8 With the Handelskammer1

Before I proceed with a description of my scientific endeavors, I must address my practical activity. From 1909 to 1938 I served with the “Niederösterreichischen Handelsund Gewerbe Kammer.”² (In 1920 the name of this institution was changed to the “Wiener Kammer für Handel, Gewerbe, und Industrie.”³)

In Austria the Handelskammer was a parliamentary body composed of elected businessmen. These were financed through a surtax on the occupational tax that was collected by the internal revenue service and then transferred to them. It had been formed during the revolution in 1848 in order to advise the government and Parliament on economic matters, and to take up some administrative duties. Until the latter part of the 1870s it remained rather insignificant. In the 1880s and 1890s it led a futile campaign against the sectarian reforms promoted and pushed through by the Christian Social Party. Throughout this time the bulk of Handelskammer activity lay within the general assembly and in Handelskammer committees. The Handelskammer’s office merely did busy work.

The breakthrough of interventionism brought with it a radical change. Secretaries, department officials, and Parliament members were completely ignorant when it came to matters of economics. They had, for the most part, no awareness of the consequences of the measures they took, and were barely capable of shaping laws, decrees, and regulations in a way that allowed officers charged with carrying them out to understand what needed to be done. It became imperative to seek appropriate advice and continued cooperation with persons who knew the conditions or were in the position to give instruction. The Parliament, the press, and the Kaiser took the secretaries to task for mistakes that were made on a daily basis, which the secretaries in turn saw as the responsibility of the departmental officials. In order to escape this responsibility, they sought the advice of men knowledgeable in their field.

Rudolf Maresch and Richard Riedl, secretaries of the Viennese Handelskammer, knew to use these favorable conditions to expand the influence of their office. The president of the Handelskammer at the time was the long-sighted Baron Mauthner. He played a prominent role in the House of Representatives as the leader of the Mauthner group, which had been named for him. (The Handelskammer sent special delegates to the House of Representatives until 1907, and to the Parliament until 1918.) Mauthner agreed to the expansion of the secretary’s office, and several young economists were added to the staff. The most distinguished among them was my friend Viktor Graetz, a man of unusual gifts and sturdy character who, precisely because of his clear vision, suffered from the same pessimism that was destined to befall all men of insight during this time. The success of this new course in the Handelskammer was tremendous. In a short time the secretary’s office became an important factor in determining economic policy. Its importance grew even further when it, under the designation Handelspolitische Zentralstelle,⁴ created an organization in which all Austrian Handelskammers played a part. Surely enough, many a provincial Handelskammer was irrelevant because its secretary exercised no influence. But secretaries from Prague, Brno, Reichenberg, Krakow, and Trieste were men whose participation was exceedingly valuable.

In 1909, the continuation of the Vienna Handelskammer’s management came into question. Maresch had been retired for a number of years, and 1909 brought Riedl’s appointment as head of the trade division of the Department of Commerce. Several young officers had left the Handelskammer to work in industry, and my friend, Graetz, left in order to assume the management of a larger enterprise. He recommended me as his successor.

The Handelskammer offered me the only arena in which I could work in Austria. A university professorship was closed to me; sought after were interventionists and socialists. Anyone not belonging to one of the three parties (the Christian Socialist, the German National, and the Social Democratic Parties) could not hope for an appointment. Nor did I aspire to a position in government service. After the war my expertise in money and banking was so widely recognized that many of the banks offered me a position on their boards. But until 1921 I always declined, as I was not given the assurance that my advice would be followed. Later I considered banks insolvent and irretrievably lost; events proved me right.

I created my position myself. Officially, I was no more than an employee in the office of the secretary. Nominally, I was always under a superior and had colleagues. I never had the desire to manage the agency or to dedicate my productive powers to bureaucratic routines. My position was incomparable to, and of greater importance than, that of any other Handelskammer official or any other Austrian not heading up of one of the large political parties. I was the economist of the land.

This is not to say that my recommendations were carried out, or that what I discouraged remained undone. Supported by few friends, I waged a hopeless battle. A postponement of the catastrophe was all I accomplished. That events did not result in Bolshevism in the winter of 1918/1919 and that the collapse of banks and industry occurred in 1931 instead of 1921 were largely due to the success of my efforts. More could not be achieved, at least not by me.

