000 --> 00:08:04.000 Then the U.S. government became the largest employer of economists. 58 00:08:04.000 --> 00:08:11.000 So people like Machlub, Morgenstern, Friedman, of course, John Kenneth Galbraith, 59 00:08:11.000 --> 00:08:16.000 and in fact thousands of other economists were employed by the U.S. government. 60 00:08:16.000 --> 00:08:23.000 But Mises could not really profit from this for reasons that are rather patent. 61 00:08:23.000 --> 00:08:33.000 Okay, so first of all he was old. Second, he had already difficulties given his views being employed in his native Austria in World War I. 62 00:08:33.000 --> 00:08:45.000 So it's easy to understand that it would have been even more difficult for him to find employment in a foreign country in wartime at a much later stage. 63 00:08:45.000 --> 00:08:53.000 So, the US government was not the suitable employer for him, he had to find something else. 64 00:08:53.000 --> 00:09:00.000 There was one little outlet that he found through his new friendship with Henry Hazlitt. 65 00:09:00.000 --> 00:09:09.000 American journalist, of course, later on became a famous Austrian, famous proponent of Misesian economics. 66 00:09:09.000 --> 00:09:15.000 In those days, Henry Hazlitt worked as a journalist editorialist for the New York Times 67 00:09:15.000 --> 00:09:21.000 and he had known Mises not personally but only through his writings 68 00:09:21.000 --> 00:09:27.000 and Hazlitt had written in particular a highly sympathetic book review of the English edition of Socialism 69 00:09:27.000 --> 00:09:31.000 so Mises was aware of the existence of Hazlitt 70 00:09:31.000 --> 00:09:44.000 and one day called him, that was quite a funny incidence, so I will read this for you, 71 00:09:44.000 --> 00:09:56.000 how Hazlitt recalled how they met in New York, so Hazlitt, sometime in 1940 I got a telephone call, 72 00:09:56.000 --> 00:10:00.000 The voice on the other end said, this is Mises speaking. 73 00:10:00.000 --> 00:10:04.000 Of course he said it somewhat different, this is Mises speaking or whatever. 74 00:10:04.000 --> 00:10:11.000 As I've told many of my friends since, it was as if someone had called and said, this is John Stuart Mill speaking. 75 00:10:11.000 --> 00:10:19.000 I had referred to Mises as a classic and you don't expect a classic to call you on the telephone. 76 00:10:19.000 --> 00:10:32.000 Anyway, that led to our acquaintance, and so Hans-Eck of course perceived the need and he got Mises to write editorials for the New York Times. 77 00:10:32.000 --> 00:10:42.000 That was not much. Mises wrote maybe eight or so editorials starting in March 1941, each of which was paid $10. 78 00:10:42.000 --> 00:10:49.000 Okay, now we've always got to think, right, $10 to get a rough idea at $35 per ounce of gold. 79 00:10:49.000 --> 00:10:56.000 Okay, so it would have been, whatever, $200 today, which is not bad for a verbal editorial, 80 00:10:56.000 --> 00:11:01.000 but it's certainly not something that would keep you going for a long while. 81 00:11:01.000 --> 00:11:10.000 So what really saved Mises eventually was, again, his connection to the Rockefeller Foundation. 82 00:11:10.000 --> 00:11:18.000 The Rockefeller Foundation funded a position for Mises at the National Bureau of Economic Research. 83 00:11:18.000 --> 00:11:32.000 So starting December 1940, Mises was hired by the NBER, but the entire funds came from the Rockefeller Foundation, $2,500 a year. 84 00:11:32.000 --> 00:11:43.000 Now, to give you a rough idea of what this meant, well, college professors in those years in the US were paid in the average around $2,000. 85 00:11:43.000 --> 00:11:55.000 Okay, so Mises was a highly paid college professor. At the universities, for full professors, salaries were much higher. 86 00:11:55.000 --> 00:12:05.000 Mark Loeb's starting salary at the University of Buffalo in 1935 was $6,500, so it's very different. 87 00:12:05.000 --> 00:12:17.000 So this kept him going for a while and he continued at first the writing and research projects that he had already started in Geneva 88 00:12:17.000 --> 00:12:24.000 in Geneva when he was finished with Nationale Ökonomie and he continued writing in German. 89 00:12:24.000 --> 00:12:30.000 So he definitely had at that point in mind to return to Europe at some point. 90 00:12:30.000 --> 00:12:34.000 There are two projects that we might mention in particular. 91 00:12:34.000 --> 00:12:45.000 One is Omnipotent Government, the book that was eventually published in 1944, which he had written in German first. 92 00:12:45.000 --> 00:12:57.000 So at NBR they found him a translator and the manuscript was translated and he worked the manuscript over. This happened in those years. 93 00:12:57.000 --> 00:13:11.000 And he also worked on a proposal for the political reorganization of Eastern Europe in those days. 94 00:13:11.000 --> 00:13:37.000 When he made plans to return to Vienna in 1937, he had written a similar paper in which he explained how and why Austria should seek a political union with other states in the Danube basin, and this in order to preserve political independence. 95 00:13:37.000 --> 00:13:57.000 So, Mises saw that, well, Austria but also the other little countries in the Danube area, that is, Yugoslavia and Hungary, Romania, were just in the middle between three mighty neighbors, Russia, Germany and Italy, 96 00:13:57.000 --> 00:14:02.000 each of whom pursued an expansionist and aggressive foreign policy. 97 00:14:02.000 --> 00:14:10.000 So it was just a matter of time until they would be conquered and annexed by any of these powers, 98 00:14:10.000 --> 00:14:20.000 just like Poland had been conquered and then partitioned among Prussia, Russia and Austria in the late 1700s. 99 00:14:20.000 --> 00:14:49.000 So Mises proposed a political union in the Danube area in 1937 and now when he was working at the NBER he worked on a proposal for the establishment of an Eastern Democratic Union which implied the political unification of virtually all of Eastern Europe, not just the Danube Basin but also Czechoslovakia and Poland in particular. 100 00:14:49.000 --> 00:14:56.000 in Poland in particular. So all of Eastern Europe too. The idea was to gain a sufficient mass, 101 00:14:56.000 --> 00:15:05.000 a sufficiently large political entity that could withstand aggression from Germany, Russia and Italy, 102 00:15:05.000 --> 00:15:15.000 would have enough resources to defend itself. These proposals have recently been published 103 00:15:15.000 --> 00:15:21.000 by Liberty Fund, in volumes edited by Richard Eberling, who has collected these documents. 104 00:15:21.000 --> 00:15:26.000 Now this is not at all something that we find in Moscow, so this has been available all the time, 105 00:15:26.000 --> 00:15:32.000 could have been published 30 years ago or 20 years ago for anybody who cared. 106 00:15:32.000 --> 00:15:38.000 These manuscripts have been in the archive of Grove City College, 107 00:15:38.000 --> 00:15:43.000 the archive where Mises' entire post-war correspondence is still stored. 108 00:15:43.000 --> 00:16:13.000 and so after Mises' death in 1973, his wife was again in need of money, a very similar situation as in 1970, so she sold his library, the library was acquired by Hillsday College, very beautiful room, so if you ever have the opportunity to travel to Michigan, go visit Hillsday College, go see the Mises Library, they have set up a separate room and wonderful bookshelves, 109 00:16:13.000 --> 00:16:24.000 with books in different languages, English is a minority language there, and she sold 110 00:16:24.000 --> 00:16:31.560 his correspondence and his files, maybe except for the love letters that she sent him, but 111 00:16:31.560 --> 00:16:39.680 some love letters are there too, to Grove City College, so Grove City College is another 112 00:16:39.680 --> 00:16:46.680 major source for biographical work of Ludwig von Mises. There we also find these manuscripts. 113 00:16:46.680 --> 00:16:53.680 Fortunately, now they've become available in beautiful editions by the Liberty Fund. 114 00:16:53.680 --> 00:17:03.680 So it was a difficult start for von Mises. He must have been very frustrated. They survived. 115 00:17:03.680 --> 00:17:10.680 And then things started to improve slowly in the second half of 1941, so about a year later. 116 00:17:10.680 --> 00:17:13.680 The first year must have been very hard. 117 00:17:13.680 --> 00:17:18.680 In the summer of 1941, he had a first vacation in the US. 118 00:17:18.680 --> 00:17:26.680 He spent a vacation in the White Mountains in New Hampshire, which reminded him of the scenery of the Alps. 119 00:17:26.680 --> 00:17:29.680 Now, this is something that we did not talk about before. 