 Okay, I bet you didn't know Murray Rothbard knew John Lennon and Fonzie It's that South Royalton they stopped by to talk to Murray Walter Walter Yeah, yeah, he that was posed they made him turn around Yeah, John Lennon, that's me okay So I look forward to introducing my my long-time friend. In fact, I met Richard at at South Royalton for the first time so you know I've known him since 1974 and There are some stories we could tell but we won't but in any case I'd love to introduce him Richard Ebbling is a BB&T distinguished professor of ethics and free enterprise leadership at the Citadel in Charleston, South Carolina and that Has been since 2014 and I think he has to wear a uniform when he teaches during the day is that true Richard? Yes, I told you you had to wear it talk here He is the author of Austrian economics and public policy restoring freedom and prosperity monetary central planning and the state Political economy public policy and monetary economics will do von Mises and the Austrian tradition and Austrian economics and the political economy of freedom He's also the editor of the three volumes of the selected works a little bit von Mises which has been brought out by Liberty Fund He previously was professor of economics at Northwood University He was the president of the foundation for economic education and the little bit von Mises professor of economics at Hillsdale College In 1991 Richard Ebbling frequently traveled to the former Soviet Union consulting with the government of Lithuania And with members of the Russian Parliament and the city of Moscow on Free-market reform and privatization of the socialist economy in a January of 91 He witnessed firsthand the Soviet military crackdown in Vilnius, Lithuania During which 13 people were killed While in Moscow in August of 1991 he joined the defenders of freedom and democracy At the barricade surrounding the Russian Parliament during the failed Soviet hardline communist coup attempt Okay, and you might remember images of that on on television with the two with the tanks right surrounding the building and that just goes to a point that was made by Murray Rothbard that and by Louis von Mises that it's really the Ideology that the people accept not not not the way the guns are pointed But the ideology accepted by the people because because that couldn't fail because the tanks that were protecting the oligarchs ensconced in the palace against the people suddenly just turned their tarts and aimed it towards towards the Palace or whatever it was it was the polyp are a bit building Yeah In October 1996 Richard Ebbling traveled to Moscow once again this time Uncovering the lost papers of the famous Austrian economists Louis von Mises. They were looted by the Nazis from his Vienna apartment in 1938 Captured by the Soviet army at the end of Second World War Dr. Ebbling was able to obtain photocopies of virtually the entire collection of documents numbering about 10,000 items Which had been kept in a formally secret KGB archive in Moscow for 50 years He testified several times before the House of Representatives It's subcommittee on monetary policy and technology that is Ron Paul's subcommittee on on the Federal Reserve policy issues And Richard also co-authored a report for the Michigan Chamber of Commerce on right to work that helped bring about the end of the closed shop In the in the state of Michigan in 2014 Dr. Ebbling's PhD in economics is from Middlesex University London, England and The title of his talk today is lessons about Mises the man from his Moscow lost papers in the 1960s When Ludwig von Mises though now getting rather old could still travel to give talks he was invited to San Francisco and One of the hosts was a businessman named Sam Husbands. He had long been a direct one of the board of trustees of fee and My wife and I were visiting Sam Husbands once and he told us that during that visit to San Francisco He had picked up Mises and Mises his wife Margaret to take them to the venue of where Mises was going to give his talk And as it turned out they went through the part of San Francisco that had the strip joints And so when they were driving through that he said that Margaret Seeing the signs and the marquees and stuff suddenly said Ludwig Ludwig look it says topless. It says bottomless Sam Husbands said Mises thought for a second look down shook his head and said very bad for the textile industry It is a pleasure to be here at the Mises Institute I've had the opportunity To be here several more times, but it's several pastimes But it is always an absolute pleasure to for a visit The graciousness of the staff the leadership and the founding through Lou Rockwell's efforts here and this the phenomenal intellectual Preservation and extension of Austrian economics that is made possible through the efforts of the Ludwig von Mises Institute This is a very special place In the United States I can't resist. I know time is a sketchy. So if I can't resist a story about Joe It's true Joe and I met for the first time at South Royalton, Vermont at that first Austrian economics conference June of 1974 But the next year there was a second conference It was at the University of Hartford in Connecticut hosted by Dom Armantano who is a professor there And so I arrive and I'm walking around the campus because they were housing a severe cold dorm rooms or something And and I dropped off my luggage in my room and I'm just walking around the campus And I see a woman sitting on one of the benches in the