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Mises MemoNews f rom t h e Ludwig v on M ises I n s t i t u t e • W i n te r 2002
A Sanc tua ry f o r Liber tybeen done fo r h im . I t would be a
center of learning, a place that per
mit ted f reedom-minded intellectu
als to research and teach. I t would
publish and disseminate ideas,
even i f t h es e i deas were considered
dangerous to existing political pri
orities.
In many ways, the Mises Insti
tute is already playing that role.
We give voice to people whowould otherwise not be heard, or
who would have to change their
tune in order to get along and get
by. Our journals make available
analysis and research that would
otherwise never see the light of
day. Yes, that makes the Mises
n 1934, Ludwig von Mises saw
the storm clouds gathering. He
was chief economis t fo r th e
Vienna Chamber of Commerce,
taught at the university, and con
ducted a fortnightly seminar with
some of the greatest intellectuals
on the continent. And yet the
totalitarian menace was rising all
around him. The en ti re academic
class in Vienna grew afraid, but
Mises had more reasons to worry
for his safety than most. As an
intransigent libertarian of Jewishheritage, he knew that he was
already on many enemy lists.
But then one day, a letter from
Geneva arrived. I t was from the
Graduate Ins t itu te o f International
Studies in a country that would be
neutral a nd t he re fo re safe should
war come. The insti tute offered
him a professorship. Though he
had to su r rende r two- th i rds o f hi s
salary to take it, heknew it was theright decision, for the sake of his
personal safety and his work. He
remained in Geneva from 1934
until 1940, during which time he
wrote the greatest economicsbook of our century,what became
Human Action.
When we think of his per
sonal heroism and example, we
do not often consider what might
have happened had there been no
politically independent institute
in Geneva that was in a position
to offer him sanctuarv. But th e
Iexistence o f this insti tute is crucial
to the storv. In politicallv difficult
times, we cannot count on the
state universities to stand firm, no r
even the private universities that
receive massive state subsidies.
There must be independent insti
tutions that provide support for
dissident intellectuals out o f favor
with the regime.
At the end of his life, Mises
wrote a private memo in which he
urged the founding of an institute
that wou ld d o for others what had
Ludwig von Mises
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history, it is as engaging as any
thing Rothbard ever wrote. As
Joseph Salerno writes in the introduction, "One will learn much
more about monetary history
from reading this exciting storythan from poring over reams of
statistical analysis."
The question obviously arises
about the origin of the book.
Murray Rothbard died in 1995,leaving archives with many papers
that were unpublished and others
that had been published in low-
circulation venues. With the rights
to these manuscripts falling to the
Mises Institute, we went to work
to bring them to the light of day.
This is one of several such projects
the Mises Institute ha s under taken
since Rothbard ,s dea th .
A History ofMoney and Bank
ing in the United States consists of
five large essays:
1. "The History of Money and
Banking before theTwentiethCen
tury." This wasoriginally published
as an unsigned contribution to the
Minority Report of the U.S. Gold
Commission in 1982, a publication
which has long been out of print.
2. "Origins of the Federal
Reserve33 is a paper never pub
lished in its full form. It represents
the fruit o f Rothbard's most ambi
tious research effor ts on th e sub
ject, written in the mid-1980s.
3. "From H oover to Roo
sevelt: The Feder al Reser ve and
the Financial Elites." This is a pre
viously unpublished papera
model of libertarian power-elite
analysisalso written in the m id-
1980s .
4. "The Gold-Exchange Stan
dard in th e Interwar Years." A ver
sion of this appeared in a volume
edited by Kevin Dowd andRichard Timberlake (1998), but it
is published here for the first time
in its original version.
5. "The New Deal and th e
International Monetary System"
appeared in the 1976 book Water
shed of Empire (Leonard Liggio,
cd.), a volume that has also long
been out of print.
Hence, much of this volume is
new or so radically unfamiliar,
there is every reason to consider
the treatise new overall. What 's
remarkable is how nicely the essays
Winte r 2002 • News f rom th e l . rnuu; v on M is es Inst i tu te
Joseph T. Salerno
form a coherent story and unite in
an even pace. In his introduction,
Salerno compares it to other main
s tr eam book s on US mone ta ry hi s
tory and finds them far weaker by
comparison.