120 00:17:29.680 --> 00:17:36.680 Well, I think I hinted at it, but Mises was a great hiking fan, great mountain hiking fan. 121 00:17:36.680 --> 00:17:42.680 He spent all of his summer vacations in Austria, in the Austrian Alps, in particular in the town of Bad Gastein. 122 00:17:42.680 --> 00:17:48.680 It's a resort town in the western Alps of Austria, beautiful setting. 123 00:17:48.680 --> 00:17:55.680 And so he always refreshed in mountain air where he could climb and had great views and so on. 124 00:17:55.680 --> 00:17:59.680 and so on, that is exactly what he also found in the White Mountains. 125 00:17:59.680 --> 00:18:06.680 Margaret von Mises was very happy to see her husband climb a different peak every day, 126 00:18:06.680 --> 00:18:10.680 so he gained strength and courage. 127 00:18:10.680 --> 00:18:15.680 They also found in that period a permanent home. 128 00:18:15.680 --> 00:18:21.680 They moved to an apartment on 777 West End Avenue. 129 00:18:21.680 --> 00:18:34.680 Go visit New York City. Just stroll there. It's not very far away from Columbia University. It's not very far away once you are in the central park, the southern edge of the central park. 130 00:18:34.680 --> 00:18:44.680 It's a 10-story building or so. Mises was, I believe, in the top story. 131 00:18:44.680 --> 00:18:52.680 And that's where they moved in October 1941 and stayed until his death and beyond his death. 132 00:18:52.680 --> 00:18:57.680 Margaret stayed there until she died in 1993. 133 00:18:57.680 --> 00:19:06.680 Well, the economic explanation is that there were rent controls, rent control laws, right? 134 00:19:06.680 --> 00:19:12.680 So they continued to pay a rent very similar to the one that they paid in 1940 throughout this time. 135 00:19:12.680 --> 00:19:22.680 So it's a splendid location. And in the second half of 1941, he started writing in English. 136 00:19:22.680 --> 00:19:39.680 So he must have during the vacation in the White Mountains made new resolves and come to the decision that he would start a new life really in America and not return to Europe. 137 00:19:39.680 --> 00:19:45.680 To Hayek he wrote in those days, quote, 138 00:19:45.680 --> 00:19:53.680 As I do not want to increase further the collection of my posthumous works, I am writing now in English. 139 00:19:53.680 --> 00:20:03.680 I hope that I will succeed to finish within a year of volume dealing critically with the whole complex of anti-orthodox doctrines and their consequences. 140 00:20:03.680 --> 00:20:16.680 He went on praising Hayek's essays on the counterrevolution of science, which were later published in a book with this title, The Counterrevolution of Science. 141 00:20:16.680 --> 00:20:22.680 And he said, I am however rather skeptical in regard of the practical result of our endeavors. 142 00:20:22.680 --> 00:20:27.680 It seems that the age of reason and common sense is gone forever. 143 00:20:27.680 --> 00:20:32.680 However, reasoning and thinking have been replaced by empty slogans. 144 00:20:32.680 --> 00:20:35.680 Does this remind you of something? 145 00:20:35.680 --> 00:20:45.680 A few days ago, Mises said, Alvin Hansen delivered a lecture on post-war economic reconstruction. 146 00:20:45.680 --> 00:20:49.680 The old stories about full employment, scarcity of foreign exchange, 147 00:20:49.680 --> 00:20:55.680 the need for foreign exchange control and planning, more self-sufficiency, etc. 148 00:20:55.680 --> 00:20:58.680 He did not even mention the problem of capital shortage. 149 00:20:58.680 --> 00:21:04.680 He seems to believe that taxing the rich would make it possible to maintain the pre-war standard of living of the masses. 150 00:21:04.680 --> 00:21:11.680 Two centuries of economic theory were in vain, as they could not kill the mercantilist prejudices. 151 00:21:11.680 --> 00:21:18.680 The audience, many ex-members of the Verein für Sozialpolitik, German Association of Economic Policy, 152 00:21:18.680 --> 00:21:22.680 expressed full agreement with the lecturer." 153 00:21:25.680 --> 00:21:31.680 So, but still, right, so he went on, was not very encouraging, we'll talk a little bit later about this, but he went on. 154 00:21:31.680 --> 00:21:40.680 Things also improved, at least from his perspective, when in December 1941 the US joined the war. 155 00:21:40.680 --> 00:21:54.680 And so there was therefore the prospect to get rid of the most aggressive socialistic government, namely the Nazi government in Germany and its allies. 156 00:21:54.680 --> 00:22:19.680 Now, Mises must have taken the resolve to start a new life in America, but there was one attractive alternative, could at least have potentially given another outlet for him, and this would have been a career in Mexico. 157 00:22:19.680 --> 00:22:26.680 In 1941 he renewed his acquaintance with a Mexican businessman by the name of Montes de Oca, 158 00:22:26.680 --> 00:22:34.680 Senor Montes de Oca. They had met in the pre-war times in Europe at meetings of the International Chamber of Commerce 159 00:22:34.680 --> 00:22:44.680 and Montes de Oca had been a great admirer of his and he proposed that he was very happy to meet Mises in New York, 160 00:22:44.680 --> 00:22:53.680 in New York, Siem over in the Americas, and so they, he proposed Mises two projects. 161 00:22:53.680 --> 00:22:59.680 First one was to arrange for a Spanish translation of socialism. 162 00:22:59.680 --> 00:23:06.680 And the second one was to come as a visiting professor to New York City, to Mexico City in 1942. 163 00:23:06.680 --> 00:23:09.680 So both projects realized. 164 00:23:09.680 --> 00:23:19.680 Maybe in this context a little bird on translations, so Mises was outright horrified at most translations of his work. 165 00:23:19.680 --> 00:23:26.680 We already mentioned the problem of the somewhat inadequate translation of the title of his money book. 166 00:23:26.680 --> 00:23:33.680 But he said in correspondence relating to this Spanish translation of socialism, he said, 167 00:23:33.680 --> 00:23:45.680 and Socialism, he said, well, most of these translations are bad, there are many distortions and many counter-senses in these translations 168 00:23:45.680 --> 00:23:53.680 and he praised only one translation as really good, which was the French translation of his book Socialism. 169 00:23:53.680 --> 00:24:01.680 So this was a good work and therefore he also proposed that the Spanish translation be done from this French edition 170 00:24:01.680 --> 00:24:04.680 because Montes de Oca could not read German, but he could read French. 171 00:24:04.680 --> 00:24:07.680 So it was done from the French edition. 172 00:24:07.680 --> 00:24:13.680 So for you, Mises students, this means, well, always be careful, 173 00:24:13.680 --> 00:24:19.680 always be careful when you read translations from his German works of the time, 174 00:24:19.680 --> 00:24:23.680 but you can trust the French edition of socialism. 175 00:24:23.680 --> 00:24:33.680 So, Mises went to Mexico for six weeks in late January to March 1942. 176 00:24:33.680 --> 00:24:37.680 And even before he arrived there, Montesioca wrote him and said, 177 00:24:37.680 --> 00:24:39.680 well, we actually would like to hire you. 178 00:24:39.680 --> 00:24:43.680 We'd like you to do exactly what you did in Vienna, 179 00:24:43.680 --> 00:24:46.680 be a leading chief economist of the Chamber of Commerce. 180 00:24:46.680 --> 00:24:49.680 In fact, there were several chambers of commerce in Mexico City, 181 00:24:49.680 --> 00:24:57.680 It was proposed to be the chief economist of two chambers of commerce and then teach also at the university. 182 00:24:57.680 --> 00:25:03.680 Whichever university you wish, pick a university and you will teach there. 183 00:25:03.680 --> 00:25:13.680 Mises said, okay, well, this sounds very interesting. I would like to first become acquainted with the conditions on the spot and so didn't commit to anything. 184 00:25:13.680 --> 00:25:23.680 went to Mexico City and talked to people of excellent state and received great generosity and attention and stayed in the local ritz. 185 00:25:23.680 --> 00:25:34.680 So it was good old times again. And so Mises gave a seminar in English and also a couple of lectures in French. 186 00:25:34.680 --> 00:25:42.680 The School of Economics was a school of law, both taught at both places, and he talked to the representatives of the chambers of commerce. 187 00:25:42.680 --> 00:25:49.680 and did still not commit to anything and said, well, okay, I've got to think this over. 188 00:25:49.680 --> 00:26:00.680 And they agreed that he should start off by writing a study on economic conditions, present economic problems in Mexico. 189 00:26:00.680 --> 00:26:07.680 What should be the economic strategy for Mexico? And that's what he did in the coming months. 