grounds and she and she's downcast and there's sort of like a tear in her eye and I felt a little awkward but finally I went up to her and I said What's the problem? Can I can I help you? No, I was just married yesterday and instead of a honeymoon My husband has taken me to this Austrian economics conference And I said How insensitive what a founder who was this fellow Joe Salerno? Now I could also tell one more story where Helen Salerno and I spent the night in the same room while Joe is in the next room But I won't go into that What I wanted to spend our time talking about Was about these lost papers And Mises in his Vienna days And what we can perhaps learn about him both as an individual and as a principled scholar and policy advocate one day in 1927 Liddy von Mises stood at the window of his office at the Vienna Chamber of Commerce looking out over the Ringstrasse Which is the main Grand Boulevard that encircles the center of the city He said to his young friend and former student for Smokloop Maybe grass will grow there because our civilization will end He also wondered what would become of all the Austrian economists there in Austria He suggested to Mokloop that clearly they would have to emigrate perhaps to Argentina Where they would have to find some type of work He suggested that perhaps they could be employed at a Buenos Aires nightclub Friedrich Hayek could be employed as the head waiter Mises said while Mokloop no doubt would be the nightclub's resident gigolo But what of Mises? Well, he would have to look for work as the nightclub doorman for as he said what else would I be good for? Now ten years later Mises's playful prediction was not far from the truth By 1938 many of the Austrian economists had indeed emigrated and left their native country To name just a few Paul Rosenstein or Dan who in 1927 had written sort of a very detailed and at that time definitive theory explanation of the theory of marginal utility emigrated to Great Britain in 1930 in 1931 Hayek who had been the head of the Austrian Institute for Business Cycle Research Accepted an invitation as a visiting professor at the London School of Economics and Move there in the autumn of 31 to a position that in 1933 became permanent Gottfried Hobbler who had worked at the Chamber of Commerce with Mises Accepted a two-year research appointment with the League of Nations in Geneva, Switzerland From 1934 to 36 at which point he then emigrated to the United States to a professorship at Harvard Oscar Morgenstern Found himself ex found himself exiled in the United States in March of 1938 Well, he was on a lecture tour in America and could not return because the Nazis had invaded and annexed the country and To give just one more the noted Austrian school-trained sociologist Alfred Schutz Who had been employed as a lawyer in Vienna? found his way to Paris in 1938 and then to the United States in 1939 where he again worked as a lawyer But also as a part-time professor at the New School for Social Research in New York City But what about Mises? Well, Mises had graduated from the University of Vienna with a doctoral degree in 1906 however university teaching positions were few and far between in both Austria before and after the First World War and He certainly had to somehow earn a living So beginning in 2009 He was employed at the Vienna Chamber of Commerce of Crafts and Industry and Served as a senior policy analyst with the Chamber in the years between the two world wars His close friends people like Friedrich Hayek were amazed by his intellectual energy and prolific output of both theoretical Economic and policy writings which won him international recognition and renowned While also performing his time consuming duties and responsibilities at the Chamber of Commerce in the 1920s and the early 1930s Duties concerning regulatory and fiscal matters constantly coming before the Austrian Parliament and the bureaucratic agencies of the government Hayek and others wondered how long Mises could keep this up Seeming to be burning the candle at birth both ends After all recall these were the years when he wrote such books as nation state and economy in 1919 his grand treatise on socialism in 1922 a second revised edition of his 1912 theory of money and credit in 1924 his summary restatement of classical liberalism in 1927 a monograph on monetary stabilization and cyclical policy in 1928 and his collection of essays devoted to a critique of interventionism in 1929 This was then followed in 1933 with a collection of his methodological writings on the epistemological problems of economics But then in March of 1934 William E. Rappard the co-founder and director of the Graduate Institute of International Studies in Geneva, Switzerland Offered Mises a visiting professor professorship in international economic relations a position which Mises readily accepted I should mention from the correspondence only after he negotiated about salary and when she took up in the autumn of 1934 well still formally retaining his ties with the Vienna Chamber of Commerce with a sort of partial leave of absence But as it turned out Mises's position at the Graduate Institute kept being renewed year after year And he remained in Geneva until July of 1940 When he and his wife Margaret then emigrated to the United States in the shadow of the German occupation of neighboring France Now Mises had jumped at the chance To escape the tiring and mind-numbing responsibilities at the Chamber of Commerce that concerned the daily twists