To be sure, not everything that happened in the Handelskammer met with my approval. I did not concern myself with the purely administrative goings on. I concentrated all of my energies on crucial economic and political questions.

I was sometimes accused of representing my viewpoint in a manner too abrupt and intransigent. It was also claimed that I could have accomplished more had I displayed a greater willingness to compromise. Gustav Weiss von Wellenstein, an old friend and the secretary general of the Central Association for Austrian Industry often lectured me on the same. The criticism was unwarranted; I could only be effective if I could present things as they appeared to me. When I look back at my work with the Handelskammer today, my only regret is my willingness to compromise, and not my intransigence. I was always prepared to give in on the minor issues if it meant that those more important could be salvaged. Occasionally I made intellectual sacrifices by signing reports that included statements that did not reflect my view. This was the only possible way to ensure a report’s gaining public approval or acceptance by the general assembly of the Handelskammer.

Were one to search the Handelskammer’s published progress and business reports, or even its archives, one would find confirmation of this claim. I have never viewed the reports and petitions that name me as reporting officer as my work, but as an expression of the opinion of that institution which I served as a consultant. I have always drawn a sharp line between my scientific and my political activity. In science, compromise is a betrayal of truth. But compromise is essential in politics, where results can oftentimes only be achieved through the reconciliation of conflicting views. Science is an accomplishment of the individual, and not, by definition, a collaborative effort. Politics is always a collaboration of men and often means compromise.

I was the economic conscience of postwar Austria. I was helped by few, and distrusted by all political parties. And yet all secretaries and party leaders sought my advice and wanted to hear my opinion. I never attempted to force my views upon them, nor did I ever seek out a statesman or politician. On no occasion did I appear in the lobby of Parliament or a government department without having first received a formal invitation. Secretaries and party leaders visited my office more often than I visited theirs.

I enjoyed working with my colleagues in the Handelskammer. Many of them were men of great knowledge and ability who strongly supported my efforts.

My job with the Handelskammer greatly expanded my horizons. That I now have the material for a social and economic history of the downfall of the Austrian civilization readily at hand is to a large degree the result of the studying that was required for me to be able to carry on with my work in the Handelskammer. Travels that led me to all parts of old Austria-Hungary from 1912–1914 taught me much in particular. In visiting the centers of industry, my intent was to become acquainted with the industrial situation in view of the renewal of customs and trade relations with Hungary, and the adoption of new, autonomous tariffs and trade treaties.

The main thrust of my job with the Handelskammer was not dealing with commercial questions, but those pertaining to finance, currency, credit, and tax policy. In addition, I was given special assignments on an ongoing basis. From the time of the armistice until the signing of the Peace Agreement of Saint Germain I was the consultant on financial questions to the Foreign Office. Later, when the terms of the peace treaty were put into effect, I was in charge of the office concerned with prewar debt. In this capacity I had numerous dealings with the representatives of our former enemies. I was the Austrian delegate to the international Handelskammer and a member of many international commissions and committees, whose insoluble task it was to facilitate the peaceful exchange of goods and services in a world pervaded by national hatred and the precursors of genocide.

In 1926 I founded the Austrian Institute for Business Cycle Research. Along with Dollfuss⁵ and Edmund Palla, the secretary of the Chamber of Labor, I belonged to the three-member publication committee of the Economic Commission, which, with the cooperation of Professor Richard Schüller, published a report on Austria’s economic difficulties.

It is not necessary for the purpose of this manuscript to say more about the multifaceted jobs that consumed my time while with the Handelskammer. It was hard work, and the many trivialities were often quite burdensome. But this is uninteresting, and I prefer to address the political aims that gave my work direction.

My political activity from 1918 to 1934 can be broken down into four stages.