190 00:26:07.680 --> 00:26:14.680 So eventually, when his host, Montes de Oca, sensed that, well, Mises was not too enticed, 191 00:26:14.680 --> 00:26:21.680 well, he was interested but not really enthusiastic about this, he propped up his offer and said, 192 00:26:21.680 --> 00:26:25.680 well, we could also do something else, we could establish an institute of the social sciences, 193 00:26:25.680 --> 00:26:32.680 purely economic outfit and could bring in people that you like. 194 00:26:32.680 --> 00:26:44.680 Now this was much more to the liking of Mises and in the early 1940s there would have been, in fact, a real possibility of setting up something like this 195 00:26:44.680 --> 00:26:55.680 because many European intellectuals were available, many European intellectuals had to come to the US and did not have found a suitable employment. 196 00:26:55.680 --> 00:27:07.680 Later on, they would. At the end of the war, most of them were accommodated very well, such as Mises, but in 1940, 1941, 42, 43, things looked different. 197 00:27:07.680 --> 00:27:15.680 It would have been possible to set up such an institution in Mexico City with the first world-class faculty. 198 00:27:15.680 --> 00:27:27.680 So, people like Werff, Mises, Arnold Plant, Röpke and so on, they were available. 199 00:27:27.680 --> 00:27:32.680 But eventually did not come to this. Mises did not go to Mexico City. 200 00:27:32.680 --> 00:27:36.680 The Institute of the Social Sciences did not see the day and so on. 201 00:27:36.680 --> 00:27:43.680 So, these were from his point of view at the time, so he was torn a little bit. 202 00:27:43.680 --> 00:27:55.680 So let's look back to New York and his activities in the Big Apple and his professional integration there. 203 00:27:55.680 --> 00:28:06.680 Before we come to the steps that fully paved the way to his integration into American life, 204 00:28:06.680 --> 00:28:21.680 There was one last activity that also kept him or drew him back to Europe, although he had already made the resolve to stay in the US, namely his cooperation with Austrian expatriate groups. 205 00:28:21.680 --> 00:28:37.680 So there were many expatriates there where they had to flee the Nazi government and they were making plans for the eventual political economic reconstruction of Austria after World War II. 206 00:28:37.680 --> 00:28:47.680 Always thinking that, wow, the Germans would lose the war, which eventually also happened. 207 00:28:47.680 --> 00:29:10.680 Now, among these expatriate groups there was one group led by monarchists and which set up an Austrian national committee in which Mises cooperated. 208 00:29:10.680 --> 00:29:26.680 Now, Mises did not cooperate because he was a monarchist, but because this was the only patriotic group, that is the only group of expatriates that prepared the restoration of an independent Austrian Republic after World War II. 209 00:29:26.680 --> 00:29:32.680 And the fact is that, well, only right-wingers were doing this at the time. 210 00:29:32.680 --> 00:29:40.680 The social democrats still strove in those days for the integration of Austria or the continued integration of Austria in Germany. 211 00:29:40.680 --> 00:29:47.680 Of course, they didn't like Hitler, but they at least wanted to keep the possibility open that after the war, 212 00:29:47.680 --> 00:29:54.680 there would still be a greater Germany, including Austria, this time led by social democrats. 213 00:29:54.680 --> 00:30:04.680 So the only group that strove for an independent Austria, which was also what Mises was aiming at, was led by monarchists. 214 00:30:04.680 --> 00:30:10.680 Now the monarchist movement was very strong in Austria before the war. 215 00:30:10.680 --> 00:30:22.680 This had not been apparent during the 1920s because the government actively, or the various governments, actively suppressed this monarchical movement. 216 00:30:22.680 --> 00:30:34.680 Movement, and they did this at the behest of the Austrian neighbors, Czechoslovakia, Yugoslavia, Hungary and so on, 217 00:30:34.680 --> 00:30:44.680 and in particular at the behest of the former war enemies, France, Britain, the US, all of them did not want to have an Austrian monarchy, 218 00:30:44.680 --> 00:30:47.680 did not want to have the restoration of the House of Habsburg. 219 00:30:47.680 --> 00:30:55.680 Now this suppression ceased under the authoritarian Dolfus government, 220 00:30:55.680 --> 00:31:02.680 which came to power in 1933-34, and as soon as the suppression ceased, 221 00:31:02.680 --> 00:31:07.680 well, they sprang into life a very active monarchical movement. 222 00:31:07.680 --> 00:31:35.680 movement. His leader was of course the dolphin, the prince Otto von Habsburg, who was until the mid 1930s, so in the few years from 1933 to 1936-1937, he had become an honorary citizen of 1,540,000 223 00:31:35.680 --> 00:31:43.680 There were approximately 140 communal towns out of a total of 4,500 in Austria. 224 00:31:43.680 --> 00:31:52.680 One out of three Austrian towns had made him an honorary citizen, so that is a good indicator for the strength of this movement. 225 00:31:52.680 --> 00:32:02.680 Otto von Habsburg had proposed that he take over the government in the big crisis that led to the annexation of Austria in 1938, 226 00:32:02.680 --> 00:32:09.680 Shushnick did not do this while Otto was a young man also at the time, he was in his early 30s. 227 00:32:09.680 --> 00:32:15.680 And then he had to leave Europe, he also went to the US and also stayed in New York City 228 00:32:15.680 --> 00:32:24.680 and coordinated there on the one hand the cooperation of various patriotic expatriates 229 00:32:24.680 --> 00:32:32.680 and also established diplomatic ties with the US government and its war allies, 230 00:32:32.680 --> 00:32:38.680 aiming at the preparation of Austrian independence after the war. 231 00:32:38.680 --> 00:32:46.680 And he was very successful in these endeavors, so first great success was that in late 1943, 232 00:32:46.680 --> 00:32:57.680 The Western Allies, including Russia, agreed on the recognition of Austrian independence after the war. 233 00:32:57.680 --> 00:33:04.680 The US established also an Austrian day, a feast day, and so on. 234 00:33:04.680 --> 00:33:14.680 There were still conflicts among these ex-patriots, and these concerned, well, most notably the question of the form of state. 235 00:33:14.680 --> 00:33:17.680 and in particular also of the scope of state. 236 00:33:17.680 --> 00:33:21.680 Form of state, should it be a monarchy or a republic? 237 00:33:21.680 --> 00:33:25.680 The monarchy, should it be based on popular consent 238 00:33:25.680 --> 00:33:29.680 or should it be based on legitimacy grounds, 239 00:33:29.680 --> 00:33:31.680 hereditary rights? 240 00:33:31.680 --> 00:33:39.680 There was a very strong legitimist faction within this group. 241 00:33:39.680 --> 00:33:46.680 One of its main representatives was a former colleague of Mises at the University of Vienna. 242 00:33:46.680 --> 00:33:53.680 Degenfeld was his name. And Mises, of course, did not at all agree with this. 243 00:33:53.680 --> 00:34:00.680 Well, we talked already about his theory of democracy, his economic theory of democracy. 244 00:34:00.680 --> 00:34:07.680 And for the crucial role that Mises stressed that democracy had was to pacify the nation 245 00:34:07.680 --> 00:34:16.680 and help prevent violent conflicts over the question which type of government we should have and who should be in the government and so on. 246 00:34:16.680 --> 00:34:34.680 So when Otto von Habsburg asked Mises his opinion about the most suitable form of state that also should have after World War II and in particular about the possibility of re-establishing the monarchy, 247 00:34:34.680 --> 00:34:39.680 Mises said, well, okay, monarchy would be fine, but it would have to be based on popular consent. 248 00:34:39.680 --> 00:34:48.680 Otherwise, we just enshrine conflict into the Constitution from the very outset. 249 00:34:48.680 --> 00:34:57.680 But his biggest disagreements concerned not with Otto von Habsburg, who was fairly a classical liberal, so he was a minimal status, 250 00:34:57.680 --> 00:35:03.680 But other members of these expectorate groups concerned the scope of the state. 251 00:35:03.680 --> 00:35:08.680 Many of them, well, wanted to run the country, didn't want to run it like the social democrats, 252 00:35:08.680 --> 00:35:12.680 didn't want to run it like the Nazis, but they wanted to run it nevertheless. 253 00:35:12.680 --> 00:35:20.680 So strong interventionist government and so on, and Mises saw no fruitful base for cooperation here. 254 00:35:20.680 --> 00:35:27.680 and some disgust, as you said in the mid-1940s, well, the Austrians are like the French Bourbons, 255 00:35:27.680 --> 00:35:36.680 the ruling house of France until the early 1830s. They have learned nothing and forgotten nothing. 