The Austrian National Committee

Ludwig and Margit returned to New York in March. A letter from Machlup had arrived, informing them of another unsuccessful attempt to secure a suitable job for Mises, this time at Rochester. The chairman of the department had told Machlup that he “should be ashamed to approach so distinguished an economist as Professor Mises with the small salaries at our disposal.”⁶¹

Fortunately, the Rockefeller grant to NBER had been extended, though apparently not without resistance. Mises applied for the extension in December 1941, based on a six-page report on his research activities in the previous year. The extension was not confirmed until mid-February, but it is possible that the delay was the result of his trip to Mexico. For the next few months, Mises took an active role in the meetings of the newly constituted Austrian National Committee. As he said on many occasions in private discussions and correspondence, he was extremely pessimistic with regard to Europe's future:

You can't have a reasonable state of affairs with unreasonable people. I do not believe that a member of the Hitler youth or of the equivalent groups in Italy, Hungary or so on can ever turn toward honest work and non-predatory jobs. Beasts cannot be domesticated within one or two generations.⁶²

But true to his motto, this was no reason for him to step back in resignation. On the contrary, he threw himself into work preparing postwar policies and he encouraged his correspondents to do the same.⁶³

The Austrian National Committee was a creation of Otto von Habsburg, who had the ear of the American administration and turned out to be the common denominator for the feuding groups of Austrian patriots. Otto delivered an excellent diplomatic performance during the war years that eventually prompted the allies to reestablish an independent Austrian state after the war (a decision to this effect was made at a conference of the foreign ministers of the United States, Britain, and Russia in October and November 1943 in Moscow). Otto's success also boosted the monarchical principle.⁶⁴ He must have at least toyed with the idea of reestablishing his dynasty after the war, and many devoted followers (as well as the usual careerists, who sensed an opportunity for political windfall profits) encouraged him to pursue this strategy. These circles of Austrian expatriates generally referred to Otto von Habsburg as “His Majesty, Kaiser Otto” and called him “Imperial Highness.” Mises himself would continue to use this title in correspondence with Habsburg long after the prospect of a restoration of the Austrian monarchy had faded.⁶⁵

In the heated days of World War II, many Austrian expatriates were betting on a political return of the Habsburg dynasty after the war. Mises's former colleague at the University of Vienna, Heinrich Graf von Degenfeld, was one of the staunch supporters of a monarchical restoration on legitimist grounds. In mid-April 1942, Habsburg asked Mises and a few other men for their detailed opinion on some forty to fifty questions concerning strategic and tactical problems that Habsburg confronted in his double capacity as the leader of the Austrian National Committee and of the House of Habsburg. Mises put this job on the front burner and answered the questionnaire within a week. Only one part of Mises's confidential report survived: the one in which he comments on the conditions under which a restoration could be achieved. Mises wrote that there was no contradiction between national self-determination and a monarchical regime, provided that the monarchy was established by a free referendum.

This point of view reflected the Polish heritage of its author.⁶⁶ Poland had in fact had an elective kingdom from 1573 to 1795; the aristocratic parliament (the Sejm) elected the king by unanimous vote. But Mises did not base his argument on historical precedent. Rather, he argued that only an elected monarch enjoyed a secure basis for his reign. Enthronement on the basis of legitimist claims against the will of the people could not last. It was likely to be resisted and eventually overthrown. As an alternative approach, Mises sent along the memorandum containing his proposal for the establishment of an Eastern Democratic Union.⁶⁷

The Austrian National Committee united all Austrian rightwingers and provided them with political representation in Washington, D.C. (in the person of Egon Ranshofen-Wertheimer). One success of this group was the proclamation of “Austrian Day” on July 25, 1942, by twelve state governors. And U.S. Secretary of State Cordell Hull declared that the United States government had never recognized Hitler's annexation of Austria. This dissociation of German villains and Austrian victims would remain the one common position of the various Austrian right-wing expatriate groups throughout the war, and here they achieved a clear success. (The expatriate social democrats never wavered from the agenda of a greater Germany.)

Mises took part in a plenary meeting of the Austrian National Committee on April 22, 1942, and a month later he was elected to a subcommittee on postwar reconstruction. In June 1942, he also took part in a subcommittee on foreign policy, where it appears that he had a major impact. The first sessions discussed and drafted a “Declaration of the United Free Austrians” based on the December 1941 manifesto of the Austrian Committee. In contrast with that document, however, the Declaration asserted that Austria had been coercively taken over by the Nazis and that it was therefore under de facto occupation by a foreign army. The Declaration also deemphasized integration into international political federations and emphasized the concept of sovereignty. Most important, the Declaration avoided the question of which form of government Austria should adopt after the war. According to the earlier manifesto, the form of government should be determined through the deliberation of a national assembly. But the Declaration was mute on this point, because a monarchist faction under the leadership of Mises's former colleague Count Degenfeld wished to maintain the option of a legitimist foundation for a future Austrian constitutional monarchy⁶⁸

For the time being, the compromise was good enough for Mises and other republicans. The important thing was that some agreement be reached as a basis for the rest of the agenda. Mises outlined this agenda in an “Aktions-Kalender”—a project schedule he seems to have circulated within the Committee. According to this schedule, the next step would be to enter in negotiations with two left-wing groups of Austrian expatriates to support a common declaration. Then the result should be published and further negotiations started, this time with the Czechs and the Poles, and then with other nations that Mises recommended for an East-European Union. Finally, there would have to be negotiations with bankers and businessmen to address the issue of financing the first few months and years of the new state.

But it did not come to pass, and apparently Mises gave up active participation in the committees and did not even attend the dinner in honor of Otto von Habsburg's thirtieth birthday on November 20, 1942. Work in the Committee must have convinced him that he had no future in Europe. The old continent was ravaged by war because it had been in the firm grip of statist illusions. The expatriates who were making plans for postwar Austria were entirely under the same spell. It is true that they despised National Socialism, but they did not despise socialism per se. Each of them had his own little scheme, and invariably all of these involved the state running the country. Many years later he wrote in correspondence: “As the Bourbons of the Restoration, many Austrians have learned nothing and forgotten nothing.”⁶⁹ These must have been his feelings in 1942 as well.