Mises Memo

News from the Ludvvig vox Mises Institute • Spring 2003

War and Recession
By tradition and convention, economics and foreign mili tary policy are seen as radically separate categories. In the class room and newspapers, war is treated in the area of politics while
economics is covered under the

In fact, Mises was right that war prosperity is like the prosper ity that cholera brings. It increases
the income of undertakers but it is

Big government can come in many forms, and it is naive to think free enterprise can be pro tected against encroachments so long as government insists on funding an overblown military machine. By the same token, those
who favor the welfare state at

hardly good news all around. The
sheer waste of material and human

resources, diverted from produc tion to destruction, represents an incredible imposition on society.
The link between war and

category of business. But are they really all that sep arate? Neither in theory nor his tory, a fact which is currently hit ting home in the most brutal way.
In U.S. politics, it is common for pundits to favor both free enterprise and militarism, while

home empower the same govern

recession also appears in the fol lowing chain of events. A reces
sion results from overextension

ment to expand internationally through intervention and war. Looking at history, war often
follows an economic downturn.
Politicians see international con

flict as

a

nice distraction

from

opponents of war sometimes tend toward socialist thinking. The confluence of these positions,
however common, lacks intellec

falling incomes and declining eco nomic prospects. To follow the Keyncsian prescription precisely— boosting spending to give aggre gate demand a solid kick—war
would seem to be just the ticket.

during the boom times, and puts new pressures on industries unac customed to strains on profitabil ity. These industries lobby for protectionist measures. These measures rupture formerly peace
ful international relations and give rise to conflicts that spin out of
control.

That is not the precise course

tual justification.

that the war on Iraq has taken—

SECOND EXPANDED EDITION

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A History of Money and Banking in the United States

EGALITARIANISM AS A REVOLT

AGAINST NATURE
and Other Essays

with cooperation. Omnipotent Government (1946) demonstrated the protectionist roots of Nazi economic ideology.

Murray N. Rothbard links up foreign and economic polity in his
essay "War, Peace, and die State," reprinted in Egalitarianism as a RevoltAgainstNature. His America's

Great Depression (1963) provides the necessary foreground to understand World War II, while hisA History of Money and Banking in the United
Murray N. Rothbard

States (2002) shows die connection
between war and economics in

though 10 years of sanctions did
not foster warm relations between the U.S. and Persian Gulf states.

In fact, these sanctions have been

are the evidence that the political sector exercises too much power over society, so much so that the peace and prosperity that comes
with free markets and free trade is

fomenting and funding conflict.
If war is so bad for the econ

variously cited by terrorists and their sponsors as the proof that the U.S. represents a destructive force
in international affairs.

omy, and if recessions often gener ate policies that foment war, what is the alternative proposed by liber
tarians? The answer can be summed

displaced by an atmosphere of con
flict and even violence.

The sanctions not only harmed civilians in Iraq; they were the rea son many people joined the terror ist armies. The U.S. government is now using this dircat as the excuse

Ludwig von Mises wrote sev

eral books attempting to explain
the connection between economic

policy and political conflict. His Nation, State, and Economy (1919)
examined World War I and its after

up in three phrases: free ttade, free markets, and sound money. And yet, so long as government is charged witii sole responsibility of providing "national defense," is it realistic to think that the govern
ment won't foment war at the

for the largest expansion of gov
ernment power in several genera
tions.

The causal link can run the

other way too. War can lead gov ernment to engage in a bout of debt and inflationary finance that
appears to create a temporary

math. Socialism (1922) demon strated how much die central plan ners like die atmosphere of wartime as a great breeding ground for socialism. Liberalism (1929) showed

expense of real security? This year, the Miscs Institute will make a huge contribution to the literature on this topic. The
Myth of National Defense is a col lection of articles, edited by HansHermann Hoppe, which deals

how a free society replaces conflict

prosperity, only to be followed by a recession and attempts by the political class to avoid its
inevitable effects.

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Finally, both war and recession
are man-made calamities, or, more

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The Mises Memo is published quarterly by the Ludwig von Mises Institute. Vol ume 9, No. 1. Copyright © 2003 by the Ludwig von Mises Institute, 518 West Magnolia Ave., Auburn, Alabama 368324528; 334-321-2100; fax 334-321-2119; info@mises.org; www.mises.org.