and turns of Austrian government policy on every conceivable economic issue under the sun As Mises expressed it in his memoirs for me It was a liberation to be removed from the political tasks, which I could not have escaped in Vienna and from the daily routine of the chamber Finally at the Graduate Institute in Geneva. I could devote myself completely and almost exclusively to scientific problems and In the first edition of human action in the forward Mises explained in the serene atmosphere of the seat of learning I said about executing an old plan of mine to write a comprehensive treatise on economics His 1940 German language treatise Nazi on Aldo Konami, which was the forerunner of human action It is not an exaggeration to say that with the German invasion of Austria in March of 1938 And the country's formal annexation into Nazi Germany shortly after that The Austrian School of Economics for all intents and purposes died in the country of its birth Mises's prevision of the fate of his native Austria and the need for most of his Austrian economist colleagues to scour themselves to the Four wins virtually came through In the rubble and ruins of war ravaged Vienna in 1945 grass did seem to grow With the city's earlier fame for a unique and civilized culture of art music science literature and learning a thing of the past and Most of the Austrian economists, especially those in Mises's circle in those interwar years Had departed their homeland in the face of the darkening clouds of Nazi barbarism over central Europe never to permanently return Now fortunately for the future of the Austrian School of Economics Mises was not in Vienna When the German army invaded on March 12th 1938. He was safe in Geneva on March 15th Out of Hitler triumphantly entered the Austrian capital and in the center of Vienna proclaimed before a cheering crowd of an estimated 200,000 Viennese that their country was now being you not unified with the German fatherland within within days Tens of thousands of people were arrested for being actual or suspected enemies of the Nazi regime Austrian Jews in particular were harassed humiliated and brutal brutally beaten up were murdered on the streets of Vienna and Within months as well the Arienization of Austrian businesses and enterprises were rapidly being accomplished with especially Jewish properties being vandalized and confiscated Now no doubt if Mises had been in Vienna 80 years ago this month At the time of the arrival of the Nazis in the Gestapo He would have been among those arrested tortured and killed either from beatings with a bullet in the back of his head or if not that Then in the gas chambers later used by the Nazis in their drive for a Jew free German dominated Europe Among his persecutors and tormentors Most assuredly would have been some of his former colleagues at the Vienna Chamber of Commerce Mises his former assistant at the chamber Later reported that the day after Hitler arrived in the city employees at the chamber were greeting each other with Heil Hitler And with several of them having turned out to be already Nazi party members But if the Nazis could not get their hands on Ludwig von Mises They could at least deprive him of that which was among the things he mo that was most precious to him His books in his personal and professional papers and correspondence Shortly after the German invasion the Gestapo came to the Vienna apartment in which Mises had long lived with his mother before his departure for Geneva in 1934 and her death in 1937 Now after his mother's passing he had returned the apartment to the landlord, but he sublet what had been his room from the new tenants The Gestapo agents broke into the room Hold away that portion of his library that he had not taken to Geneva with him Emboxed up his personal and family papers and documents his correspondence with family colleagues and friends the copies of his scholarly and popular Articles on economic theory and policy and the memorandum position papers and speeches He had prepared for internal uses at the Vienna Chamber of Commerce during the quarter of a century that he worked at that institution Also among his little papers were materials relating to his teaching at the University of Vienna and And and in relation to his private seminar that he ran on a regular basis for many years out of his chamber offices With a selected group of Viennese scholars and invited guests from around the world About a year after the Nazis had carted away all of these and other family items Mises sent out a letter of information to friends and associates in Europe telling them what the Gestapo had done He also explained that people in Vienna who had interceded on his behalf with the Nazi authorities in an attempt to get his property back We're told that the Gestapo had no idea what had happened to them in 1977 I had the good fortune to meet Marguerite von Mises through the offices of Murray and Joey Rothbard I Had written a review of Marguerite's book my years with Ludwig von Mises Which Murray had published in his old publication Libertarian forum Marguerite had liked my review and asked the Rothbard's to introduce her to me We met at Murray and Joey's apartment in Manhattan, and I still remember that Joey prepared an absolutely delightful quiche for lunch For the next seven years while I was living in New York at that time Marguerite would invite me over to to have a tea with her once or twice a month for which during which he made extremely tasty little sandwiches She