256 00:35:36.680 --> 00:36:05.680 So he discontinued cooperation with the Austrian National Committee in late 1942 and 1943, and then fully turned to board US organizations, so he left all this European trouble behind and then sought integration into American society. 257 00:36:05.680 --> 00:36:24.680 Here we have then a transition. His contract with NBER, funded by Rockefeller, ran out in 1944. 258 00:36:24.680 --> 00:36:35.880 So it was extended two times, one time after a year and then another, so in 1942, for another two years. 259 00:36:41.880 --> 00:36:47.480 Mises then even received a two-year extension under the same conditions as before. 260 00:36:48.480 --> 00:36:54.080 It was the normal policy of the Rockefeller Foundation to subsidize the integration of European emigres, 261 00:36:54.080 --> 00:37:01.080 The Rockefeller Foundation's chief executive made it clear, and the NBER executive, with Mises Rettoburg, made it even more stark, that this extension would be the last one. 262 00:37:01.080 --> 00:37:08.080 However, it was to be the very end of their cooperation. The second year's bonus was a not-so-subtle goodbye. 263 00:37:08.080 --> 00:37:23.080 The Rockefeller Foundation's chief executive made it clear, and the NBER executive, with Mises Rettoburg, made it even more stark, that this extension would be the last one. 264 00:37:23.080 --> 00:37:38.080 and the last one. Fortunately for Mises, about exactly the same time, he found a more amenable source of support, independent of the Rockefeller Foundation, namely the National Association of Manufacturers, NAM. 265 00:37:38.080 --> 00:37:54.080 The NAM leadership opposed the New Deal and other status projects. They were determined to prepare a counterattack, starting a large-scale campaign to educate the American public about the benefits of what they called the free enterprise system. 266 00:37:54.080 --> 00:38:02.080 NAM needed intellectual leadership from people who were conversant both in the world of business and in the world of ideas. 267 00:38:02.080 --> 00:38:09.080 By February 1943, they had discovered what they were looking for in the person of Ludwig von Mises. 268 00:38:09.080 --> 00:38:14.080 Many years in the Vienna Chamber of Commerce had accustomed him to dealing with businessmen 269 00:38:14.080 --> 00:38:21.080 and to communicating effectively his economic and political insights to this audience. 270 00:38:21.080 --> 00:38:26.080 Just when the Rockefeller Foundation made it clear that they were no longer interested in supporting him, 271 00:38:26.080 --> 00:38:34.080 Supporting him, NAM immediately stepped in and offered to hire Mises as a consultant, starting today. 272 00:38:34.080 --> 00:38:43.080 Mises became a member of the Economic Policy Advisory Group, as was the name, Economic Policy Advisory Group. 273 00:38:43.080 --> 00:38:53.080 He later also became a member of NAM's Economic Principles Commission and of its Advisory Group on International Economic Relations. 274 00:38:53.080 --> 00:39:03.080 The contract provided for an annual honorarium of $3,000, more than its previous contract at NBER. 275 00:39:03.080 --> 00:39:14.080 The contract was extended on an annual basis. In the 1944-45 period, Mises' honorarium increased to $3,600. 276 00:39:14.080 --> 00:39:26.080 He worked closely with NAM Secretary Noel Sargent, who in 1943 commissioned a study from him on international monetary reconstruction after World War II. 277 00:39:26.080 --> 00:39:34.080 This study too has recently been published in a volume edited by Richard Eberling. 278 00:39:34.080 --> 00:39:39.080 By the fall of the year, Mises had written a 68-page memorandum on the subject, 279 00:39:39.080 --> 00:39:55.080 in which he advocated a return to the gold standard and criticized reconstruction plans that Harry Dexter White and John Maynard Keynes had made in preparation for the 1944 Bretton Woods Conference. 280 00:39:55.080 --> 00:40:03.080 A few months later he took part in a NAM-sponsored expert meeting to discuss the Keynes and White proposals. 281 00:40:03.080 --> 00:40:09.080 By June 1944, Mises had prepared another memorandum, this time on monopoly. 282 00:40:20.080 --> 00:40:24.080 A few months later he addressed two advisory committee luncheons on the West Coast. 283 00:40:24.080 --> 00:40:30.080 Now that was to be faithful. At that point he had already acquired a solid reputation 284 00:40:30.080 --> 00:41:00.080 reputation through the publication of two books, Omnipotent Government, English translation of the German manuscript that he had written about 1938-39, by the way the German manuscript of the original was published only many years later in the 70s, it was a posthumous publication, so there was Omnipotent Government and another book, Bureaucracy, which presents an economic theory of bureaucracy that he had just outlined 285 00:41:00.080 --> 00:41:07.080 and socialism and a few passages and then 10 or so pages in his critique of interventionism. 286 00:41:07.080 --> 00:41:15.080 So this he then turned into a full book. And accordingly, so these were his first two American publications 287 00:41:15.080 --> 00:41:22.080 and he was presented as, quote, the most eminent and uncompromising defender of English liberty 288 00:41:22.080 --> 00:41:30.080 and the system of free enterprise, which has reached its highest development here in the United States." 289 00:41:30.080 --> 00:41:38.080 Mises addressed the local NAM chapters in San Francisco and Los Angeles. 290 00:41:38.080 --> 00:41:42.080 So this was October 1944. 291 00:41:42.080 --> 00:41:51.080 And there he met, as he said, such excellent men as Leonard Reed, Orville Watts and R.C. Hoyles. 292 00:41:51.080 --> 00:42:06.080 Now these are three names that we should remember because they were very important allies for Mises in the succeeding years, not immediately thereafter but then the corporation would kick in with full force in the 1950s. 293 00:42:06.080 --> 00:42:24.080 Leonard Reed or Watts was a Reed employee and R.C. Hoyle was a publisher in Orange County and the newspaper that he ran was the predecessor of what is today, is this the Orange County Register? 294 00:42:24.080 --> 00:42:30.080 Is this the name of the paper today? So that's Hoyle's set up. 295 00:42:30.080 --> 00:42:39.080 Mises' encounter with Leonard Reed was a fateful one. They may have met a few years earlier, shortly after his arrival in the United States. 296 00:42:39.080 --> 00:42:49.080 At any rate, Reed later recalled such a first meeting in 1940. Maybe also that his memory escaped him, but okay, that's something that I could not tell from the records. 297 00:42:49.080 --> 00:43:02.080 In any case, at this first meeting he had been much impressed by the purity of Mises' opposition to any government power beyond the minimum necessary for the preservation of domestic peace and the market. 298 00:43:02.080 --> 00:43:09.080 Mises had reportedly attended a party in Reed's home. One of the guests asked him, 299 00:43:09.080 --> 00:43:19.080 quote, all of us agree with you that we are headed for troubled times, but Dr. Mises, let's assume that you were the dictator of these United States 300 00:43:19.080 --> 00:43:25.080 and could impose any changes you think appropriate. What would you do? 301 00:43:25.080 --> 00:43:34.080 And Reid clearly recalled the answer. He said, quick as a flash, Mises replied, I would abdicate. 302 00:43:34.080 --> 00:43:43.080 Okay, so this made a very strong and positive impression on these West Coast men. 303 00:43:43.080 --> 00:43:51.080 And Leonard Reid eventually moved in 1946, 1945, he moved to the East Coast, moved to the New York area. 304 00:43:51.080 --> 00:43:59.080 and one year later set up the Foundation for Economic Education, which we'll talk a little bit later. 305 00:43:59.080 --> 00:44:13.080 Shortly thereafter, then, Mises became an American citizen. That was also one of the reasons why he did not visit more with his new friends in Mexico. 306 00:44:13.080 --> 00:44:21.080 in Mexico, he could not leave the country during the application period, and he finally received citizenship in January 1946. 307 00:44:21.080 --> 00:44:34.080 At that point there were no plans to return to Europe, but he finally got access again to his pension fund from the former Chamber of Commerce in Vienna. 308 00:44:34.080 --> 00:44:44.080 Finally, with the new government, they started honoring again the contract, only with a little problem that they had, of course, foreign exchange controls. 309 00:44:44.080 --> 00:44:55.080 So you could not export the money from the country. We are today so much blessed, because we can just wire money from one country to another and bring money from one country to another. 310 00:44:55.080 --> 00:45:03.080 That was not possible. And as a concept, that was the reason why Mises eventually came to spend a couple of vacations in Austria. 