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News from the Ludwig von Mises Institute

Spring 200.'3

frankly with die problem of the national security state and its rela tionship to a free society. Whereas the founding fathers worried about standing armies, we must now worry about completely
militailed societies, whole nations

organized around the principle that they should engage in global war in order to bring security. But this book argues that the entire apparatus of national security, despite many trillions in expendi tures, has actually managed to weaken security for all Americans.
The contributors deal with such

security services originate? How did monarchies handle the ques tion? How was security provided in the Colonial experience? How and to what extent can security be provided at a profit? What is the role of ideologv in the nationaldefense state? Is there any basis for the claim that security is a publicgood that can only be provided by the government? In a fully priva tized society, what kind of institu tions would replace the national security state? What is the best means toward achieving fully pri vate security provision?
There's never been a book like

scholarship showcased within the book to shake up opinion in and
out of libertarian circles. Rarely is the logic of free markets pushed to the point that such fundamental questions are examined. But in an age when gated subdivisions, pri vate security companies, and pri vate firearms provide more secu rity than a $400 billion national defense budget, the question is
worth close examination. •

Loving Mises.org

One of the 9,000 subscribers

questions as: how did the idea that die state must have a monopoly on

this, and we are expecting the

to the daily email from Mises.org writes: uPvc been reading

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Costs of War on Iraq
"War," said Ludwig von Mises "is harmful, not only to the conquered but to the conqueror. Society has arisen out of the works of peace; the essence of society is peacemaking. Peace and not war is the father of all things. Only economic action has created the wealth around us; labor, not the profession of arms, brings happiness. Peace builds, war destroys." More...

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The Economics of the Rose Market
Nationwide, rose prices are often double on Valentine's

STUDENTS

Library Working Papers Study Guide
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AUDIO

Day from what they are on most other days of the year. Why are rose prices so high on Valentine's Day? And while we answer the question, let's be careful to keep cause and effect straight. More...

Fellowships
ONLINE BOOKS
Human Action

/workiM fvayirs °

Not in Stacks
Gregory Bresiger merely wanted to check out a video

Mises Books and

Essays
Rothbard Books

that both the library catalog and a clerk said was on the

and Essays
Foundational

mm
Spring 2003

shelves. Instead, he stood face to face with what

seemed to be the very embodiment of the entire public sector. Whether running libraries or global economies,
the public sector isn't up to the job. More-

Writings
Palm Books

News i-uom tup: Luowic. von Misks Instititk

the daily articles since you started sending them, and I have to say
this is the single most valuable piece of email I get each day—the
one I can be absolutely certain will

paper currency. He has also found that they made subtle errors, later corrected by the Austrians, that led to the undoing of hard money in
favor of soft.

never be a waste of my time. The
Mises Institute contributors offer

the most varied, yet consistently brilliant, commentary available, no matter what the topic. "Anyone following these
pieces as closely as I have would gain a better education in econom
ics and ail the social sciences than

Interestingly, Alan Greenspan recently confirmed the relationship
between the welfare state and

they could get in any classroom (except, possibly, yours). I'm not an economist, just an interested layman who loves liberty and the
Austrian thinkers who have done

Ron Paul

The Gold Standard

paper money in a letter to our Dis tinguished Counsellor, Congress man Ron Paul. Paul had to ask why, in light of the recessions so clearly wrought by a boom fueled by loose money and credit in the 1990s, we shouldn't consider gold backing for the currency. Greenspan responded that the gold standard "is inconsis tent with significant government entitlement programs."

more than any others to defend it.
"In fact, the Austrians have

helped shape my outlook by giv ing me deeper insight into politi
cal and economic realities. You

With a war looming and the recession lingering, gold shot up in price, once again astounding the critics who keep proclaiming the death of this pre
cious metal that once served as the

Gertchev's papers are being delivered at the weekly Austrian Workshop at our offices in Auburn,
along with many other talks on

might call this an unintended con sequence, and perhaps not an important one. But it has been veiy meaningful to me. In short— thanks, and keep up the great
work!" •

aspects of economics, philosophy, law, and politics. Other fellows
working on projects include Steven Yates, who has completed his book on logic, and Scott Trask who is working on American banking his tory. Resident Fellow Guido Hiilsmann leads our weekly seminar. Members are welcome to attend (see

basis of the nation's currency. Ludwig von Mises, of course, was the twentieth century's leading cham pion of the gold standard against the Keyncsian celebration of paper currency. His students like Murray
Rothbard and Hans Sennholz fol

lowed in his footsteps, and simi larly championed sound money with commodity' backing.
Visiting Massey Fellow Nikolay Gertchev, who is completing

