Eighty years ago, on August 2, 1940, the leading living member of the Austrian School of Economics, Ludwig von Mises, arrived in the United States as a refugee from war-torn Europe. Hated by the socialists, viewed as a “class enemy” by the communists, and despised as “racial vermin” by the Nazis, Mises, like so many others, had made the journey across the Atlantic to the shores of the country that was still considered a haven of freedom in a world that seemed increasingly threatened with a totalitarian future of one form or another.
The migration of Europe’s cultural legacy to America
Nazi domination of Central and Western Europe, especially after the fall of France in the summer of 1940, meant the exiling of much of Europe’s living culture to the Americas. Already, before the start of the Second World War in Europe with the joint invasion and dismemberment of Poland by Nazi Germany and Soviet Russia in September 1939, classical-liberal essayist, author, and
social critic Albert Jay Nock (1870–1945) observed what he considered a momentous event in his article “Culture Migrates to the U.S.A.,” which appeared in the April 1939 issue of The American Mercury:
We all know it is going on, but I doubt that we have taken its measure as the most important movement of our time.… I refer to the westward migration of European culture, and the effort to transplant it in this hemisphere….
… Hardly anywhere in Europe can the pursuit of culture go on at the present time, and the prospects are that it must remain in abeyance for quite a while. In some European countries, as we all know, culture is officially outlawed; the individualism and intellectual freedom which are the primary essentials of its existence, are proscribed….
Culture’s refugees, therefore, come from all Europe — to our universities, our press, our urban centers of creative activity. They come out of all peoples, nations, and languages, bringing their big and little hoards of cultural experience and creative intuitions and artistic energies. In our country they see, or think they see, a refuge where they may be safe from the cruder forms of repression and persecution….
… Culture is knowing the best that has been thought and said in the world. Its purpose is to transform the raw and crude individual by setting up in him an overmastering feeling for the best; and this not only in the realm of the intellect and beauty, but in the realm of morals and conduct as well. In short, the aim of culture is to transform the individual by inculcating a controlling sense of all spiritual values, a sense of what is right, just, fair, honorable, as well as of what is beautiful, dignified, graceful, and becoming.
Albert Jay Nock wondered, “What will become of it is quite beyond prediction….’ We have, then, the responsibility of choosing whether we shall welcome it as a windfall or resent it as alien and un-American.”
Europe’s intellectual and professional refugees enrich America.
Europe’s loss due to Hitler’s ideological imposition of racism, terror, and tyranny was America’s gain in the natural sciences, the arts and humanities, and in many of the social fields, including history, political science, sociology, philosophy, and economics. Tens of thousands of scholars, scientists, professors, artists, musicians, doctors, lawyers, businessmen, and entrepreneurs who were able to escape from Nazi-occupied or -dominated Europe (and fortunate enough to obtain scarce U.S. government-issued visas to enter the country) enriched the culture and character of America for decades afterwards, since most remained here long after the war was over in 1945.
Between 1933 and 1945, more than 220,000 European refugees made their way to America, and of that number 125,000 were from Germany or Austria, with many of them being Jews. Tens of thousands more wanted to come and could have made it to America’s shores if the U.S. government had not closed the immigration door in the face of all those wanting freedom from the oppression and murder of the Nazi regime.
Franklin Roosevelt’s famous claim of wanting a “freedom from fear” did not apply to those literally facing torture and death on the European side of the Atlantic. They were left to their fates at the hands of Gestapo interrogators, or concentration-camp guards and executioners, or the rain of Axis and Allied bombings and battlefield destruction.
Austrian economists who found safe haven in America
Those who successfully escaped likely death if they had fallen into Nazi hands included a number of the Austrian economists. To name only a very few of the prominent ones: Friedrich A. Hayek (1899–1992) had accepted a visiting professorship at the London School of Economics in 1931, which became a permanent position in 1933. He was fortunate to survive the Nazi bombing raids on Britain during the war.
