Six Weeks in Mexico

The trip to Mexico (late January to March 1942) by far surpassed their expectations. They were treated with the highest respect—hotel reservations had been made at the local Ritz—and Mises found an audience prepared for and receptive to his message. He started lecturing on January 14 and finished his program by February 20. Besides his course at the School of Economics, which he taught in English, he also gave two lectures in French at the Independent School of Law.⁵² The course only attracted some 8–14 students—still Mises thought it was “a great success. The audience was of course small, as the students mostly do not understand foreign languages.”⁵³ Montes de Oca attended each session, but Mises had particularly animated discussions with Señor Eduardo Hornedo.

Margit stayed in and around the hotel, and in the evenings Ludwig joined her and often took her out. They also spent many evenings at the home of Montes de Oca. At these meetings Mises again and again expressed his pessimism about the future, and again and again his Mexican host protested that it was not too late to start a fight for liberty and sound economic policies. Montes de Oca was indeed firmly convinced that the best place to start this fight was Mexico. He had made Mises a job offer by correspondence even before his Austrian guest had left New York. The Bankers' Association and the Chamber of the Mining Industry—two of the three most important Mexican business associations—were interested in hiring Mises for “an extended stay” as an economic advisor.⁵⁴ Mises wrote back that the offer was “very flattering and tempting” and that he was “anxious to get more detailed information about the functions which it is expected I would fulfill.”⁵⁵ Six weeks later, Montes de Oca replied with a firm offer. According to his proposition, Mises would become the head of the economics departments of the two business associations, with sufficient personnel to assist him and at a comfortable monthly salary of 1,000 Mexican pesos (a lunch for one person at the Ritz cost three or four pesos). He would also be teaching courses and seminars at any department he wished at the National University of Mexico and at the Colegio de Mexico, and he would be free to take up other (paid) teaching assignments. The offer was for three years and could become effective any time—Mises would not even have to return to the United States after his upcoming visit.⁵⁶

This was a great temptation. Had the offer come a year earlier, Mises would probably have accepted it on the spot. But he had since made new plans. Was his future not in the United States? Montes de Oca tried to bring Mises to an early commitment by correspondence, but his Austrian friend remained steadfast: He would first pay a visit to each of the two business associations before making a decision.

Upon his arrival in Mexico City, Mises conducted very wideranging talks with his Mexican hosts. He even started to write a couple of words in Spanish, and at the request of his hosts began working on a memorandum analyzing Mexico's economic problems. In the course of the next few weeks, he perused the statistical yearbooks of the country and became acquainted with other literature on Mexican conditions. He read the press to the best of his ability and led many discussions with his host and other people. Slowly a more concrete picture of Mexico became clear to him, which he later described in a letter to Hayek:⁵⁷

Mexico is a country without industry and very short of capital. The soil is in the greater part of the country very poor. The result... is that they have to import wheat and mais [Mises meant what Americans call “corn”], but the rulers—generals, trade union leaders and pink intellectuals—intend to start industrialization by ruthless confiscation of capital. Neither this attitude nor its effects differ from conditions in other countries. But really amazing is the fact that there are some people—of course a small elite only—who have a very keen insight into the problems involved and try to educate the intellectuals.

Then Mises went on to compare this Mexican elite very favorably with the “small group of economists” who, according to Hayek, resisted the trend toward government omnipotence in Great Britain.⁵⁸ Speaking of his Mexican hosts, Mises said:

You cannot find such men in other countries. Contrary to your statement in the “Nature” article everybody in this country advocates allround planning. Sir William's ideas (published in the London Times a few days ago) all economists, businessmen and pressure groups sympathize with. They are convinced that current events have demonstrated in an irrefutable way the superiority of the “post office” system. People do not learn anything; they despise theory and they interpret facts from the point of view of their errors and prejudices.⁵⁹

Still the fact remained that Mexico was a very poor country and that the forces of reason were weak. Luis Montes de Oca must have sensed that Mises was not exactly enthusiastic about another Chamber of Commerce career, and brought up the prospect of a research organization under Mises's leadership—a private “Institute of the Social Sciences.” This was much more to the liking of his Austrian guest, and when Mises departed he promised that he would write a paper for Cuadernos Americanos—a journal managed by one of Montes de Oca's associates—as well as a short memorandum on the establishment of an Institute of the Social Sciences, as a basis for further deliberation. He complied with this request after his return, and wrote two memoranda—one concerning the general aspects of the venture, the other concerning more concrete institutional aspects of the proposed Institute—in June 1942.⁶⁰