311 00:45:03.080 --> 00:45:20.080 In Austria, what else do you do? You go there and stay in nice hotels and maybe you buy books and other marketable, highly marketable goods that have a high purchasing power per weight unit and that's all you can do. 312 00:45:20.080 --> 00:45:33.080 Now, the intellectual situation in his new country was of course bleak. 313 00:45:33.080 --> 00:45:43.080 Mises was well aware while he was convinced at that point that things were, from an economic point of view, 314 00:45:43.080 --> 00:45:52.080 from an intellectual point of view, of course, still better than in Europe, but from an intellectual point of view, very similar. 315 00:45:52.080 --> 00:45:58.080 In fact, the American literature on economics was, if anything, worse than the European one. 316 00:45:58.080 --> 00:46:09.080 This is what he wrote in a letter to a young Austrian economist, well, a young economist in Austria, let's say, in those years, 1946. 317 00:46:09.080 --> 00:46:19.080 He said, there is a great enthusiasm in the U.S. for unbalanced budgets, deficit spending, low interest rates and all sorts of regimentation. 318 00:46:19.080 --> 00:46:27.080 Those who dare to disagree are simply brushed aside as orthodox and reactionary." 319 00:46:27.080 --> 00:46:31.080 Again, this reminds us of something. 320 00:46:31.080 --> 00:46:35.080 And on the same theme he continued in another letter, 321 00:46:35.080 --> 00:46:39.080 the intellectual ravages caused by Keynesianism are very bad. 322 00:46:39.080 --> 00:46:51.080 For example, everyone here is delighted the national income has increased from 77 billion dollars in 1940 to 161 in 1945. 323 00:46:51.080 --> 00:47:01.080 That's a nominal increase, simply because the money supply has been increased so much, so all prices increase. 324 00:47:01.080 --> 00:47:09.080 It doesn't mean that the nation has really become richer, just because nominal spending has gone up. 325 00:47:09.080 --> 00:47:17.080 But the forces of resistance were slowly emerging. There was a seedbed of libertarian opposition, 326 00:47:17.080 --> 00:47:25.080 A network of leaders, thinkers and organizers, some alone, others in small groups, who were preparing the counter-attack. 327 00:47:25.080 --> 00:47:35.080 I've already mentioned the NAM before. One historian has called these years the nadir of individualistic Jeffersonian thought in the United States. 328 00:47:35.080 --> 00:47:44.080 Yet the nadir was only in political practice, the thinking was no longer in disarray but in the initial phase of a long-term resurgence. 329 00:47:44.080 --> 00:47:51.080 It is true that these thinkers and organizers were still scattered. They had only to find one another. 330 00:47:51.080 --> 00:48:04.080 There were journalists like Henry Hazlitt, Lawrence Fertig, Frank Chodorow, Susan Lafollette, Garrett Garrett, John T. Flynn and John Chamberlain. 331 00:48:04.080 --> 00:48:11.080 By the way, we have in the library a couple of reprints of books by John T. Flynn and Garrett Garrett and others. 332 00:48:11.080 --> 00:48:24.080 There were writers like Albert J. Nock, also here, Isabel Peterson, Rose Wilder Lane, Ayn Rand, no we don't have her here, and Felix Morley. 333 00:48:24.080 --> 00:48:30.080 There were organizers such as Leonard Reed, Frederic Neumeyer and Lauren Miller. 334 00:48:30.080 --> 00:48:38.080 There were businessmen ready to sponsor educational ventures to promote laissez-faire policies, such as Jasper Crane, 335 00:48:38.080 --> 00:48:46.080 Harry Earhart, Alfred Kohlberg, Howard Pugh, Claude Robinson, Pierre Goodrich and William Volcker 336 00:48:46.080 --> 00:48:58.080 And there were academics such as Benjamin Anderson, Davenport, Fred Fairchild, Leo Wolman, Frank Knight, Henry Simons and Ludwig von Mises. 337 00:48:58.080 --> 00:49:03.080 These men and women reversed the course of events in a mere 15 years. 338 00:49:03.080 --> 00:49:15.080 They were not strong enough to rid America of its creeping statism, but they succeeded in slamming the brakes on the brakes and reorienting public debate. 339 00:49:15.080 --> 00:49:31.080 This is what's happening from 1945 to 1960. By the beginning of the 1960s, classical liberalism had risen from the ashes, and it had done so under the decisive impact and intellectual leadership of Mises. 340 00:49:31.080 --> 00:49:40.080 These 15 years of his life saw a last great blossoming of his creative powers, which paved the way for a new liberty in the western world. 341 00:49:40.080 --> 00:49:53.080 During this period, Mises' impact was amplified and deepened through several new organizations that rallied a hitherto desperate and unaware public around the banner of liberty. 342 00:49:53.080 --> 00:50:02.080 And for the first time in his life, Mises worked with a group of students who had learned economic science through his writings. 343 00:50:02.080 --> 00:50:12.080 These first Misesians, we'll talk about them this afternoon more, became even more coherent and radical advocates of laissez-faire than the master himself. 344 00:50:12.080 --> 00:50:20.080 Something unprecedented for Mises. In his Vienna seminars he had been in the awkward position of being more radical than his students. 345 00:50:20.080 --> 00:50:47.080 Now, the potential of the seedbed of libertarian networks broke to the fore for the first time in 1944 with the enormous success encountered by Hayek's Road to Serfdom. 346 00:50:47.080 --> 00:50:55.080 So Frederic August von Hayek published his famous book, The Road to Serfdom, first in Britain and then in the United States. 347 00:50:55.080 --> 00:51:03.080 While in Britain there was a reserved, well attentive, but reserved reception, in the US the reception was enthusiastic, 348 00:51:03.080 --> 00:51:12.080 it was a nuclear bomb that went on here. So Hayek came to a trip to the US, wanted to give one talk, 349 00:51:12.080 --> 00:51:18.080 But then as sales increased, tens of thousands of copies, 350 00:51:18.080 --> 00:51:23.080 he himself was very surprised, and his publisher too, because they had just had the English experience. 351 00:51:23.080 --> 00:51:29.080 And then he stayed in the US for months and gave one talk after another, one presentation after another. 352 00:51:29.080 --> 00:51:36.080 So what happened here was simply that you had these latent forces, these latent individuals and networks, 353 00:51:36.080 --> 00:51:49.080 and they brushed forth with this initial event of the publication of the Road of Serfdom. 354 00:51:51.080 --> 00:51:59.080 Mises was enthusiastic and very hopeful, very encouraged by this reception, 355 00:51:59.080 --> 00:52:03.080 although of course he did not fully agree with Hayek's analysis. 356 00:52:03.080 --> 00:52:16.080 Hayek, as we have said yesterday, was part of the emerging neoliberal movement, was a central agent of this neoliberal movement 357 00:52:16.080 --> 00:52:26.080 and Hayek in those days, he changed this, he became more radical later in his life, in those days fully subscribed to the neoliberal agenda 358 00:52:26.080 --> 00:52:38.080 So he subscribed to this division of market processes that should play themselves all freely within an institutional framework 359 00:52:38.080 --> 00:52:42.080 whereas the institutional framework itself should be set up by the government. 360 00:52:42.080 --> 00:52:49.080 So the government should be planning for freedom, should be planning for free competition. 361 00:52:49.080 --> 00:52:57.080 competition. So there was a positive role for planning, positive again meaning the government should take care of it. 362 00:52:57.080 --> 00:53:07.080 Now Mises criticized it again without naming Hayek, so without naming names, but he criticized the idea in a paper with the title 363 00:53:07.080 --> 00:53:18.080 Planning for Freedom that he presented shortly thereafter which then also became the title of a book, collection of essays that was first published in 1952, 364 00:53:18.080 --> 00:53:25.080 is still available today, in which he said, well, so the crucial question is, who is doing the planning? 365 00:53:25.080 --> 00:53:28.080 Of course, we always need planning, but the question is, who is doing the planning? 366 00:53:28.080 --> 00:53:36.080 Do we need the government to do the planning or should private persons and associations do the planning? 367 00:53:36.080 --> 00:53:47.080 But again, this could not diminish his joy and enthusiasm for the success encountered by Hayek's book. 368 00:53:47.080 --> 00:54:02.080 Mises then was integrated in this libertarian seatbed through his association with NAM, which stopped in 1946, 369 00:54:02.080 --> 00:54:16.080 but then especially through three individuals respectively, organizations, namely New York University, Leonard Reed and Friedrich Nehmeyer, 370 00:54:16.080 --> 00:54:28.080 I'll talk a little bit about these three now. So starting in 1945, Mises obtained a position as a visiting professor at New York University. 