The most important task I undertook during the first period, which lasted from the time of the monarchy’s collapse in the fall of 1918 until the fall of 1919, was the forestalling of a Bolshevist takeover. The fact that events did not lead to such a regime in Vienna was my success and mine alone. Few supported me in my efforts, and any help was relatively ineffective. I have already mentioned the success of my influence with Otto Bauer in this regard. I alone convinced Bauer to abandon the idea of seeking union with Moscow. Bauer’s authority was not acknowledged by the radical young, who wanted to forge ahead on their own and against the will of party leadership. But they were so inexperienced, incapable, and torn by internal rivalries that they were unable to found a halfway viable communist party organization. Forward motion lay in the hands of the leaders of the old Social Democratic Party, in whose circle Bauer had the final word.

When this danger had been overcome, I directed all of my efforts toward putting an end to inflation. In this battle I had found an outstanding comrade in Wilhelm Rosenberg, a student of Carl Menger who had remained true to his friendship with his old teacher. He was a sharp thinker, an excellent economist, and such a brilliant lawyer that his advice was sought on all difficult questions of a business or financial nature. He enjoyed the high esteem afforded an “expert” on financial matters, and was prepared to use this privilege as he took on the fight against inflation.

We fought for three years before we achieved our goal: the restoration of a balanced budget and the cessation of a further increase in banknotes. It was to our credit alone that the Austrian crown was stabilized at a ratio of 14,400 paper crowns to one gold crown, and not at a higher rate. But this was not the result we had sought.

Had it not been for our passionate agitation against the continuation of the deficit and inflation policy, it is highly likely that the crown would have fallen to one millionth or one billionth of its 1892 gold parity in early 1922. It is unlikely that any administration would have then been able to maintain public order. Foreign troops would have had to occupy the country, and foreign powers would have created a new state. This catastrophe was avoided. An Austrian administration had eliminated the deficit and stabilized the crown. Austria’s currency did not collapse, as did Germany’s in 1923. The crack up boom did not occur. Nevertheless, the country had to bear the destructive consequences of continuing inflation for many years. Its banking, credit, and insurance systems had suffered wounds that could no longer heal, and no halt could be put to the consumption of capital. We met with too much resistance. Our victory had come too late. It had postponed the collapse by many years, but it could no longer save Austria.

Rosenberg and I suffered no illusions on this matter. We knew the truth surrounding the restoration. My friend succumbed to the pessimism borne of hopelessness, the lot of all enlightened Austrians. It was not only the grief of having lost his only son, but the knowledge of the futility of his toils in Vienna that drove him to his death.

Our success in the struggle for a balanced budget was delayed because it took us so long to convince the Christian Socialist Party of the necessity of eliminating state subsidies intended to reduce the retail price on rationed foodstuffs. This reduction played only a minor role in the consumer budget, but it precluded the restoration of a balance in the government’s budget. Thanks to the support of Weiss-Wellenstein⁶, we were successful in persuading large industry to grant concessions to labor unions were the subsidies to cease. The fact that the labor unions agreed to our plan behind their backs was a heavy blow to Social Democrat Party leaders. Otto Bauer took desperate measures to disrupt the negotiations. On December 1, 1921, the Ordner,⁷ Social Democratic Party troops, stormed the inner city and plundered and demolished all retail stores. The police, opting to retain political neutrality, did nothing to interfere. In the days that followed, however, the public voiced its opposition to such tactics, the Social Democrats retreated, and negotiations with labor unions were resumed.

One must not underestimate the credit that is due Christian Social Party leader, Professor Seipel.⁸ He was a stranger to economics in a sense that only a cleric could be. He saw inflation as an evil, but was otherwise inexperienced when it came to financial policy. Rosenberg and I felt obliged to bring to his attention the fact that a stabilization of the currency would in time allow the consequences of inflation to become outcropped in the form of a “stabilization crisis.” We explained to him that public opinion would place responsibility for the depression that would follow the inflation boom on the combatants of inflation, and not on those who caused it. The Christian Social Party would harvest ingratitude rather than thanks.

Seipel appreciated our candor. He felt that useful and necessary measures must be taken, even if they meant damage to the party. The statesman distinguishes himself from the demagogue in that he prefers that which is right over that which brings him acclaim. There were not many politicians in Austria who shared this kind of thinking. Although his worldview and life notions remained foreign to me, I felt the highest respect for the genteel and honest character of this noble priest. He was a noteworthy personality.