Mises.org for the schedule). •

his Ph.D. at the University of Paris, has been investigating criti cisms of the gold standard and has
come to see the money question as
the crucial one that divides the
laissez-faire school from the statist

school. In the end, if you want big
government, paper currency pro

vides the ticket because it permits expansion without taxation. Investigating the classical econ
omists in a series of articles, he has

found diem all to be champions of sound money and opponents of
Ni-;ws from Tin-: I.rinvic. von Misks Instititi-:

Spring 2003

assumptions of their worldview are contrary to basic notions of prop erty rights. We will also present the sec ond annual Kurzweg Family Prize for outstanding personal achieve ment in the scholarship of liberty. Made possible by scholar-surgeon Frank Turner Kurzweg, the prize this year goes to Robert Murphy, a graduate student at New York University. In addition to doing outstanding academic work, he has been a vigorous participant in public debates about economic theory and policy, and has already published his first book on the role of insurance in the provision
of security. Finally the winner of

Robert Higgs

Ralph Raico

Austrian Sghoiars
Gather

the Lawrence W Fcrtig Prize in
Austrian Economics will be
announced. •

The Austrian Scholars Confer
ence is an event that never

stops growing. In its nine years, each year's program has attracted more presenters and attendees.
This year, we are expecting the biggest showing yet, with more than 80 new pieces of scholarship covering an incredible array of topics on economics, history, phi losophy, law, and more.
In addition to die four lectures

Summer 2003

faculty to assemble to teach the fundamentals and applications of Austrian theory. In that time, the program has developed a reputa tion for excellence in teaching unmatched by any other program
available. We also look forward to two

Summer is the busiest time of

the year at the Mises Institute. This year, the Mises University has
attracted a continuing stream of applicants hoping for a chance to study under a top faculty of Aus trian economists. This year will be
the lcSth time for students and

week-long history seminars, one led by Ralph Raico and the other

by Robert Higgs. Raico is a lead ing authority on European history,
the origin and development of
classical-liberal thought, and the

named in honor of Hayek, Mises,

Rothbard, and Hazlitt (given respectively by Sudha Shenov, John
Cochran, Butler Shaffer, and Gene

Callahan), a new plenary lecture has been added this year: The Lou
Church Memorial Lecture in Reli

gion and Economics.
The first Church lecture will

be given by Timothy Terrell of Wofford College. His topic con cerns the growing influence of faith-based environmental politics, and its penetration of both reli

gious denominations and public
life. He argues that the champions of religious cnvironmentalism nei
ther know nor care about eco

nomics, but that the underlying
Spring 2003

News from the Ludwio von Mises Institute

politics of war. Higgs's specialty is
the role of economic and military
crisis in the rise of die American
leviathan. Both sets of lectures are

The second book on the list is

Thomas DiLorenzo's

The Real

Lincoln. Epstein writes: "More than 16,000 books have already
been written about Abraham Lin coln. But it took an economist to

open to die public (pending appli
cation) . Both will be recorded and
made available after the seminars.

Also, the Rothbard Graduate

Seminar this year offers a guided tour dirough Murray N. Rothbard's great economic treatises Man, Economy, and State, and
Power and Market. These books stand with Mises's Human Action
Gene Callahan

get die story right. The Real Lin coln, by Loyola College economics professorThomas J. DiLorenzo, is this year's top. ... I personally
revere Lincoln as a great writer (I've read the Second Inaugural so often, I can recite long passages from memory). But the short and riveting book, The Real Lincoln, made me actively dislike him as a politician." •
in
LewRogkwell . COM

as primary texts on Austrian the ory. Under the guidance of an expert faculty, students will walk through the texts page by page.
When it comes to teaching the details of Austrian theory, no books are as good as these. •
New Texts Online

More Reviews

T w o familiar

books came

for top reviews in the Barrow's year-end book roundup. "If I were

teaching an introductory course in
economics," writes Gene Epstein, "I'd assign Gene Callahan's Eco nomicsfor Real People: An Introduc
tion to the Austrian School. I also commend it to folks in search of a

Taking advantage of online technology, we've been busy making many important books, monographs, and articles avail able. Among the newest offerings
are The Underground Economy by Hans F. Sennholz; "Keynes, The Man," by Murray Rothbard; and The Historical Setting of the Aus trian School of Economics by Lud

good read on the joys of economic
insight."