obviously appreciated that I was a poor student All of this at the apartment at 777 West End Avenue Where she and Ludwig had lived since shortly after the arrival in America during the war Anyone interested in Mises in the Austrian school had heard some vague and Small version of the story of how the Gestapo had plundered Mises's papers but Marguerite told me That for the rest of his life Mises believed that either the Nazis had destroyed it all or that they were perhaps lost in the destruction of the war But as the old George Gershwin song says it ain't necessarily so They in fact had been transported to a small town in the Czech region of Bohemia and Stored with all the many other looted collections of personal and official papers and documents seized by the Nazis at the German Army occupied one country after another during the war It all fell into the hands of the Soviet army at the end of the war in May of 1945 After the Soviet secret police did a cursory examination of the literally millions of pages of Documents that the Nazis had plundered from one end of Europe to another they informed Stalin what had fallen into their hands The Soviet dictator ordered that everything be brought back to the Soviet Union And that a secret archival building be constructed in Moscow under his Stalin's orders to house all this booty There it remained And among all these millions of pages of documents were Ludwig von Mises's During the post-war decades until the end of the Soviet Union in 1991 only employees of the KGB And members of the Soviet foreign ministry had any access to anything in this vast collection Now in 1993 my wife and I had been in Vienna. We were doing our tribal research about Mises and other Austrians and a friend of mine who then was with the Austrian Ministry of Labor Gunther Kalupec I informed us that some Germans had been in Moscow and Had been looking for information about a pre-war anti-fascist Germans and that in their searches. They had come across a an index of Items of Mises's but because he was Austrian and not German and were limited in their time had not really pursued this But that's all they knew now my wife Anna who is here today She is a Russian come on Russian and She attempted to Find things out about it, but we couldn't find any detail what what where what? And then in 1996 we were at the Holocaust Museum in Washington, DC and I was interested, you know since Mises was Jewish, you know, and they and obviously having you know having Mises on their hit list Maybe a Gestapo file about Mises had survived the war. You never know, right? That would be historical curiosity Well, if such a Gestapo file survived the war they didn't know But what I then asked well, is there anything that you could tell me about? Something relating to Mises that might be in the former Soviet Union And I really there I mentioned these papers and then the person who we were working with Then took us to another fellow at the Holocaust Museum who specialized in Holocaust studies relating to the Soviet Union And he said, you know, I recently got an index of The documents being held in a formally secret archive of foreign papers and collections and so we start looking through this and Then page after page after page and there it is a fund 625 Dash Ludwig Mises And that's all now my wife Had long worked at the in the Soviet Academy of Science and knows their cataloging system if it's a file, it's 10,000 pages or less it's called a fund it's 10,000 pages of more of material But what 10,000 pages of what of Ludwig von Mises's? His his laundry tickets his rental receipts what? But we went back to where we were then Working at Hillsdale College I informed George Roach who was the president who had known Mises at Fee Before he became a Hillsdale president but maybe there in Moscow and that Papers of Mises is maybe And he reigned through the kind generosity of some supporters of Hillsdale the money immediately from my wife and I to make a trip to Moscow Since we now knew from this fellow at the Holocaust Museum the name of the archive its address its phone number its fax number and Friends of my wife's who were then connected with the Boris Yeltsin's administration Interceded in our behalf both to arrange our visas to come to the now post-soviet Russia and to have entree into the archive And we traveled to Russia in October of 1996 spent 10 days in that formerly secret archive carefully going through and arranging for the photocopying of virtually everything of What was a nearly 10,000 page of materials that they had under their? control and Shortly after our return to Hillsdale College where I was then teaching as Joe mentioned as the Ludwig von Mises professor Liberty Fund of Indianapolis heard of our find and asked me if I would serve as an editor and a Translation coordinator of a large selection of these papers to be published by them and over the next several years three volumes did appear under the general title selected writings of Ludwig von Mises Combined the three printed volumes offer 1,000 additional pages of essays articles and policy memoranda written by Mises from before the First World War into the 1940s a Huge addition if I may say to our understanding and appreciation of Ludwig von Mises is both economic and social theorists and as an active policy analyst and proponent on a wide variety of economic policy issues Especially during those momentous years between the two world wars Now what can we learn about Mises the man and as a policy analyst from these