His lack of worldliness, unfortunately, had damaging effects on his politics. The corruption of his colleagues, Christian Social and German National Party members, was not plain to him. He failed to notice that his party friends thought only of personal gain.

These party friends, in particular Deputy Viktor Keinboeck, an attorney who later became minister of finance and then president of the National Bank, had introduced him to Gottfried Kunwald, the son of an eminent Viennese attorney. Kunwald had been disabled since birth. He labored to take but few steps, hobbling from one room to the next. He required constant care and attention, and was always accompanied by two strong men who lifted him out of the car or helped him up and down the stairs. Bravely overcoming all of these constraints, Kunwald had finished his studies and earned his doctorate in law. The bar was inaccessible to him, as his physical condition did not allow for him to complete the requisite, yearlong internship. But he found an occupation in the law office founded by his father and carried forth by his brother-in-law. Being an outstanding and knowledgeable jurist, he had a large clientele.

Kunwald was well read but could not think in economic terms. He saw economic problems with the eyes of a jurist who prepared contracts. But he was opposed to inflation, having seen the disruption it caused in the economy, and was thus prepared to support Rosenberg and me as we initiated the fight against it.

Kunwald enjoyed the boundless confidence of a number of Christian Social politicians and a few bankers whom he advised on difficult legal matters. The dealings of these friends of Kunwald were not always without objection. These politicians capitalized ruthlessly on their positions in public life, receiving compensation for commissions of all kinds, supporting bids for public contracts, and exerting influence over many agencies. They had profited greatly during times of inflation, and feared that stabilization would jeopardize their interests. Kunwald explained to them that the inflation would soon meet its end in any case, and hinted that he would find remunerative opportunities for them in its wake.

When Rosenberg and I succeeded in winning Seipel and his party over to monetary stabilization, they chose Kunwald as their liaison officer and charged him with implementation of the necessary measures. He proved himself at first equal and true to the task, and our work together went well, overall. He had gathered around himself a circle of bankers, government officials, and Christian Social politicians with whom he conducted a kind of financial political seminar. But as years passed and his activity continued, his influence became menacing. The outstanding purpose of his instruction became the confutation or weakening of my critique of the prevailing interventionist policy. In his view, it was not as bad as I had presented it; Austria was making economic progress, and there should be no talk of interventionist policy leading only to capital consumption.

I know for certain that Kunwald was not acting in good faith in his optimistic presentation. He had in fact rightly judged the situation of the banks and large enterprises and had occasionally made comments that were no less pessimistic than mine. But he believed that his influence with the secretaries, through whom he secured license and other favors for his clients, would suffer were he to present the plain truth about the state of affairs. He relied on this influence for his income as an attorney and financial agent.

It was extraordinarily difficult to counteract Kunwald’s unfavorable influence. One could not freely discuss such matters in public if the credit reputation of the Austrian economy were to be protected. It would have been easy to present the facts in such a way that everyone appreciated the necessity of abandoning the policy of capital consumption. But in so doing, the bank’s foreign credits would have been undermined, and bankruptcy would have been unavoidable. I was forced, therefore, to use extraordinary restraint in my efforts to bring about a change in economic policies lest I alarm the public and unsettle the credit of banks and industry. This restraint guided my conduct throughout the third period, beginning with the stabilization of the crown in 1922 and lasting until the collapse of the Kreditanstalt in the spring of 1931.⁹ The worse the situation became, due to the continuation of calamitous policies, the greater the danger of a credit crisis and the more important it became not to disturb foreign markets. After the collapse of the Bodenkreditanstalt in 1929,¹⁰ I myself insisted that a graphic presentation of Austrian industrial progress after 1922 be made at a London exhibition. It was clear to me as well as to Hayek, who as head of the Institute for Business Cycle Research had prepared the tables, that this progress was questionable. Having used only statistically unobjectionable data, however, I saw no harm in making known abroad what appeared as progress within the prevailing mercantilist point of view.