371 00:54:28.080 --> 00:54:39.080 So he gave a class, in particular a seminar. The money was essentially paid out of private funds. 372 00:54:39.080 --> 00:54:46.080 Funds, a couple of friends who raised money for him, especially Lawrence Furtick and Hazlitt were involved. 373 00:54:46.080 --> 00:54:54.080 And he never obtained a permanent position, so he was somewhat in the same position in which he had been at the University of Vienna. 374 00:54:54.080 --> 00:55:06.080 He was an extraordinary professor, in this case a visiting professor, and he would be visiting the University of New York University for 24 years, 24 years in a row visiting them. 375 00:55:06.080 --> 00:55:19.080 Now the New York University seminar was the central vehicle, the cradle, we might say, of the emerging Mises School. 376 00:55:19.080 --> 00:55:25.080 This school emerged in particular after the publication of Human Action in 1949. 377 00:55:25.080 --> 00:55:33.080 So here we had then the training ground for people who received their economic formation through Mises himself 378 00:55:33.080 --> 00:55:37.080 and in particular on the basis of his treatise on economics. 379 00:55:37.080 --> 00:55:45.080 All the great post-war Austrians, virtually all of them, have come out of the seminar. 380 00:55:45.080 --> 00:55:53.080 So we have Murray Rothbard, Hans Zenolds, Israel Kirzner, George Reisman, Ralph Raico and so on. 381 00:55:53.080 --> 00:55:55.080 You have it, you name them. 382 00:55:55.080 --> 00:56:00.080 So some of them are still fortunately with us. 383 00:56:00.080 --> 00:56:05.080 So, for example, Ralph Reichow will be teaching next week at the Summer University. 384 00:56:05.080 --> 00:56:12.080 Oh, by the way, since we are at it, we have in this room here two people who knew Mises, have known Mises personally. 385 00:56:12.080 --> 00:56:15.080 It's, of course, not me because I was a baby at the time. 386 00:56:15.080 --> 00:56:19.080 So, we have Lew Rockwell, met him once or twice. 387 00:56:19.080 --> 00:56:26.080 And we have Richard Perry, who was a member of Mises Seminar in the late 1960s, at the very end. 388 00:56:26.080 --> 00:56:32.080 And he was also the first person, as I learned only yesterday, who typed human action onto a computer file. 389 00:56:32.080 --> 00:56:36.080 Okay, so Richard, could you just raise your hand so that everyone can see? 390 00:56:36.080 --> 00:56:43.080 So this is one of our remaining links to Ludwig von Mises, remaining living links. 391 00:56:43.080 --> 00:56:52.080 Okay, so there was New York University and then there was Leonard Reed, who Mises had encountered during the war years, as we have seen. 392 00:56:52.080 --> 00:57:05.080 and Leonard Reed in 1945 comes to the US and he first works for a libertarian policy organization 393 00:57:05.080 --> 00:57:11.080 which was not fully effective because they pursued the policy, they arranged debates and also publications 394 00:57:11.080 --> 00:57:18.080 but in whatever debates they arranged they pursued a policy of hearing every voice. 395 00:57:18.080 --> 00:57:29.080 So they would invite somebody defending a libertarian position and then also to be equitable invited a pro-government advocate. 396 00:57:29.080 --> 00:57:42.080 Now Reid found that was completely pointless because the other side was being heard constantly in all the journals, the radio, publications, the schools. 397 00:57:42.080 --> 00:57:51.080 The other side that is the pro-government, the interventionist, the socialist position was constantly explained, championed, analyzed. 398 00:57:51.080 --> 00:58:00.080 So what was needed was an institution entirely dedicated to the explanation and defense of the libertarian position. 399 00:58:00.080 --> 00:58:11.080 And therefore, so he quit this other organization and set up his own outfit, namely the Foundation for Economic Education. 400 00:58:11.080 --> 00:58:22.080 Reit could do so because he had an address book, so we are talking about the time before the internet, before telephone books even. 401 00:58:22.080 --> 00:58:35.080 So he had a fully stuffed address book, excellent contacts to the business world because he had been for many years the chief executive of the largest chamber of commerce in the world, 402 00:58:35.080 --> 00:58:40.080 of the World, the Chamber of Commerce of the Los Angeles area. 403 00:58:40.080 --> 00:58:45.080 And so he had the necessary wherewithal and the necessary connections. 404 00:58:45.080 --> 00:58:50.080 He set up this new institution and Mises was one of his main intellectual allies. 405 00:58:50.080 --> 00:59:00.080 But Mises was not the number one economist, Phyllid was one among others. 406 00:59:00.080 --> 00:59:06.080 He turned into number one only again after the publication of Human Action in 1949. 407 00:59:06.080 --> 00:59:16.080 So fee was not set up as a cradle of the Austrian School, it turned into the cradle of the Austrian School, 408 00:59:16.080 --> 00:59:21.080 an institution dedicated to the promotion of Austrian economics later on. 409 00:59:21.080 --> 00:59:36.080 The third main vehicle for the promotion of Mises intellectual impact on America was Frederic Niemeyer or Neimeyer. 410 00:59:36.080 --> 00:59:45.080 Neimeyer was a Chicago businessman who in the early 1920s had worked at Harvard University, setting up the Harvard Business Barometer, 411 00:59:45.080 --> 01:00:04.080 He was acquainted with methods of business cycle analysis and so on, and he was also a dedicated Christian, a Calvinist, supporting several publications, Calvinist publications and so on. 412 01:00:04.080 --> 01:00:12.080 Now he came across Mises through the English edition of his Theory of Money and Credit. 413 01:00:12.080 --> 01:00:18.080 And he was very impressed by this book and started correspondence with Mises. 414 01:00:18.080 --> 01:00:25.080 And came then increasingly to the conviction that, well, this was the way to go. 415 01:00:25.080 --> 01:00:32.080 The Austrian School and Mises in particular are the most important intellectual vehicle 416 01:00:32.080 --> 01:00:43.080 to the promotion of liberty in the Americas and in particular they are fully compatible with Christian concerns, Christian morals and Christian theology. 417 01:00:43.080 --> 01:00:54.080 So, Neumeier in the following years arranged for and funded the translation of Boehm-Bawerk's Capital in Interest. 418 01:00:54.080 --> 01:01:02.080 The work had already been translated, the first two volumes had been, the first edition had been translated in the 1890s, 419 01:01:02.080 --> 01:01:11.080 William Smart at the time, but then the final edition, the third edition had not been translated, 420 01:01:11.080 --> 01:01:14.080 in particular the third volume that Boehm-Bawerk had created. 421 01:01:14.080 --> 01:01:20.080 So Neimeyer funded this and he got one of the translators from Mises, namely Hans Zenholz, 422 01:01:20.080 --> 01:01:26.080 and then he arranged for a co-translator who was a native English speaker. 423 01:01:26.080 --> 01:01:34.080 Neumeyer also became a publisher of Mises. It was Neumeyer who published this collection of articles that we already mentioned, 424 01:01:34.080 --> 01:01:46.080 Planning for Freedom, 1952. He promoted, well, he printed talks, lectures that Mises had given to Montpelerin Society meetings and others, 425 01:01:46.080 --> 01:01:49.080 and others, for example, the lecture Profit and Loss, 426 01:01:49.080 --> 01:01:54.080 it was printed in several thousand copies and other lectures as well, 427 01:01:54.080 --> 01:01:58.080 and he set up finally his own publishing house, Libertarian Press, 428 01:01:58.080 --> 01:02:04.080 Libertarian Press, which still exists today, which was eventually taken over by Hans Zenholz, 429 01:02:04.080 --> 01:02:07.080 and is today run by Hans Zenholz's son. 430 01:02:07.080 --> 01:02:11.080 So all this emerged in those years, 431 01:02:11.080 --> 01:02:20.080 in those years, and I've already mentioned the Mont Pelerin Society, so it's appropriate that we talk briefly about the MPS, 432 01:02:20.080 --> 01:02:38.080 which was an initiative of Frederic August von Hayek. During the war already, Hayek stayed in Britain, did not go to the US, 433 01:02:38.080 --> 01:02:45.080 But he was already considering, well, he thought, well, I cannot just escape from Britain, I have to show my solidarity with the British colleagues and so on. 434 01:02:45.080 --> 01:02:51.080 So he stayed on the spot and there are quite funny letters that Hayek wrote from England. 435 01:02:51.080 --> 01:02:55.080 He said, well, I mean, look, I mean, these bombs and so on, it's not that dangerous, finally. 