papers? What do they tell us about how he thought the policy perspective perspective from which he confronted the economic issues facing Austria at that time and how he saw the application of Austrian economics itself to such issues of the day When Mises came To the United States He he wrote a memoir Which is not really so much of a story of his life as a re-account of his views and ideas and how he came to some of them and His despondency and despair of the Austria and the Europe that he had left behind Looking back over his more than a quarter of a century of work at the chamber He said occasionally I entertain entertain the hope that my writings would bear Practical fruit and show the way for policy I've come to realize that my theories explain the degeneration of a great civilization They do not prevent it. I've set out to be a reformer But only became the historian of decline But Mises also Insisted that as far as he was concerned he had no regrets in fighting for freedom-oriented economic policies during all those years Or as he said I could not act otherwise I fought because I could do no other Now how did Mises approach the policy issues that confronted him as an applied economist if you will an economist who was the grand philosopher and Wide-bresh social thinker and economic theorist that we think of him from theory of money and credit and socialism and human action and so on But in fact a policy wonk by day. He knew immense and meticulous descriptive statistical and historical knowledge about everything going on in Austria and the surrounding variants of central Europe Because of the requirements of his position. I Would like to suggest and Mises lays this out. Nowhere. This is my interpretation if you will I think with you can suggest that he approached economic policy issues in the context of three policy horizons The first and the most distant horizon Concerned the most optimal Institutional and policy arrangements in society for fostering the classical liberal ideal of freedom and a free-market prosperity On the basis of what he thought economic theory could teach us These are found in those books and monographs that he wrote outside of his duties with the Chamber of Commerce If you will as the independent free agent who could offer his own most professional views as an economist and as a proponent of Classical liberalism. This is reflected in the fact that in all such articles and on the title pages of those books If an affiliation is given it is as a professor at the University of Vienna Not in his status as a more narrow Interested party as a policy analyst at the Chamber of Commerce The second horizon was closer to the actual circumstances of the present but focused on the intermediate goals that could lead in the direction of more Distant optimal horizon solutions For example, the need right now for ending paper money inflation and a reestablishing a gold based monetary system for general economic stability Without which a market order and economic calculation cannot function effectively Well, they need to shift Austrian fiscal policy in a direction that would reduce the burden and incidence of the tax structure To end the danger of capital formation a capital consumption Excuse me and instead foster private sector investment in capital formation for general economic betterment for all in the society And the third horizon in the context of which Mises analyzed and prose economic policies was more the actual immediate situation In other words, how do you design the concrete bylaws and rules for a central bank to prevent it from following inflationary monetary policies? Including the transition to an implementation of specie that is gold redemption And what policy tools should have then used to maintain foreign exchange rate stability and currency convertibility Now There's a whole array of Ways that one could think present this That was a long period of time and a lot of policy issues arose I could talk about the issues that arose. How do you get rid of a bloated and multi layered bureaucracy that is hemorrhaging a huge amount of money out of the government's coffers And is burdening every sector of the economy with this regulatory net We could talk about how he viewed Austria getting out of the great depression in the face of bank failures And monetary and price contraction But I'd like to briefly in the little bit of time we have left to talk about in the episodes surrounding the immediate post World War One period The idea of an easy and tranquil return to normalcy when World War One ended Disappeared with the shock of the signing of the armistice on November 11th, 1918 This was soon followed by a political disintegration of the Austro-Hungarian Empire An emerging economic chaos in the early months of 1919 And then the social democrats and the Christian socialists in Austria forming a coalition government Following the abdication of the Hapsburg Empire They soon were implementing costly social welfare programs Introducing food subsidies for the municipal populations, especially in Vienna And resorting to the monetary printing press to fund the growing budget deficits to pay for all of it The new Austrian Republic was threatened with the revolution, civil war, and an increasingly worsening price inflation Now having returned to his duties at the Chamber of Commerce very shortly after the war ended In May of 1919, Misa prepared a confidential memorandum for Austrian businessmen and bankers affiliated with the Chamber On the actions