A Swiss Oasis Of Liberal Sanity In A Totalitarian Europe

By Richard M. Ebeling

On September 16, 1939, barely more than two weeks after the beginning of the Second World War in Europe with the German invasion of Poland on September 1, the “Austrian”-oriented British economist Lionel Robbins finished the preface to his short book, The Economic Causes of War. The five chapters making up the 125-page volume had originally been delivered as a series of lectures at the Graduate Institute of International Studies in Geneva, Switzerland, in the spring of 1939.

With a new world war now threatening to once again place political and military barriers in the way of relatively easy travel for the exchange of goods and ideas across the European continent, Robbins wistfully paid homage to that institution and what he considered its significance in the interwar period:

How much of all that was most stimulating and inspiring in the period between the two wars is typified in their lovely college by the lake. Long may it flourish, an oasis of sanity in a mad world, to preserve and advance the great principles of international citizenship for which it conspicuously stands. (Robbins, 1939, p. 9)

In the face of the rising tide of Italian fascism and German national socialism (Nazism) in the Europe of the 1920s and 1930s, (classical) liberal refugee scholars escaping from Benito Mussolini’s and Adolph Hitler’s totalitarian tyrannies searched for any safe place where their lives would not be in danger and they could continue their intellectual pursuits of the ideals of political, economic, and social liberty. The Graduate Institute of International Studies in Geneva, Switzerland, became such a refuge for a number of such individuals, an oasis of liberal sanity in an increasingly totalitarian Europe.

The Graduate Institute’s purpose and mission

Yet, insufficient attention has been paid, in my opinion, to the significance of the Graduate Institute in the history of liberal ideas in the first half of the twentieth century. The classical liberal economist and political scientist William E. Rappard (1883–1958) and the economic historian Paul Mantoux (1877–1956) founded the institute in 1927. Its mission was to offer a center for scholarly research into the interrelated problems of international politics, economics, and law and offer an advanced education to a cosmopolitan selection of students interested in the public affairs of the world in which they would be living.

During the decade of the 1930s, the Graduate Institute, especially under Rappard’s daily administrative direction, brought together a fairly unique faculty. It was international in makeup, including both Europeans and Americans. Some of the most prominent members, particularly as the decade progressed, were refugee intellectuals from countries in Central and Eastern Europe escaping from or threatened by Italian fascism and German Nazism.

What the Graduate Institute ended up creating during the period was that “oasis of sanity,” as Robbins called it, in a Europe that seemed to be falling more and more under the grip of totalitarianism. In the 1930s, European liberals were shocked, horrified, and fearful of the rise of totalitarian collectivism. Understanding this is, in my view, essential for appreciating the significance of the institute and those affiliated with it at that time.

The liberal world before the First World War

It needs to be recalled how very much the First World War had been a hurricane-like storm that seemed to shatter the liberal institutional structures and order of the nineteenth century. Nineteenth-century liberalism had ended human slavery in most of the world; it had widened democratic government through expanding voter franchises; it had become more inclusive in extending civil liberties to religious and other minorities; it had abolished many if not most of the earlier mercantilist restrictions on domestic and foreign freedom of trade and occupation; it had attempted to limit the human costs of international conflicts through agreements concerning the “rules of war,” the treatment of prisoners of war, and respect for the life and property of noncombatants in occupied territories during times of war; and it had cultivated the idea of arbitration of international disputes in place of the taking up of arms.

The world was becoming an increasingly global community of commerce, culture, and cooperative market competition. Standards of living, especially in parts of Europe and North America, had increased significantly for a growing number of people, and the same process was also, slowly but surely, happening in other parts of the world. The quality of life in terms of longevity, health, and material comfort was improving, seemingly on a day-by-day basis.

Equality of rights before the law, even when not fully incorporating all in society, was considered the ideal and the norm that was expected to serve as the benchmark to judge all future grievances and improvements. Of course, the realities of these ideals were far from being completely practiced even in the most enlightened and advanced nations of the “civilized world.” Discrimination, prejudice, and bigotry against various peoples and minorities abounded. Subject peoples in the far-flung empires of the Western “great powers” too frequently experienced arrogance and cruelties at the hands of their administrative representatives and European colonists. It was for this reason that the British laissez-faire liberal Herbert Spencer (1820–1903) acidly summarized the course of empire when rationalized as a means of bringing the Christian gospel to the heathen: “The policy is simple and uniform — bibles first, and then bombshells.”