Fritz Machlup (1902–1983), who wrote his dissertation under Ludwig von Mises’s supervision at the University of Vienna and who ran his family’s corrugated-box business in Austria, came to the United States on a Rockefeller Foundation research grant in 1933-1934, and stayed after landing an academic position at the University of Buffalo in upstate New York. He later accepted a position at Johns Hopkins University in Baltimore, Maryland.
Gottfried Haberler (1900–1995) had also been a student of Mises’s at the University of Vienna and had worked at the Vienna Chamber of Commerce until moving to Geneva, Switzerland, as a three-year resident scholar at the League of Nations. He accepted a professorship at Harvard University in Boston in 1936, where he taught for the rest of his professional life before becoming a senior scholar at the American Enterprise Institute in Washington, D.C.
Oskar Morgenstern (1902–1977) also had studied at the University of Vienna and worked as an assistant to Hayek, who from 1927 to 1931 was the director of the Austrian Institute for Business Cycle Research in Vienna. Morgenstern took over the directorship of the Institute when Hayek moved to London. He found himself exiled in the United States while on a lecture tour at the time of Nazi Germany’s invasion and annexation of Austria in March 1938. He was offered a position at Princeton University, and he remained there for many years.
The noted phenomenological sociologist Alfred Schutz (1899–1959) had been greatly influenced by the Austrian economists during his student years at the University of Vienna and had been an active participant throughout the 1920s and early 1930s in Mises’s famous private seminar on topics relating to economics and the social sciences in general. He was visiting Paris when the Nazis occupied Austria in March 1938 and could not return home. Schutz moved to the United States in 1939 and worked as a lawyer while also teaching part time at the New School for Social Research in New York City.
Ludwig von Mises, policy analyst and Austrian economic theorist
Mises (1881–1973) was the last of this Austrian group to make his way to the American side of the Atlantic Ocean. Educated at the University of Vienna in the early years of the 20th century, he graduated with a doctoral degree in 1906 from the faculty of law but with an emphasis in economics. In 1909, he was employed at the Vienna Chamber of Commerce, Crafts, and Industry, a full-time position he held until 1934. In that capacity, and especially after the First World War, he served as a senior economic analyst who was influential in steering Chamber policy positions in free-market directions against the tide of socialist, interventionist, and welfare-statist policies that dominated Austria between the two World Wars.
In the 1920s, Mises had helped to bring an end to Austria’s post–World War I hyperinflation. He partly wrote the new by-laws of the Austrian central bank for the re-
establishing of a gold standard. He worked hard to prevent a full-blown violent socialist revolution in his native land. He attempted to restrain government budgetary excesses in the middle of the 1920s. And in the early 1930s, he tried to prevent Austria from falling into a deflationary spiral with the coming of the Great Depression while working equally hard to limit any inflationary policies as misguided cures to the economic depression.
While he may have been a prominent economic policy analyst by day at the Vienna Chamber of Commerce attempting to influence the direction of economic policy in Austria, by night he was the “Austrian” economic theorist and grand classical-liberal social philosopher who devoted his free time to writing the books that won him a growing international reputation: The Theory of Money and Credit (1912; 2nd ed., 1924); Socialism, An Economic and Sociological Analysis (1922; 2nd ed., 1932); Liberalism (1927); Monetary Stabilization and Cyclical Policy (1928); A Critique of Interventionism (1929); and Epistemological Problems of Economics (1933), along with numerous articles in German-language scholarly journals, as well as frequent pieces for the popular press in Austria on the burning policy issues of the day in those years.
Mises as the enemy of all brands of collectivism
Through his writings, Mises became one of the best-known and most respected voices on the European continent not only for “Austrian” economics in the pure theoretical sense, but for his uncompromising stance for free-market, laissez-faire liberalism. He, therefore, became the hated enemy of all those fighting for any form of collectivism and the planned economy. The democratic socialists in Western Europe and the dictatorial socialists, following the lead of their Marxist masters in Soviet Russia, detested Mises, since he had demonstrated why their holy grail of a centrally planned economy was inherently and inescapably unworkable, leading only to economic chaos.