to be undertaken in the face of progressive currency depreciation He said you can't rely upon the government, they quite possibly are just going to destroy the currency It would then fall on the shoulders of the private sector, banks and businessmen To devise the mechanism to bridge the gap between the dramatic and rapid collapse of the old currency And the spontaneous shift to the use of alternative monies by the citizenry of the society As he put it, it is up to us citizens to try to do on their own what the government is failing to do for us What we can hope from the government is that it will not stymie the endeavors of its private citizens In their own interest and in the interest of the community, the banks as well as large industrial and commercial enterprises Must take the necessary preparatory steps to avert the catastrophic consequences that will follow from the collapse of the currency Misa then presented a plan for these elements in the private sector to use export revenues and sales of assets to accumulate cash reserves Of small denomination units of Swiss money to use as the temporary emergency medium of exchange It would be used to pay salaries and pensions and in the form of loans to the government and other employers in the market So that the population would have access to a medium of exchange that they could have confidence in And could use for survival This only would be necessary until normal export sales and capital transfers supplied over time the required quantities of gold and other foreign currencies To be used as permanent money substitutes in a post-inflationary Austrian economy Mises also explained the process by which private banks could form an informal consortium to jointly cover the costs and the clearings Of providing this emergency alternative currency Or as he said, as soon as the government interference in the monetary system is eliminated by the collapse of the currency Free market forces will automatically come into play that will supply the economy with the exact amount of money it needs Sales to other countries will build up at that moment and will attract the requisite money into the country He also told a few months later in a speech before the chamber members The disastrous consequences that were befallen Austria due to the imposition of foreign exchange controls Austrian businesses had to sell all hard currency earnings from their exports to the Austrian government and the central bank And then had to appeal back to those foreign exchange control administrators To have access to some quantity of those hard currencies to be able to import not just finished goods but the necessary imports of intermediate goods For them to undertake production once more As he said in another time when the Austrian government was implementing this The agents of the national bank responsible for forming authoritative judgments about various trade policy problems appear to be totally incompetent Whether due to their educational background Well, they must have attended Yale Or their lack of prior experience If these people who most certainly cannot be considered qualified experts have the discretionary power to decide finally whether particular export firms will be favored with permission to enter in to access to foreign exchange A refusal for so-called favoring is the same thing as a prohibition on export businesses Therefore in the final analysis it helps to increase unemployment problems As far as he was concerned the only solution to this was the abolition of these controls Or as he said in a V&E's newspaper in December of 1919 the foreign exchange agency must be suspended And a real and proper exchange market for futures transactions as well as cash transactions and transactions in foreign currency and foreign exchange must be reintroduced Now of course the currency did not collapse In 1919 but the inflation kept going on and getting worse 1920 1921 1922 into 1923 The appreciation of the Austrian currency Accelerated more and more into a hyper inflation of rates of monetary expansion to cover the government's deficits To give you just simple examples In 1919 the currency increased from 12.1 excuse me In 1919 the currency stood at 12.1 billion crowns At the end of 1920 that had increased to 174 billion By 1923 that had ballooned to 7 trillion 7 trillion At the beginning of 1919 one American dollar could purchase 16.1 Austrian crowns In 1923 the same US dollar traded for 70,800 crowns Measured by a cost of living index a basket of goods that could be purchased in Vienna for a little over 28 Austrian crowns in January of 1919 Cost almost 12,000 crowns in 1923 The Austrian economy was facing disaster and collapse Rational economic calculation had become all but impossible due to the rapid and erratic and non-neutral manner in which prices of both inputs and outputs were rising in the early 1920s of Austria Real wages for many segments of the middle and working classes were falling As they were lagging behind erratic movements in consumer prices Viennese men and women could be seen trekking out to the neighboring Vienna woods to cut down the trees to have fuel to heat their homes in the city Hundreds of sickly and starving children were seen every day in the doorways of leading Vienna hotels begging for food and money The Austrian provinces were in open rebellion against the central government in Vienna And set up preventional border controls to prevent exports of scarce food produced in their areas of the country to be able to be