Congratulations to Lew Rock well, founder and president of the Mises Institute, on his per sonal website. Though just three years old, it enjoys a higher trafficranking than National Review Online and even Rush Limbaugh's personal site. His daily links include
commentaries on economics, war,

LewRockwell.com
'the premier anti-state/pro-market site on
Friday, February 14, 2003

the net'

@0Q(D PffflgQ
From Ihc Vault

wig von Mises. In addition, our library of writings on taxation continues to grow. The TariffHis tory ofthe United States, a classic by FrankTaussig, until now very hard
to find, is now online.
Other items online include the

Bush the Infallible
War ha ordalneth. Jeffrey Tucker on the religious mind of the pre sldent.

Government Asphyxiation
Homeland Security can kill you. Article by Brian Duneway,

Greg Davis on the
Simpsons and Nasa. Bob Wallace on doing Osama's dirty work.
Michael Peirce on the Fuhrer.
Thomas J. DiLorenzo on

The Heroic Ron Paul
The Texas Observer is astonished to find an antiwar Republican.

Tracing the Box Cutters
Joseph Sobran on Bush's evidence.

Abe and the Indians.

Freedom Calendar for 2003, and

What Happened?
Burt Blumert on the gold market.

Ron Liebermann on the

petro-dollar and war.
John Attarian on Flea

the complete editions of die Jour nal ofLibertarian Studies, the Aus
trian Economics Newsletter, the

What Can I Do To Stop the War?
Plenty, says Harry Browne.

fibbing. Daniel McCarthy on
Michael Novak.

Arbitrary Arrest
Bob Murphy on another totalitarian ploy.

Quarterly Journal ofAustrian Eco
nomics, the Review ofAustrian Eco nomics (vols. 1-10), and the Mises

Richard Cummings on

Why Our Side Is Different
A mathematical explanation from Donald Mills.

American Empire.
David Dieteman on God and Uncle Sam.

Confederate Haggis
Jeff Adams on one aspect of the Southern-Celtic connection.
Alan Turin on an open
letter to France.

Review. Mises.org also offers dozens of audiotapes, including a complete seminar by Robert
LeFevre. •

Saving the World
One roll of duct tape at a time, by Mark Flore.
Ltw*» Columns

News from the Ludwig von Mises Institute

Spring 2003

history; politics, and culture. It has
been a wonderful source for

• Florida State University, Tallahassee, Florida.
Contact: Randall Holcombe

directing people to Mises.org, which enjoys higher traffic rank ings than any libertarian or con
servative think tank. Rockwell's
commentaries continue to run in

• Grove City College, Grove City, Pennsylvania. Contact: Jeffrey Herbener

the Washington Times, the Ameri can Conservative, and publicradio's Marketplace. Also, he recently spoke at Grove City Col lege in honor of the accomplish
ments of Hans Scnnholz, and was
FA. Hayek

• Hampden-Sydney College, Llampden-Sydney, Virginia. Contact: Anthony Carilli • Hillsdale College, Hillsdale, Michigan. Contact: Richard Ebeling • Loyola University,
New Orleans, Louisiana.
Contact: Walter Block

keynote speaker at the Sage Capi
tal annual economic conference in

Houston, "Beyond the Storm." •
Hayek. Garrison,
and LSE

advancement of Miscs's influence across world academia. Many thanks to LSE alumnus and British

• Metropolitan State College of
Denver, Denver, Colorado. Contact: John Cochran

beef baron Toby Baxendale for making it possible. •
American Colleges
and Universities

When EA. Hayek left Vienna, he taught at the London
School of Economics. From his

• New York University,
New York, New York.

post there, he employed Misesian business cycle theory to attack the influence of John Maynard Keynes. Today, die influence of Misesian ideas is being revived through a series of lectures made possible in

Ph.D. program.
Contact: Mario Rizzo

part through the influence of the
Mises Institute. The first scries of

The Austrian presence in acade mia is growing in the U.S. and abroad. The faculty list of the Mises Institute gives some indica tion of die wide variety of institu tions where Austrians are teaching and working, not only in economics

• Ohio University,
Athens, Ohio.
Contact: Richard Vedder

• Pepperdine University Pepperdine, California. Contact: George Reisman
• San Jose State University, San Jose, California.

lectures will be delivered by Roger
Garrison, adjunct scholar and author of Time and Money, an important book on Austrian cycle theory. His syllabus will be posted on Miscs.org. Truly, this is an important milestone in the

departments but also in history, phi
losophy, and even the humanities.
To assist students, the follow

ing has been assembled to high light particular institutions where
students can find two or more

Contact: Edward Stringham • Wofford College, Spartanburg, South Carolina.
Contact: Timothy Terrell. •

professors in economics depart ments who are broadly sympa thetic with the Austrian perspec tive. The list is by no means
exhaustive.