The Nazis loathed Mises, first and foremost because he was Jewish and therefore a race enemy of a purified German master race. But they hated him also because he challenged the racial and linguistic premises upon which the German National Socialists built their plans of Germany’s superiority over all other peoples in the world. He defended a philosophical and political individualism that challenged their tribal collectivism.
He also spoke on behalf of a cosmopolitan humanitarianism that emphasized an equality of all men everywhere before the law with the same rights to life, liberty, and the peaceful ownership and use of private property in free markets that should encompass the world. If Mises had fallen into the hands of the Nazis, his life, no doubt, would have been brought to a brutal and cruel end.
A year after Hitler’s rise to power in Germany in early 1933, there was a short-lived civil war in Austria between the Social Democrats and the Christian Socials, the former wanting a radical Marxist remaking of the country, while the latter were inspired by the corporativist conceptions that guided fascist Italy under Mussolini. The Social Democrats were roundly defeated in a matter of days, but the conflict ushered in a fascist-style authoritarian regime in Austria that did away with the fairly liberal constitution of 1920 that had protected most people’s civil liberties. Austria’s version of the fascist state lasted until the German annexation of Austria in March 1938.
Mises’s vision of things to come
Mises had understood the political and ideological currents present in Central Europe already in the 1920s and better than many others. In 1925, in an essay entitled “Anti-Marxism,” he warned of a rising “national socialism” that was nationalist and anti-Marxist, but not anti-socialist. Its advocates merely wanted the “right kind” of socialism, a socialism based on a unity of all social classes for restoring Germany’s national greatness — that is, the fascist variation on the collectivist theme.
In an essay a year later, in 1926, entitled “Social Liberalism,” Mises warned that Germany was ripe for such a national socialist regime. He pointed out that a growing number of Germans were “setting their hopes on the coming of the ‘strong man’ — the tyrant who will think for them and care for them.” Thus, seven years before Hitler’s ascendancy to power, Mises forecast where political currents were taking Germany.
But Mises’s understanding of the shape of things to come went even beyond that. In “Anti-Marxism,” he anticipated the 1939 alliance between Hitler’s Germany and Stalin’s Russia. He asked, where would a national socialist Germany turn for an ally in a future plan of conquest in Eastern Europe?
If Germany, a nation surrounded by other nations in the heart of Europe, were to assault [other countries], it would invite a coalition of all its neighbors into a world-political constellation; enemies all around. In such a situation Germany could find only one ally: Russia, which is facing hostility by Poles, Lithuanians, Hungarians, and possibly Czechs, but nowhere stands in direct conflict with German interests. Since Bolshevist Russia, like Czarist Russia, only knows force in dealing with other nations, it is already seeking the friendship of German nationalism. German Anti-Marxism and Russian Super-Marxism are not too far apart.
Thus, nearly 15 years before the Nazi-Soviet Pact of August 23, 1939, with its secret protocol for dividing up Eastern Europe between the two totalitarian states in case of war, and which set the stage for the actual conflict that began a week later, Ludwig von Mises had anticipated the events that set lose the terrible cataclysm of the Second World War in Europe.
Mises, the “historian of decline”
Years later, shortly after arriving in America in the summer of 1940, when writing his memoirs, Mises reflected on his professional life in his native Austria and the nearly 25 years during which he worked as a senior policy analyst at the Vienna Chamber of Commerce:
Occasionally I entertained the hope that my writings would bear practical fruit and show the way to policy…. But I have never allowed myself to be deceived. I have come to realize that my theories explain the degeneration of a great civilization; they do not prevent it. I set out to be a reformer, but only became the historian of decline.
Did Mises have any regrets about fighting his losing battles over ideas and policies? He added, “I won nothing more than a mere delay of the catastrophe…. But I do not regret that I attempted the impossible. I could not do otherwise. I fought because I could do no other.”
Seeing the events unfold in the 1920s and the early 1930s, he happily and immediately accepted a visiting full-time professorship at the Graduate Institute of International Studies in Geneva, Switzerland, when it was unexpectedly offered to him in the summer of 1934. While originally offered for only one year, it was renewed over and over again, and he remained in Geneva until July 1940, when he set off on his journey to reach America.