Reading through the history
helps identify certain patterns that
repeat themselves. For example,
the current hysteria against short-sellers, speculators, and Wall Street
moguls generallyunder a Repub
lican presidentrepeats in nearly
every detail Hoover's campaign
against finance from 1930-1932.
Denouncing falling stock prices
and attempting to jail people as
scapegoatsdidn't do any good
then, either.
Also, in Rothbard's account,
financial regulation, inflations,business cycles, and banking con
solidations of the past were not
just abstract economic forces at
work but involved interest groups
and struggles among groups. For
example, the battle between the
Morgans and Rockefellers is a key
part of 20th-century financial his
tory. Do such struggles exist
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today? Of course, bu t to under
stand them requires background.
In Rothbard's hands, this his
tory comes to life as never before.Many economists have written
books on banking history that getthe history wrong. Many histori
ans have written books that get
the economics wrong. But here we
have brilliant, accurate history
informed by sound theorya rare
thing in this literatureand the
result is a mammo th contr ibut ion
to the literature that is going to
make a huge difference in the
world o f ideas. •
Epi s t emo log i ca l
Prob l ems
In the early 1930s, Mises
mrncd his attention to prob
lems o f economic method. Ever
since the battle between th e his-
toricists and the classicists, there
had been confusion over the precise status of economics as a scien
tific undertaking. It was Mises
who sorted ou t al l the i ss ue s i n a
series of scholarly articles that
became a book which representsthe most ambitious attempt by
any Austrian to put economics on
firm ground as a deductive scienceo f action.
Since die revival o f Austrian
economics 30 years ago, this trea
tise h as been an essential text for
graduate students seeking to
counter the influence of positivism
in die profession. But in recent
years, it has fallen out of print and
been hard to come by.
This is why the Mises Insti
tute, with the gracious permission
of Bettina Bien Greaves, decided
to publish a new and vastly
improved version of the book.
Originally translated by George
Reisman, this new edition features
a clear f orma t w it h footnotes at
the bottom of the page, and a
remarkable introduction by Jorg
Gu ido Hu lsmann .
The new edition of Epistcmo-
lojjical Problems ofEconomies should
be available after th e first of th e
year. •
O t ii f. r P u b l i s h inc.
Projects
The cause o f f reedom was
tripped up badly after 9-11,when even l ibertarians were at a
loss to explain how to mete out
justice and protect the homelandwithout resorting to vast increases
in state power. It is a striking factthat not a single modern book
exists that gives the case for theprivate production of security anddefense. This is why we are going
to print with TheMyth ofNationalDefense: Essays on the Theory and
History of Security Production,
edited by Hans-Hermann Hoppe.This collection explains how the
provision of defense against invasion is the proper domain of thefree market.
Two years ago, Jesus Huertade Soto wrote a huge book on thehistory of credit expansion and
Jesus Huerta dk Soto
Money,Bank Credit,
and Economic
CyclesIKANSl.A II l > I 1Y ML I. IN DA A . S TKOU r
fractional reserve banking, coveringeconomics and law, from the
ancient times to the present. More
than any existing treatise, it makes
th e case f or t he M i se si an -Ro thb ar -
dian view of bankingthat it
should operate like any other mar
ket institution: free from govern
ment intervention and adhering to
strict standards of property-rights
protection.
Only one problem: the treatiseappeared only in Spanish! Tomakeit available for English-speaking
audiences is th e reason the Mises
Institute is publ ish ing Money,
Bank Credit, and Economic Cycles.
The translation is wonderful , and
worked on at great length in coop
eration with Gabriel Calzada, a
Spanish-speaking visiting fellowfrom Juan Carlos University in
Madrid. This book has been rightlycalled the most important treatiseon money and banking since
Mises's in 1912so o f c ou rse w e
are pleased that the author chosethe Mises Institute as its publisher.
Man, Economy, and State is
Murray Rothbard 's treatise on eco
nomic theory, a companion treatiseto Human Action but extending
beyond it in many ways, and
NEWS I'KOM THE LlJOWIO VON MlSKS INSTITUTE Winter 2002
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It includes an amazing new intro
duction constructed by Joseph
Strombcrg from the Rothbard
Archives, in which Rothbard him
self explains how the work devel
oped from an introductory textbook to a sem inal text in the
Austrian and l iber tarian tradi tion. •
organized in more step-by-step
fashion. Students of economicshave reported for decades that
thcv find it immensely useful infleshing out the technical details of
the Austrian system. It is also a
huge seller: the edition we have
kept in print continues to be
reprinted. But the Institute will
now come ou t with a scholar 's edition that unitesMan, Economy,
and State with Power and Market
as was intended by the author
from the very outset. An ex-Com-
munist succeeded in severing
them, but we have remedied that.