Taking into consideration the precarious credit situation, I never offered a whitewashed rendition of the conditions, nor did I tolerate suppression, much less falsification of statistical data. I had the institute prepare an investigation into capital consumption for the previously mentioned commission. The bank had objections when the publication committee made plans to reveal the results of this investigation in its report. At the time I already knew of the approaching banking crisis, and wanted to avoid everything that might hasten its outbreak. The concerns of the bank were unfounded, and I agreed that the publication of the inquiry should be carried out, not under the name of the economic commission or of the institute, but under that of the head of the institute, Oskar Morgenstern.

My work during this third period of my political activity in postwar Austria was even more tedious than that of the two earlier periods. The tedium stemmed from daily battles against ignorance, inability, indolence, malice, and corruption. I did not stand alone in the fight. Dear, good friends assisted me, in particular Siegfried Strakosch von Feldringen, Gustav Weiss von Wellenstein, and Victor Graetz. The support I received from my assistant in the Handelskammer, Therese Wolf-Thieberger, was of special value. Her extraordinary intelligence, her indefatigability in work, and her personal bravery helped me through the dark hours.

The use of the catchword Lebensunfähigkeit¹¹ with regard to Austria had had a damaging effect through the years. Everyone in Austria and abroad was convinced that Austria was not “viable.” It was believed that a “small” country could not retain its independence, especially when it needed to import essential raw materials. For this reason it was thought that Austria should seek merger with some larger economic entity, that is, with the German Reich.

Outside of Austria, even those circles that had inserted the annexation prohibition into the Peace Treaty of Saint Germain held to this view. They recommended special economic privileges in order to make possible a continuation of Austria’s political independence. In this spirit, the Völkerbundanliehe, or League of Nations loan, was granted to assist in Seipel’s crown stabilization in 1922. Austria did not need a foreign loan at this time; what it did need was a foreign finance commissioner whom the government could, if necessary, hold responsible for the odium: the vetoing of an increase in outlays. The League of Nations appointed a finance commissioner by the name of Alfred Zimmerman, an ignorant, tactless, and arrogant Dutchman. Hans Patzauer, an official in the Ministry of Finance, conducted business in Zimmerman’s name. Patzauer was a highly gifted man, knowledgeable, firm in character, and equal to the tasks presented him. He died shortly before the end of Zimmerman’s term and before having reached the age of fifty. Precisely how necessary this financial guardianship was to the Austrian state would become evident when, just a few hours after its termination, the government guaranteed the obligations of the insolvent Zentralbank deutscher Sparkassen¹²

Besides the granting of this League of Nations loan and another in 1932, the western powers did nothing to assist Austria. After the Nazis raised obstacles preventing the export of Austrian lumber to Germany, the French government was petitioned, in vain, to grant tariff reductions on lumber exports to France.

German Nationalists, who had called themselves the party for a “Greater Germany” since the collapse of the monarchy, saw in the myth of Austria’s Lebensunfähigkeit a sweeping argument for annexation. For the Christian Socialists, who feigned support of the annexation while actually doing everything they could to prevent it, this myth served as a convenient means to sabotage all attempts to steer economic policy in a reasonable direction. After all, they said, ours is not a viable existence, and it is therefore pointless to seek life-giving economic policies. It would have appeared downright unpatriotic to suggest reforms that could improve the economic situation. The theory of the Lebensunfähigkeit of Austria was considered the most important of foreign policy’s assets; with its help, one would be able to demand favors of all kinds from the western powers. Anyone contradicting this thinking, as did Friedrich Otto Hertz, was seen as a traitor.

It is not necessary to expound on just how untenable the theory of Lebensunfähigkeit of small countries is. But I do want to point out just how contradictory the appeal to the alleged doctrine was in the mouths of the protectionists who had come into power. Industry in postwar Austria suffered less from the dissolution of the old monarchy’s tariff zone than did its counterpart in the Sudetenland. Since 1918, when they were freed from the pressures of Sudetenland competition, several Austrian industries had been able to expand their production. Other industries, for example the sugar industry, had only recently come into existence in Austria. In the old tariff zone, Austria’s agriculture industry was in a difficult position when compared to that of Hungary. But now, thanks to a prohibitive trade policy, Austria could greatly expand its production.