Mises’s Geneva years and his treatise on economics
He had taken the years in Geneva to write what became his great treatise on economics, which first appeared in Switzerland in its German-language version in May 1940, just as the German army was beginning its conquest of Western Europe, and which — in its 1949 English-language version — is known as Human Action: A Treatise on Economics, one of the most important works in the history of 20th-century economic ideas.
When Friedrich Hayek reviewed the original German-language version, Nationalökonomie, shortly after it appeared, he said,
[It] ranges from the most general philosophical problems raised by all scientific study of human action to the major problems of economic policy of our own days…. [The] result is a really imposing unified system of a liberal social philosophy….
[There] appears to be a width of view and an intellectual spaciousness about the whole book that are much more like that of an eighteenth-century philosopher than that of a modern specialist. And yet, or perhaps because of this, one feels throughout much nearer reality….
And as another reviewer of the book, the liberal German economist Walter Sulzbach explained, “It is the work of a man who combines an immense knowledge of economic history, economic theories and present-day facts with a thoroughly logical mind.”
Ludwig von Mises, as these comments by Hayek and Sulzbach suggest, was one of those living cultural and intellectual treasures that the war in Europe had brought to America’s shores. Mises might have stayed in neutral Switzerland for the duration of the war. In retrospect, we know that Germany did not invade that Alpine country, but with the fall of France in June 1940, there were serious concerns that the Swiss might be the next victim of Hitler’s aggression. If that had happened and if Mises had fallen into German hands, he surely would have been either shot on the spot or sent to his death in a Nazi concentration camp in Eastern Europe.
So, in July 1940, he made an arduous and dangerous journey through southern France to Spain and then to Lisbon, Portugal, where he and his wife, Margit, were able to book passage on a ship to the United States, having acquired American visas before leaving Geneva.
When their ship docked in New Jersey on August 2, 1940, they were met by his Viennese friend Alfred Schutz, who had arrived in America the year before in 1939. He soon came into contact with the free-market journalist Henry Hazlitt, who was then an economic editorial writer for the New York Times.
Mises in America and the revival of the Austrian School
Mises’s first years in the United States were not easy ones. He financially survived on the generosity of research grants provided by the Rockefeller Foundation, which also enabled him to write his first books in the United States, Bureaucracy (1944) and Omnipotent Government (1944). He also lectured widely on the problems of postwar reform and reconstruction, if Europe and other parts of the world were to have a free and prosperous future. .
He finally landed a visiting professorship in the School of Business Administration at New York University in 1945, a “visiting” position that he retained until his retirement from teaching in 1969 at the age of 89. It was during those years that Mises published Planned Chaos (1947), Human Action (1949), Planning for Freedom (1952), The Anti-Capitalist Mentality (1956), Theory and History (1957), and The Ultimate Foundations of Economic Science (1962).
If the winds of war had not carried Mises to the United States, it is very possible that there might not be today a living, surviving, and thriving Austrian school of economics. The rising appeal of socialist central-planning ideas and the triumphant domination of Keynesian economics in American and European academic and policy circles in the postwar period silenced almost all remaining voices for free-market liberalism.
But while alone and mostly intellectually isolated at New York University in the 1950s and 1960s, Mises attracted a new generation of young minds to whom he introduced the ideas and policy perspectives of the Austrian school. The two most notable of them were Murray N. Rothbard and Israel M. Kirzner.
Through them, Mises passed on the history and intellectual tradition of the Austrian economists, and therefore saved it from passing away as a closed chapter in the history of economic ideas. Thus, the cultural legacy of the Austrian school was given new roots and a new beginning in the New World.
Therefore, it is not only worth marking but celebrating the arrival of Ludwig von Mises to the United States 80 years ago this August. The tragic circumstances that brought him here served as the unintended catalyst and conduit for bringing about the revival and vibrancy of the Austrian economics that exists in America today.
This article was originally published in the August 2020 edition of Future of Freedom.