436 01:02:55.080 --> 01:03:01.080 You get used to it. It's actually quite simple to extinguish a firebomb and so on, if you know how to do it. 437 01:03:01.080 --> 01:03:12.080 So he stayed there but then he was making plans for the preparation of libertarian movement after World War II 438 01:03:12.080 --> 01:03:20.080 and Hayek was well placed to do this because he was traveling a lot and especially his success with the road of serfdom in the US 439 01:03:20.080 --> 01:03:26.080 brought him in touch with virtually all libertarians all over the US and of course he knew his people in Europe 440 01:03:26.080 --> 01:03:43.080 So, Hayek was the man, he was the juncture of the intellectual pockets that existed in those years in Europe and the US. 441 01:03:43.080 --> 01:03:59.080 So, Hayek prepared as a first attempt to integrate this burgeoning movement, the arrangement of a conference, the organization of a conference. 442 01:03:59.080 --> 01:04:09.080 and with the conference to establish a society of libertarian intellectuals. 443 01:04:09.080 --> 01:04:14.080 It would not have to be libertarian but more precisely neoliberal intellectuals. 444 01:04:14.080 --> 01:04:22.080 That is, the agenda that emerged slowly in the interwar period, in the 1930s in particular, 445 01:04:22.080 --> 01:04:27.080 should now be given a more permanent form. 446 01:04:27.080 --> 01:04:38.080 In the 1930s, there had been already a conference of this sort. This was a Walter Lipman colloquium that had been organized in 1938 in Paris. 447 01:04:38.080 --> 01:04:47.080 Mises took part in this too. But this was a one-time shot. People met there, it was predominantly Europeans, not many Americans. 448 01:04:47.080 --> 01:04:57.080 And so Hayek now sought to establish something more permanent, a society of intellectual, well, neoliberal scholars. 449 01:04:57.080 --> 01:05:06.080 And his main source of funding was the William Volcker Fund. Now that's important, especially for Mises. 450 01:05:06.080 --> 01:05:12.080 One pattern in society is not that important for Mises, but the Volcker Fund is important for Mises. 451 01:05:12.080 --> 01:05:36.080 The Volker Fund had been set up by William Volker, V-O-L-K-E-R, was a businessman from Kansas City of German descent who had made a fortune in the US and then finally married at some point in his 50s and well relaxed, laid back and became a philanthropist. 452 01:05:36.080 --> 01:05:48.080 So he started funding all kinds of things, set up his own foundation, we also mentioned the constraints of the income tax, which gave him an incentive to set up a foundation, so that's what he did too. 453 01:05:48.080 --> 01:06:05.080 And his foundation became the main source of funding for libertarian activities, libertarian organizations in the immediate post-World War II period, that is running from 1945 to 1960 approximately. 454 01:06:05.080 --> 01:06:13.080 So this coincided exactly with the main impact that Mises would have on the libertarian movement, a happy marriage. 455 01:06:13.080 --> 01:06:24.080 The Volcker Fund was managed by a man with the name of Harold W. Luno, and later on by two brothers by the name of Herbert and Richard Cornuel, 456 01:06:24.080 --> 01:06:33.080 who were for some time also employees of Fee, Leonard Reed in New York, and then moved to the Volcker Fund, 457 01:06:33.080 --> 01:06:49.080 and the Joker Fund, which then relocated after some years to California and precisely to that county of California where we have today the Center of Libertarian Studies. 458 01:06:49.080 --> 01:06:54.080 Is this a pure coincidence? 459 01:06:54.080 --> 01:07:10.080 So, Hayek, how did this contact come about? Well, Hayek arranged for this meeting, which was to take place, the first meeting was to take place in Switzerland, close to the Mont Pelerin, 460 01:07:10.080 --> 01:07:17.080 a mountain in southern Switzerland, therefore the society that came out of this meeting was also called the Mont Pelerin Society. 461 01:07:17.080 --> 01:07:25.080 Mises came into touch with the Volker Fund because somebody had to buy his plane ticket and pay the hotel bills. 462 01:07:25.080 --> 01:07:29.080 So that was the Volker Fund. Mises arranged this through them. 463 01:07:29.080 --> 01:07:37.080 Now what about the meeting itself? Well, it became a neoliberal meeting, but it was a very interesting constellation. 464 01:07:37.080 --> 01:07:54.080 In his opening address, so we're talking about spring 1947, Hayek set the agenda for the post-war ideological reconstruction of the classical liberal movement. 465 01:07:54.080 --> 01:08:06.080 It involved, Hayek explained, on the one hand purging traditional liberal theory of certain accidental accretions which have become attached to it in the course of time. 466 01:08:06.080 --> 01:08:15.080 And on the other hand, facing up to some real problems which an oversimplified liberalism has shirked, 467 01:08:15.080 --> 01:08:21.080 which have become apparent only since it has turned into a somewhat stationary and rigid creed. 468 01:08:21.080 --> 01:08:33.080 As later developments would show, the concrete meaning of this program was first to exculpate classical liberalism 469 01:08:33.080 --> 01:08:53.080 liberalism from certain widely held criticisms, for example, that the policies it had inspired had led to mass misery, and second, to distinguish the modern liberalism or new or neo-liberalism from its laissez-faire predecessor. 470 01:08:53.080 --> 01:08:59.080 Some of the other scheduled talks, however, were more neo and less liberal. 471 01:08:59.080 --> 01:09:07.080 For example, the German economist Walter Eucken explained that anti-monopoly legislation was not sufficient to combat monopolies. 472 01:09:07.080 --> 01:09:13.080 Further legislative inference was needed in the field of corporate law, patent law and trademark law. 473 01:09:13.080 --> 01:09:17.080 He championed two maxims of economic policy. 474 01:09:17.080 --> 01:09:24.080 First, although there was to be freedom of contract, this freedom was not to be allowed to limit in any way the freedom of contract of others. 475 01:09:24.080 --> 01:09:32.080 Second, monopolistic market participants should be forced to behave as if they were in competition, 476 01:09:32.080 --> 01:09:37.080 produce the same quantities and sell them at the same prices that would prevail under competition, 477 01:09:37.080 --> 01:09:42.080 which meant the model of perfect and pure competition. 478 01:09:42.080 --> 01:09:51.080 In short, Eugen dished up the same interventionist agenda that had already dominated the Libman colloquium in 1938. 479 01:09:51.080 --> 01:10:00.080 At that time, Mises had been on his honeymoon in Paris, which might explain why his contributions to the discussions had been unusually tame. 480 01:10:00.080 --> 01:10:18.080 9 years later, 1947, the honeymoon was over. Mises reacted with great determination and defended his laissez-faire position so vigorously that many years later his friend Lawrence Fertig still recalled the debate. 481 01:10:18.080 --> 01:10:25.080 There was another source of comment on this first meeting, namely Milton Friedman. 482 01:10:25.080 --> 01:10:30.080 Milton Friedman concurred with this observation. He said the following. 483 01:10:30.080 --> 01:10:40.080 Our sessions were marked by vigorous controversy over such issues as the role of religion and moral values in making possible and preserving a free society, 484 01:10:40.080 --> 01:10:47.080 the role of trade unions and the appropriateness of government action to affect the distribution of income. 485 01:10:47.080 --> 01:10:56.080 I particularly recall a discussion of this issue in the middle of which Ludwig von Mises stood up, announced to the assembly, 486 01:10:56.080 --> 01:11:10.080 you're all a bunch of socialists, and stomped out of the room an assembly that contained not a single person who by even the lowest standards could be called a socialist, unquote. 487 01:11:10.080 --> 01:11:17.080 It's a quite vigorous debate. Friedman did not specify what he meant by the lowest standards. 488 01:11:18.080 --> 01:11:27.080 In any case, while Mises was able to hold socialists in high esteem, he believed in their honest attitude, 489 01:11:27.080 --> 01:11:33.080 the incident showed that he had little patience with socialists parading as liberals. 490 01:11:33.080 --> 01:11:41.080 The exchange between Mises and his neoliberal opponents set the tone in the Mont Pelerin society for years to come. 491 01:11:41.080 --> 01:11:47.080 Willem Röpke would later pay a friendly tribute to Mises, even though the letter made, as he said, 492 01:11:47.080 --> 01:11:54.080 sarcastic comments upon the unenlightened spirit of so many of its members, including himself. 