N
On l i n e Ed i t i o n s
ew editions of great books
have recently appeared on
Mises.org (the most popular site
in t he wo rl d for f ree-market schol
arship). From Rothbard, Mises.org
ha s two books: For A New Liberty
and The Pa?lie of 1819, as well as
five of hismost importantscholarlyarticles. From Mises, jMises.org
has On theManipulation ofMoney
and Credit and Economic Calcula
tion in the Socialist Commonwealth.
Thanks to support from Fred
erick L. Maier , the Miscs Institute
has established th e Frederick L.
Ludwiq von Mises Ins t i tute
Per iodicals Dally Articles • Coming Events • Resources • Audio • Membership
Home About E-mail Lists Cata log
Tuesday, October 0 8, 2 00 2
ONLIIff TEMTSK? BY
Annwersam
n,.
Dcnoldrtnip
OCTOBER 18-19.2002
LudW'g von M s ea Insbtula
Auburn. Alabama
Austrian
Communism in Capital Markets
It is hard t o under st and t he vague and ill-defined laws
Mar tha S tewa r t and Sam Waksal are accused o f
violating. Bu t th e premise of th e law is not hard to
divine: Competition in capi tal markets must proceed from
a level p laying field. All investors ar e entitled to th e
same information advantage irrespective of e ffor t and
abilities. In a word, socialism1. More...
Fo r c ed La bo r a n d th e Le f t
If someone is forced to engage in work that he
otherwise would no t do, and he is no t paid compensation
to which he agrees for that work, then we call this slave
labor. It cannot be defined by any other term, writes
William Anderson. Princeton's Paul Krugman and his
followers, howeve r , b e li eve tha t th e s t a t e shou ld f or ce
peopl e t o do it s bidding, even if it means they will not
r ece ive payment for their work. More...
Winte r 2002 News i-kom th e Ludwics von Mises Inst i tu te
Content
Market Update
ASC8 Pape r s
C a l e n d a r
20-Year Repo r t
Ab o u t Mi s e s
Ab o u t Ro t hba r d
STUDENTS
Library
Working Papers
Study Guide
Con f e r en ce s
Fellowships
ONL IN E BOOKS
Human Ac t ion
Mises Books an d
Essays
Ro t hba r d Book s
an d Essays
Founda t i on a l
Writings
Pa lm Book s
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Maier Anti-Tax Archive, which
includes reprints of the best anti-
tax scholarship ever written. Fea
tures include the work of the great
American l iber ta rian Frank C ho -
dorov as well as Harvard economist
Frank Taussig's hard-to-find historyof tariffs in t he Un it ed States. This
library will continue to grow andgrow. •
The Econom i s t
Wrestles wi t h Au s t r i a n s
Earlier this year, the Interna
tionalMonetary Fund distributed a working paper on the Aus
trian theory of the business cycle
(which fingers central banking as
die culprit). More incredible thanits conclusions (that the Austrian
theory isn't entirely correct) wasthe veryfact of its appearance andwhat it says about the new status
of Misesian banking and capital
theory;
Something similar can be said
of the September 26, 2002, issue
of TheEconomist,which included a
large insert on the Austrian theory.
The famousmagazine sums up thetheory, "As a result of mutuallyreinforcing movements in credit,
investment and profits, each boom
contains th e seeds o f the su bse
quent recession and each recession
the seeds of the subsequent
boom." Fairenough, but of coursethe article ends up rejecting the
theory.