The fact that coal had to be imported was no disadvantage, considering the unfavorable conditions in the coal market. It must be noted in general that during the Great Depression that began in 1929, prices of raw materials fell further and more rapidly than those of industrial products; industrial countries were not hit as hard as agricultural and raw-materials countries. Austria was not justified in joining in on the complaining about the fall in prices for raw materials.

Financially, too, the new Austria suffered less from the dissolution of the old state than did other parts of the empire. In the old empire the government had used some of the Austrian tax revenues to cover the administrative costs of its other members. The old Austria had not lived on the revenues of other members, for example, those of Galicia or Dalmatia, but had, on the contrary, subsidized them.

It has been said that Austria had to take on a disproportionate share of the administrative apparatus of the old empire. This, too, is incorrect. The new Austria inherited a small number of civil servants, mostly employees of the state-run railroad, who had been working in other divisions of the empire. The precise number could never be determined, as officials frustrated every attempt to do so. But there is no doubt that the number of civil servants in question was far less than one thousand. At the same time, and especially in the case of the railroads, there were many thousands, in fact tens of thousands, of individuals newly appointed. The surplus of civil servants in the new Austria had nothing to do with the legacy of the old empire.

The paralyzing effect of the catchword Lebensunfähigkeit cannot be assessed highly enough. Wherever a reform proposal appeared, it was rejected immediately on the basis of this catchword. The notorious term, Schlamperei¹³ and the unfortunate, “da laßt sich nix machen,”¹⁴ found in it a generally accepted justification.

The situation caused me to waver at times in my position on the annexation program. I was not blind to the dangers that would threaten Austrian culture if allied to the German Reich. But there were moments in which I asked myself whether the annexation was not a lesser evil than the continuation of a policy leading, unfailingly, toward catastrophe.

Since the currency reform in 1922, a coalition of the Christian Social Party and the Party for a Greater Germany had been the nominal rulers of Austria. The Social Democrats stood in opposition, holding “bourgeois” parties responsible for all deficiencies in the existing system. Surely enough, the situation was quite different in reality. The bulk of all executive power lay in the hands of individual state governments, elected by state legislatures. The power of the central state, that is, the federal parliament and the federal government, was limited. In the most important, richest and most populous state, the city of Vienna, the Social Democratic Party exercised absolute sovereignty, using its position of power to wage a ruthless war of destruction against the capitalist order. The second most important state, Lower Austria, was ruled by a coalition of Social Democrats and the Christian Social Party and there the Greater Germans comprised the opposition. In the state of Styria, the third in importance, the Social Democrats governed in likewise fashion. It was only in the smaller states, those less populous and financially successful, that the Social Democrats made up the opposition.

The effective predominance of the Social Democratic Party had nothing to do with parliamentary representation and its participation in government. It had to do with its terror apparatus. The party ruled all labor unions, in particular those of the railroad, the postal service, the telegraph and the telephone employees. The party could paralyze all economic life at any time through the imposition of a strike; it threatened strike in essential industries as soon as it disapproved of something in the government’s position, thereby forcing the government to yield. What carried even more weight, however, was that the Social Democratic Party had at its disposal an army equipped with rifles and machine guns, light artillery, ample munitions, and manpower at least three times greater than that available to the government with its troops of federal forces and state and local police. Federal forces possessed neither tanks, nor heavy artillery, nor airplanes, all of which had been prohibited by the peace treaty. Disarmament provisions were strictly supervised by the military attachés of the western powers, who were more lenient with the Social Democrats. During the months following the armistice and the ratification of the peace treaty, Social Democrats had been permitted to secure from the stores of the old army as many weapons and as much ammunition as they wanted to and were able to take. They were later allowed the acquisition of weapons and ammunition from Czechoslovakia. The Social Democratic Army, officially called “The Organizers,” conducted demonstrations and field exercises that the government was unable to oppose. Unchallenged, the Social Democrats assumed the “right to the street.”