493 01:11:54.080 --> 01:11:58.080 Although the libertarians around Mises were a small minority, 494 01:11:58.080 --> 01:12:05.080 It was they who had the financial backing of the main American sponsors, such as the Volcker Fund, 495 01:12:05.080 --> 01:12:10.080 without which the society would quickly have died out in the early years. 496 01:12:10.080 --> 01:12:23.080 In fact, by 1953, the Volcker Fund was paying the membership fees and even travel expenses of virtually all European members. 497 01:12:23.080 --> 01:12:33.080 Now imagine what this means, well it means that without the Volcker Fund there would have been no MPS in the first ten years or so. 498 01:12:33.080 --> 01:12:50.080 And this of course means that even though Mises and his fellow Manchesterists from New York, essentially the New York fraction was Mises, Fertig, Hazlitt, Reid and others were the radicals. 499 01:12:50.080 --> 01:12:59.080 Well, even though they were a numerical minority, they had a very strong impact on the agenda, on the discussions of the society. 500 01:12:59.080 --> 01:13:05.080 Everybody knew, well, I mean, without these guys, we cannot go on. Society will quickly die out. 501 01:13:05.080 --> 01:13:20.080 Okay, so this was the situation until about 1947-48. This afternoon we'll talk about what happens with the publication of Human Action and the succeeding years. 502 01:13:20.080 --> 01:13:24.080 We have now some 13 minutes for questions. 503 01:13:24.080 --> 01:13:36.080 Did you send him to a reason that he didn't move down to Mexico City or was he just really interested? 504 01:13:36.080 --> 01:13:43.080 I didn't find any document in which he would explain in detail why this is. 505 01:13:43.080 --> 01:13:49.080 At the beginning it might have been that the material conditions, the financial conditions were not good enough. 506 01:13:49.080 --> 01:14:14.080 He later wrote to his host, Montes de Oca, he said, well, because then he made a very attractive offer later in the 1940s and Mises said, well, if I were 10 years younger, or whatever, 50 or 20 years younger, I would accept it immediately, but it's not clear to me whether he said this out of politeness or whether he genuinely believed this. 507 01:14:14.080 --> 01:14:24.080 I have no reason to believe that he lied, but he never explained in detail why he didn't do it the first time. 508 01:14:24.080 --> 01:14:31.080 He certainly considered it very seriously, but then things improved steadily also for him in the U.S. 509 01:14:31.080 --> 01:14:37.080 One thing that was very important for him was that he didn't want to go to a province somewhere. 510 01:14:37.080 --> 01:14:41.080 He wanted to be in an intellectual center. 511 01:14:41.080 --> 01:14:48.080 Now, New York City was definitely, well, the intellectual world center in the post-war period, 512 01:14:48.080 --> 01:14:51.080 at least in the first 20 years or so. 513 01:14:51.080 --> 01:14:58.080 So before, there were European competitors and Vienna was one among them, Paris, Paris, another. 514 01:14:58.080 --> 01:15:06.080 But after the war, clearly, New York was a financial, intellectual, cultural center, so he felt very much at ease. 515 01:15:06.080 --> 01:15:36.080 It's very similar to the life, well different of course, but similar in principle to the life he had led in Vienna to the capital city, well not political capital, that was rather advantageous, financial capital, cultural, intellectual, that's exactly how he founded in Vienna, plus as I said many of his friends, wartime acquaintances were still there so he could in a way build on what had already existed, he was not completely deracinated. 516 01:15:36.080 --> 01:15:45.080 Bert sometimes, there was a talk of consideration, should he go to a different university, but he never actively pursued this. 517 01:15:45.080 --> 01:15:53.080 So he wanted to stay there even if he could have got maybe more money or a more prestigious position somewhere else. 518 01:15:53.080 --> 01:16:10.080 Who wanted to re-translate Boehm-Bawerk's volumes? 519 01:16:10.080 --> 01:16:15.080 It was not Mises who brought this up, it was Neumeier. 520 01:16:15.080 --> 01:16:21.080 Nijmijer said, well, we need to translate all of the major Austrian works into English. 521 01:16:21.080 --> 01:16:26.080 What's the best thing to start? What's the most important thing to translate? 522 01:16:26.080 --> 01:16:32.080 And then Mises said, well, we would need to have a full translation of Boehm-Bawerk. 523 01:16:32.080 --> 01:16:44.080 Well, because this was the first edition Boehm-Bawerk had worked over, it revised this first edition. 524 01:16:44.080 --> 01:16:54.080 The first edition, so the third edition was the final, it was a different edition, and plus there was a third volume also, so this had to be translated anyway. 525 01:16:54.080 --> 01:17:01.080 It's very revealing, right? I mean, Mises would have said, well, we have, whatever, my important work from the 1920s, right? 526 01:17:01.080 --> 01:17:09.080 They need to be translated first, whatever, critique of interventionism or liberalism and so on, but no, he did not say this. 527 01:17:09.080 --> 01:17:16.080 Well, we need to have Boehm-Bawerk first. He had a very, very high opinion about the importance of Boehm-Bawerk's book. 528 01:17:22.080 --> 01:17:34.080 Why is Ayn Rand not seen as popular here? 529 01:17:34.080 --> 01:17:42.080 I mean, we just don't have a book on her, I believe, I'm not even sure about this, it might be that we have an Ayn Rand book, but I didn't see it. 530 01:17:42.080 --> 01:17:49.080 Ayn Rand, as far as our subject is concerned, in the early days, was not a main figure. 531 01:17:49.080 --> 01:17:56.080 Ayn Rand really burst to the scene with the publication of Atlas Shrugged. 532 01:17:56.080 --> 01:18:01.080 And then, of course, she became a main figure in the libertarian movement. 533 01:18:01.080 --> 01:18:06.080 and indeed was the only one who could rival the impact of human action. 534 01:18:12.080 --> 01:18:24.080 I was wondering if Mises ever commented on the early associations between religion and pre-market ideas in the early post-war Americans? 535 01:18:24.080 --> 01:18:31.080 No, he did not. I mean, there's no critical analysis of these connections and so on. 536 01:18:31.080 --> 01:18:47.080 Well, he respected these religious beliefs. He emphasized in two books which crowned his reflections on epistemological problems, 537 01:18:47.080 --> 01:18:53.080 Mises and Boehm's Theory and History, Ultimate Foundation of Economic Science, 1957-1962. 538 01:18:53.080 --> 01:18:59.080 He talked a lot about religion, so that's the place to look for this. 539 01:18:59.080 --> 01:19:05.080 And his position was that religion plays a very important role. 540 01:19:05.080 --> 01:19:13.080 It's important for man because it gives us answers to questions that we cannot find anywhere else. 541 01:19:13.080 --> 01:19:18.080 His activity was of course science. Religion had nothing to do with science, so he believed. 542 01:19:18.080 --> 01:19:26.080 But he very clearly saw the limits of science. So you only can go so far. 543 01:19:26.080 --> 01:19:31.080 And what comes beyond this? Well, I mean, you need religion, therefore you turn to prayer and so on. 544 01:19:31.080 --> 01:19:39.080 He did not at all disparage this. He was very respectful and many of his promoters and also friends were Christians, 545 01:19:39.080 --> 01:19:49.080 We have, for example, so we have a Neumeier here, but they were among his New York students, 546 01:19:49.080 --> 01:19:58.080 and in the 1950s there were two that initially came from a Christian organization, 547 01:19:58.080 --> 01:20:05.080 a Christian social analysis organization, namely George Coulter, who had been here, 548 01:20:05.080 --> 01:20:08.080 I've been around until very recently. 549 01:20:08.080 --> 01:20:12.080 Josh Coulthard was almost 100 years old, he was 99 years old. 550 01:20:12.080 --> 01:20:16.080 He died last year or earlier this year. 551 01:20:16.080 --> 01:20:20.080 So I met him, still a very charming man. 552 01:20:20.080 --> 01:20:21.080 He has been around. 553 01:20:21.080 --> 01:20:24.080 So he came from this Christian organization first. 554 01:20:24.080 --> 01:20:34.080 And also Perry Greaves, a big time Misesian in the 1960s and 1970s, 555 01:20:34.080 --> 01:20:42.080 In the 1970s, a big promoter of Austrian economics, Misesian economics in particular, the husband of Bettina Bingreeves was still around. 556 01:20:43.080 --> 01:20:47.080 He came from the same organization. So Mises attracted these people too. 557 01:20:48.080 --> 01:20:55.080 And well, he liked their association. It was not because somebody was religious that he would avoid contact. 558 01:20:56.080 --> 01:20:59.080 Okay, no more questions. We meet again this afternoon.