Economis t William Anderson
commented:
"Wha t amazes me is tha t th e
author lays out all of the pieces,
and even the half-baked Austrian
theory that he describes in his article, but still cannot put the pieces
together. Instead, he looks at thepieces and then tries to say there
are many different causes of busi
ness downturns and concludes
t ha t th e cent ra l b ank s mus t rescue
William L. Anderson
the var iou s e conomies . We have
the answers in front o f us on how
to get out of this mess, yet policy
makers and thei r mains t ream
economist allies continue to grope
around in the dark when the light
is available." •
L eF e v r e the Great
The late Rober t LeFevre had a
huge impact in building the
libertarian intellectual movemen t
through his Freedom School in the
1960s and other work. Al l these
years later, we often come across
people who attended his lectures
and came away astonished at their
Style and content. L ew Rockwell
heard h im, but the rest of us
though we had always known that
he was an outstanding thinker and
a passionate activist for liberty
never could have imagined how
compelling a lecture style he had
until we received a set of tapes as
part of the LeFevre Archive that
the Mises Institute now possesses,thanks to the work o f Ross Ander
son.
Together, the tapes make upwhat is essentially the greatest
audio course of freedom you will
ever find. Thanks to th e miracles
of the Web and MP3s, we worked
to produce editions that could be
made available to the world at no
charge. They are now up on
Mises.org. The day they appeared,we logged a new record of kilobyte downloads. LeFevre is once
again lecturing, but now to the
biggest audience he has ever had. •
S o n g s f r om the
M i s e s -K r e i s
From 1920 until 1934, Ludwig
von Mises conduc ted a for t
nightly private seminar in hisoffice, which could be attended
only by invitation. Participants
c alle d it th e Mises-Kre is o r Mises
Circle.Many of the greatest econo
mists, historians, and philosophers
oJhe ffiises--CftQiyer Rebate
ejedx (Kaufman
1have a point to make 1have some ideal typesThat you should hear for better We c a nno t d o w i th o ut
O f wh ic h on e c annot even Or else we're really crippled
Refute a single letter. 'Cause nothing else works out.
I am a libera l, Therefore 1 have a t va lu e s
But not of the old yore Only a remote glance,
For 1say all things differently Bu t he w ho thinks without them
Than those who wrote before . In my view has no chance.
A liberal anyone can turn, 1 state my values in black ink
But in Vienna alone (h e reasons learn. So e ac h o ne will k now wha t 1 think.
I know this 'cause marginal utility I say this 'cause marginal utility
Sheds the proper light on the econo ny. Sheds the pr oper light on the economy.
News from th e Ludwig vo n Mises In s t i t u t e Winter 2002
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Dr. Anthony Carilli
of Europe would gather to discuss
problems and issues in a setting
where Mises h imse l f le d the dis
cussion as first among equals.
The formal meetings wouldbegin at 7:30 P.M. and last as late
as 10:00 P.M. Most of th e mem
berswould then gather for dinner
at the Anchora Verde, where the
discussion would continue bu t
grow lighter. Afterward, theywould continue to th e C afe Kiin-
stler, opposite the University of
Vienna, for coffee until 1:00 A.M.,
when M isc s u su ally left. Fri tz
Machlup reports, however, that
when he left a t 3 :00 a.m., he usu
ally had to say goodnight tophilosopher Alfred Schiitz!
Adding poetry and music tothe late-night gatherings at the
Cafe Kiinstler were the songs thatphilosopher Felix Kaufman wrote
fo r the seminar. Based on Austrian
folk melodies and popular songs,and written in Aus tr ian dialec t,
they featured clever references to
the contemporary debates and theinternal culture o f the Mises-
Kreis.
In the course of a magical
evening we heard these songsrevived and performed. The
melodies were obtained from a
Vienna archive, so as to be as
accurate as possible. The perform
ance i ncl ud ed th e movine sone
about Mises's departure for
Geneva, which brought to life the
d i ff icu l t t imes in which he lived.
This performance will be madeavailable onl ine. •
Mi s e s Institute
on nil- : March
Wh e n we originally put
together a program for our
20th anniversary, we consideredand rejected the usual approach of
hiring a big name, usually a politi
cian or big media figure, to come
in and speak. Conventional wis
dom has it that this is the only wayto at trac t at tendees.
And yet that is not what the
Inst i tu te is about . As we consid
ered this, we knew that the right
path would be to have the many
scholars with whom th e Institute
is associated to come and talk
about their work and how they
v iew t he ir role in th e overall mis
sion o f the Insti tu te. Wha t
emerged was a spectacular two
days of fascinating lectures andseminars reflecting the heart and
soul o f the Institute.