This right had already been extorted by the Social Democrats in the old empire. In the stir that in 1907 led to the adoption of universal, equal, and direct voting rights for the Austrian Parliament, the Social Democratic Party had tried to force the government and Parliament into compliance through terror and intimidation. The Austrian constitution had expressly prohibited open-air meetings at the time and in the vicinity of Parliament’s sessions in order to assure that decisions could be made without regard to public opinion in the capital. In 1907, Vienna was already more heavily represented in Parliament than its number of inhabitants would have demanded. Nevertheless, the Social Democrats paid the prohibition no heed, and the imperial government shrank away. Work came to a complete standstill in Vienna on November 28, 1905, when 250,000 workers, in military rows of eight and under the leadership of party officials, marched down the Ringstrasse¹⁵ and past Parliament. On that particular evening I happened upon Otto Bauer in a coffeehouse. He was much inebriated by the success of the demonstration. He was pleased to announce that the Social Democrats had now won the “right to the street,” and would know how to preserve it for all future time. I was of another opinion. I asked him: “What will happen if another party at some point takes the street through organized force? Will this not lead to civil war?” Bauer’s answer was quite characteristic:

Such a question could only be asked by a bourgeois who does not realize that the future belongs to us alone. Where should such a party come from: a party that would dare to confront the organized proletariat? Once we have come to power, there will be no more resistance.

Marxism made the Social Democrats blind and stupid. During the early years of the Austrian Republic, I once heard the Social Democratic Mayor Seitz remark, “The rule of Social Democracy in Vienna is now secured forever. A child in kindergarten is already instilled with a proletarian consciousness. The schools teach Social Democracy, and labor unions complete this education. A Viennese is born into Social Democracy, lives in it, and dies as he has lived.”

I incurred the disapproval of all present when I reduced my reply to a Viennese saying: “Es sollen auch schon vierstöckige Hausherren gestorben sein.”¹⁶

As early as the winter of 1918/1919, the terror caused by the Social Democrats forced other Austrians to try to expand their defenses. After various failures, the “Home Guard” achieved some organizational success. But, in 1934, its methods and its number of members remained modest, and rivalries between its leaders crippled its power to act.

I watched this clearly unavoidable development with horror. It was plain that Austria was moving toward civil war. I could do nothing to prevent it. Even my best friends were of the opinion that the threat posed by the Social Democratic Party could only be opposed by violence.

The emergence of the Home Guard introduced a new type into politics: adventurers without education and desperados with limited perspectives ascended the ranks because they were good at drill and had command of loud voices. The manual of arms was their Bible, “authority” their slogan. They identified democracy with Social Democracy and therefore saw in it “the worst of all evils.” Later, they clung to the catchword “Ständestaat,” or “corporate state.” Their social ideal was a military state in which they alone could give orders.

With the collapse of the Bodenkreditanstalt in May of 1931, the third phase of my activity with the Handelskammer came to a close. A limited scope of activity was all that remained available to me. I summoned all of my strength to fight the inflationary policy that had again been taken up by the government. That the inflation went no further than to the 175 Austrian shillings (up from 139 shillings) for 100 Swiss francs and that new stabilization at this rate of exchange resulted soon thereafter was my achievement alone.

But the fight for Austria remained lost. Even if I had achieved complete success, Austria could not have been saved. The enemy who was to destroy it came from the outside. Austria could not forever withstand the onrush of the National Socialists who were soon to overwhelm all of Europe.

Austria’s problems were no longer domestic. Her fate lay in the hands of Western Europe. Anyone wanting to help Austria had to do so abroad. When I was offered the chair for “International Economic Relations” with Geneva’s Institut Universitaire de Hautes Etudes Internationales in the spring of 1934, I accepted gladly. I retained my position with the Handelskammer, and returned to Vienna on occasion to continue in my old activity. But I was determined not to move back to Vienna until after the destruction of the National Socialist reich. I will return to my political activity as it developed between 1934 and 1938 in coming chapters.

I fought a battle in the Handelskammer for sixteen years in which I achieved nothing more than the postponement of catastrophe. I made weighty personal sacrifices, even though I always foresaw that I would be denied success. But I do not regret having attempted the impossible. I could not act otherwise. I fought because there was nothing else I could do.