Times oe Giianc;e

The

Fed's recession has been

• Auburn University,
Auburn, Alabama.

tough on charitable organiza
tions. The Mises Institute is solid

Contact: Roger Garrison

as a rock, but diis is not true for

• California State University, Hayward, California.
Contact: Charles Baird

• George Mason University, Fairfax, Virginia. Ph.D. program.
Contact: Peter Boettke

some other organizations that gen erally support the free market. This is grim news because it is sad to lose a single voice for liberty, of any sort. The ideas of capitalism would
not stand a chance alone. We need

every institution, every website, every opportunity for teaching.

Spuing 2003

NIO.VS FROM Till-: Ij-nWIC. VON MlSliS I.NSTITITI-:

Given this, the Mises Institute
must take on new burdens and

new responsibilities. We must do everything possible to maintain and indeed expand our activities
and outreach. We must make sure

inspired by her businessman father, a great opponent of FDR; on the dark day of the election in
1932, he told her: "That man will foment strikes and take us to war";

that no promising student, no future leader of freedom, slips through the cracks. We must lift high the uncompromising banner
of freedom, and never let it fall, or

Truman Johnson (1914-2002), a teacher and champion of free
dom who, with his wife of 63

years, Floy, ran a reading group in
Austrian economics.

even dip, no matter what. This is a huge burden and responsibility. We are eager to shoulder it. But we need your help. We have the greatest library and campus of liberty. We have the best journals and books and teachers.
We attract die finest minds. And

Robert N. Tuller

(1907-2002)

Famed entrepreneur William B. Ruger, who through the produc tion of millions of pistols, rifles, and shotguns, was a living embod
iment of the second amendment;
Texas businessman and hard-

municipal finance, the gold stan dard, and the cause of public health. The bequest of their his
toric Florida home will fund an

money advocate Justin G. Bradburn, Jr.; and

annual scholarship in their honor;

we do it with the minimum possi

ble expenditure. Yet, the demand for what we do is outstripping our ability to provide. Even now, we turn away hundreds of students.
Institutions like the Mises Insti tute are vital to the future of civi lization. When Mises was driven

New Jersey inventor and entrepreneur Edward J. Monett (1902-2002), who dedicated a
student research office at the Insti

Pittsburgh businessman and champion of the free market,
Robert Kohman.

We mourn, and remember in

tute in honor of his son, Jack;
Hermona Beardslee, whose

deepest gratitude, all the Institute
Members who have died over the

dedication to the Old Right was

last nine months. Requiescat in Pace, dear friends of liberty a

out of his home in Vienna, he was

able to seek refuge in an independ ent institution of learning in
Geneva. The Mises Institute is, in

In Memoriam
We mourn the passing, and will always be inspired by the dedication to liberty, of our benefactors. May they rest in peace, and may we always strive to be worthy of them.
Hermona Beardslee, Justin G. Bradbum, Jr., Truman Johnson, Robert Kohman, Mrs. Robert E. Miller, Edward J. Monett, William B. Ruger, Robert N. Tuller George T. Adair, H. N. Crecelius, Stanley Hirsch, James R. Malott, Jr.,

many ways, die successor to diat institute, providing sanctuary for scholarship and sustaining die ideas of liberty when others buclde.
The Miscs Institute has built

its work on die support of people like you, who care enough to sup

port ideas that would be muffled.
Now is die time to bolster that

support, to back free markets, sound money, and liberty with all our strength. •
In Memoriam

Charles Mason, Margaret Mink, Charles F. Row, J.T. Wallace
Philip F. Bagwell, William P. Cook, Louis B. Dailey, E.M. Erickson, John G. Fifield, Don Goldberg, John D. Kennedy, Richard Mader, John Muhl, Dennis A. Wight, C.W. Zimmerman

We mourn the passing of:
Robert N. Tuller (1907-

2002), an Indiana boy who became a Wall Street giant. He
and his late wife Jo were dedicated

to international amity, sound
News from the Ludwig von Mises Institute
Si-rino 200.3