exported to Vienna and the other cities of the country As the situation worsened, Mises put together a proposal on behalf of the chamber in August of 1922 For the restoration of Austria's economic situation, which was submitted to both trade and union, labor union or associations in the country to devise a way to bring an end to the government's budget deficits as a prelude to stopping the inflation In a nutshell, Mises recommended the establishment of price indexation throughout the economy Although government expenditures were automatically adjusted in lines with cost of living indexes Now the same arrangement had to be set up for government revenues Otherwise nominal expenditures would keep growing while nominal tax revenues would always lag behind, never leading to an end to the deficits Incomes, profits and wages in all prices had to be indexed to the market value of gold This would continually adjust government tax revenues to government expenditures It would mean that government nationalized sectors such as the railway system would have their prices rise in tandem with the average rate of depreciation of the currency reflected in its link to the price of gold Which would help reduce their losses and maybe even earn a profit from transit fees for shipments of cargoes passing through the country At the same time, gold indexation would assist in keeping the wages and salaries of many workers rising to maintain a certain real value of their income Mises emphasized that such an indexation policy was desirable, not only due to questions of equity in a period of rapid depreciation and the need to bring the government's budget closer into balance It was also needed because inflation distorted the very essence of a money-using economy That is the ability for economic calculation to reasonably estimate profit and loss and relative profitability of alternative lines of production Price and wage indexation linked to the price of gold would help reduce the miscalculations that inflation caused and which often resulted in capital consumption This measure, Mises said, was meant to be a transition method to bring stability to the Austrian economy Or as he concluded, we must make up our minds to return from the extravagant intoxication of spending billions to the sober, more modest financial figures of a smaller country which Austria was now after the war The object of the proposed plan is to avoid a sudden and disastrous collapse A year earlier, in February 1921, at the request of an Austrian politician, Mises published a 15-point comprehensive economic policy program for Austria The first order of business was to stop the monetary printing presses But this could be done only if the costly food subsidies were eliminated and the nationalized industries were reprivatized to end the huge expenses to cover their deficits under government ownership So that the national budget once again could be brought into some semblance of balance and therefore the pressure to print money would be loosened And foreign exchange controls, obviously, as he had argued, would have to be abolished At the same time, the value of the Austrian crown had to be stabilized once the central bank had stopped printing paper money All domestic regulations and controls inhibiting free commerce among the various provinces of Austria and the rest of the world needed to be abolished This, he said, was the path to revitalization and prosperous in a prosperous Austria But he ended the article by saying, I scarcely believe that there is a party in the country today who would be inclined to carry out this program Nevertheless, I hope that that which is sensible and necessary will prevail Now, in fact, the inflation was ended And through the influence of Ludwig von Mises What brought Austria back from the precipice of disaster was the appointment of Monsignor Seifel as the chancellor of Austria in May of 1922 In his memoirs, Mises describes his interactions with quote, this noble priest whose worldview and conception of life remained alien to me But whom Mises considered a great personality Seifel's ignorance in economic affairs was that which only a cleric could have, Mises said He saw inflation as an evil, Mises went on, but otherwise would rather unacquainted with financial policy Mises explained to the Monsignor that following the end of the inflation, there would come an unavoidable stabilization crisis That no doubt would be blamed on Seifel's Christian socialists with the inevitable short run negative effects for his party The chancellor replied that a policy that was necessary had to be undertaken even if it injured his party's standing Mises then said there were not many politicians in Austria who thought that way Seifel did subvert severe criticism, both from outside and inside the Christian Socialist Party For following the type of stabilization policy that Mises and a few others had recommended The Social Democrats ridiculed his conversion to Manchester liberalism With an underlying anti-Semitic tone by suggesting that a Jewish element was at work behind the scenes Read Mises His own Christian Socialists accused him of moving from a socialist course to a consciously and deliberately capitalistic one In reply, Seifel said, a people does not perish, however desperate its economic situation Spend less, save more, Seifel said, was the remedy for Austria's economic ills Thus ended Austria's immediate post-war monetary and fiscal madness Under the supervision of the League of Nations in Geneva, Austria's