D id the lack o f a media star di s
courage attendance? Not at all. In
fact, attendance surpassed our highest expectations and, thankfully,
pushed our facilities to the maxi
mum. Members and scholars, we
all found ourselves invigorated,
and enjoyed plotting the course
Lubwig von Mises Institute
TWENTY YEARS OF
TEACHING FREEDOM 21
20th anniversary confe rence
OCTOBER 18-19,2002
AUBURN, ALABAMA
Winte r 2 0 0 2 News k rom th e Ludwig von Mises I n s h h t k
Dr. GaryG. Schlarbamn and
Mrs. Bettina Bien Greaves
ou r intel lectual revolut ion will
take over the next 20 years.
We heard more than 30 lec
tures, and the program was
attended by students and faculty
and member s from all over. On Fri
day afternoon, Mrs. Bettina Bien
Greaves received die Schlarbaum
Prize f or l ife time achievement in
liberty It was a glorious two daws,
filled with music, economics,
energy, and ideas. The camaraderiewas obvious, showing once again
that th e Mises Institute is more
than a think tank; it is a support
system for a global intellectual
movemen t tha t is on the march. •
Other N ew
Dev e l o pm e n t s
An art exhib it in New York, at
the D'Amelio Terres, featured
the work of John Morris in an
exhibit titled: "Drawings for theAustrianSchool." It is not the typeof art that would have been fullyappreciated by Mises, Hayek, and
Rothbardcultural traditionalists
allbut, still, the spirit is right.
Horizon Media Co . in Bei
jing will be translating and publishingAmerica '<r Great Depression.
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Forbes Magazine has been
running frequent commentaries of
the Austrian School, includingSteve Hanke's article, "The Hayek
Hangover."
Transaction P ub li sh er s h as
released John Attariaifs SocialSecu
rity: False Consciousness and Crisis, a
longer version o t a s tudv the Miscs
Institute published last year.
Nicolai J. Foss and Peter G.
Klein are t he ed it or s o f a new vol
ume from Edward Elgar, Entrepre-ncurship and the Finn: Austrian
Perspectives on Economic Organiza
tion (2002).
The sales of Gene Callahan's
Economics for Real People arc doing
very well. On Amazon, it is ranked
very high, with people giving posi
tive reviews, and on Laisscz-Faire
Books, it has consistently stayed asthe number two best-seller.
The Mises I n st it u te luncheon
semina r series features talks and
papers on all aspects of liberty and
economics. It is attended by local
scholars and Members . The fall sea
son opened with JosephStromberg's
papers on total war, and continued
weekly with papers on American
banking history, methodology, and
more.
LcwRockwell.com, the web
site of the president of the Mises
Insti tute , continues to rise in rank
ings on Alexa. It is easily the most
trafficked libertarian site anywhere,
with contributions from such fig
ures in the l ibert a ri an in te l lec tua l
world as Robert Higgs, Hans
Hoppe, Butler Shaffer, and Paul
Can to r .
The newest issues ofThe Quarterly Journal of Austrian Economics
have featured the works o f Walter
Block, George Reisman, Ben Pow
ell, Robert Mulligan, William
Anderson, Mark Thornton, Guido
Hulsmann, and Richard Vedder
and Lowell Gallaway, among oth
ers. Major contributions have been
new translations of articles by F.A.
Hayek and Eugen von Bohm-
Bawerk. •
More Programs at the
M i se s Institute
Th i s past summer, we had far
more applications than we
could accept for our programs, but
particularly for the Mises Univer
sity, which was attended by out
standing students from all over theUnited S ta tes a nd t he wor ld . Nex t
summer, we are featuring a new
R ot hb ar d G ra du ate Seminar in
which outstanding students will
read the restored Man, Economy,
and State and discuss it with a top
faculty.
The Austr ian Scholars Confe r
ence is coming along nicely. To be
held March 13-15, 2003, this pro
gram has been extended by anentire day to accommodate th e
high level of interest. Just before
the conference begins, there will
be an academic symposium on
Man, Economy, and State, u
T h e Plage of I d e a s
In the great battle for liberty,
the state has all the guns, and
more money than any privateinstitute could possibly put
together. But the forces for liberty
have something that is ultimatelymore powerful: true ideas. This is
the way we fight. Our deepest
gratitude to our Members, who
have made our work possible for
the last 20 years. And thanks to
those who will contr ibute to make
the next 20 possible aswell. •