finances were gotten back into order Government spending was slashed and an end to the government's costly and disastrous food subsidies were brought to a halt And over 70,000 government employees were let go Only they'd let 70,000 go in Washington The Austrian Central Bank was reconstituted with the gold exchange standard And if one looks through the archives in Geneva, one discovers that many of the new bylaws were written by Ludwig von Mises In an attempt to restrain any future monetary madness by the central bank authorities Now, of course, this respite for monetary and fiscal irresponsibility was short-lived Once the League of Nations' supervisorial role was ended in the mid-1920s, budget deficits returned Due to the losses suffered by the government-managed public forests and the railway system and other sectors of the economy Business taxes were raised and as Mises showed in a study that he co-authored in 1930, labor costs and tax burdens had resulted in actual capital consumption in some private manufacturing sectors of the Austrian economy And these were all exacerbated by what? The coming of the Great Depression in 1929 and 1930 But as we saw in the second half of 1934, Mises was able to escape from all of this By accepting the position at the Graduate Institute How might we see Mises' three-horizon policy perspective at work in these events? His writings on monetary theory both before and after the First World War led him to consider that only a functioning gold standard under which monetary expansion was restrained by specie redemption requirements imposed on the central bank Could assure a general economic and business environment not plagued by inflation that generated the ups and downs of the business cycle And therefore did not also disrupt the capacity for rational economic calculation The wider social setting required respect for private property rights, free and unregulated market-based prices Not only for domestic commerce but also international trade and of course a free market in foreign exchange But more immediate steps to stop the possibility of more imminent threats we saw might require using such devices as wage and price indexation to moderate the damaging effects arising from the non-neutrality of money in a worsening inflation Not that Mises considered such methods of price and indexation to be a panacea of solving the problems caused by a serious monetary expansion Especially since if one knows something about his writings, Mises went out of his way to talk about the roughness, the arbitrariness, the inexactness of all attempts to measure purchasing power and price levels by the use of index numbers But extreme circumstances may require the use of imperfect policy tools to reduce some of the more egregious effects of hyperinflation that was threatening even more serious economic chaos The same was reflected in Mises's proposal to members of the business and financial communities in 1919 That they be called upon to organize a provision of a substitute currency through their international trading arrangements in the face of a possible monetary collapse due to the government's fiscal irresponsibility Such policies and actions might have to be expedients to prevent the destruction of the market economy They were the more immediate means to a more distant end, ending inflation so that the institutional reforms could be introduced so such monetary debasements would be more difficult to introduce in the future Thus restricting the monetary discretion of the central bank by requiring the issuance of any paper, notes and other forms of media exchange to be backed by some form of gold and mandatory species redemption Now by the end of this episode in Austria's post-war monetary mismanagement, Mises had come to the conclusion that in the real long run the only real institutional reform that might most effectively prevent the possibilities for paper money inflations and business cycles was basically the separation of money from the state In the second edition of the theory of money and credit 1924, in his 1928 monograph monetary stabilization and cyclical policy, Mises offered the argument for private competitive free banking That is the removal of the government's hand from the handle of the monetary printing presses Not simply by tying the hands of a central bank by requiring it to follow the rules of the game under a central bank managed gold standard But by ending government monetary policy of any kind, because money would be returned to the marketplace of consumer and producer choice And the competitive forces of supply and demand for gold in determining its available quantities as a medium of exchange and its purchasing power of value in the social arena of free trade Looking over and above the battleground of the economic conflicts and cataclysms of those years between the two world wars It is possible to trace out the logic, the consistency, the determination, the principles of one of the greats of classical liberalism free markets and Austrian economics during the last 100 years Friedrich Hayek once pointed out Quote that they had one of the great thinkers of our own time in their midst, the Viennese have never understood Fortunately for us, 45 years after Ludwig von Mises's death in 1973 at the age of 92, we have the opportunity to discover and learn from his enduring wisdom and insights A leading source for learning such lean sites is this place itself, the Ludwig von Mises Institute of Auburn, Alabama Thank you very much