But at the same time, it would be a misplaced exaggeration when pointing out these contradictions, inconsistencies, and hypocrisies to then conclude that the stated values and beliefs were all a sham, a cover for baser and less praiseworthy motives in both domestic and global affairs. Ideas do have consequences, and these liberal ideas of personal freedom, representative government, impartial rule of law, freedom of association, and market-based voluntary exchange required, indeed, compelled those who espoused them to adjust their practices and policies as the years went by.

The postwar, antiliberal counter-revolution

Then came the First World War and the rising European tyrannies in the postwar period that seemed to classical liberals to be a cataclysm of ideological, political, and economic destruction threatening the end to all that liberalism had achieved in the earlier century.

There was the victory of Lenin and the Bolsheviks in Russia following the 1917 revolution and a three-year bloody civil war, which by the end of the 1920s became Stalin’s dictatorship, with its forced collectivization of the land that resulting in millions starving to death in the name of “building socialism”; there was the rise of Italian fascism in 1922 with Mussolini’s “march on Rome,” with Ill Duce’s coining of the term “totalitarianism” that was meant to capture the new collectivist vision of the individual as nothing and the state as everything; and then there was the coming to power of Hitler’s national socialism in Germany in 1933, with its swift removal of Weimar democracy and the imposition of a brutal race-based tyranny enforced by Nazi street thugs and the building of concentration camps.

Said the internationally famous Italian liberal philosopher Benedetto Croce (1866–1952) in 1932:

We remember the old [prewar] Europe with its riches, its flourishing trade, its abundance of goods, its ease of life, its bold sense of security; we see today the new Europe – impoverished, discouraged, crisscrossed with high tariff walls, each nation occupied with its own affairs, too distraught to pay heed to the things of the spirit and tormented by the fear of worse to come…. Impatience with free institutions, has led to open dictatorships, and, where dictatorships do not exist, to the desire for them. Liberty, which before the war was a faith, or at least a routine acceptance, has now departed from the hearts of men even if it survives in certain institutions.

Guglielmo Ferrero, Italian historian of liberty

The Graduate Institute was to serve, in its modest way, as an intellectual defense against these collectivist and totalitarian trends. The first internationally noteworthy scholar to find refuge and residence at the institute in Geneva was the Italian historian Guglielmo Ferrero (1871–1942). Almost forgotten today, in the first half of the twentieth century, Ferrero was one of the most well-known and respected historians in both Europe and America. He had published a widely regarded five-volume history of The Greatness and Decline of Rome (1909), as well as works on The Ruin of Ancient Civilization and the Triumph of Christianity (1921) and a comparison of Ancient Rome and Modern America (1914).

Ferrero was also a strongly antiwar liberal, having penned a work on Militarism (1902) devoted to this theme. In the immediate aftermath of the First World War, he pondered The Problems of Peace, from the Holy Alliance to the League of Nations (1919). Its theme was that Europe’s conflicts and instabilities had their roots in the search for political legitimacy and stability since the demise of belief in monarchy, symbolized by the beheading of Louis the XVI during the French Revolution; in its place had arisen competing political alternatives (despotism, democracy, nationalism, and socialism), with the rivalries between them as bases for political legitimacy helping plant the seeds that culminated in the Great War of 1914–1918.

Strongly anti-fascist, Ferrero had been placed under house arrest by Mussolini’s government and was prohibited from teaching or lecturing in Italy. In 1930, he was given permission to leave for Switzerland to take up a chair in history at the Graduate Institute, which he held until his death in 1942. In that tranquil environment, he wrote a series of books on understanding the antiliberal ideas of the time in their historical context, including Peace and War (1933); The Reconstruction of Europe: Talleyrand and the Congress of Vienna, 1814–1815 (1941); The Principles of Power: Great Political Crises of History (1942); and his posthumously published lectures from his time at the Graduate Institute on, The Two French Revolutions, 1789–1796 (1968).

An underlying theme in these works was the growing threats of total war with unimaginably destructive weapons due to the unbalancing of the delicate relationship between increasing human liberty and traditional institutional order that somehow prevailed in various ways in the nineteenth century as conservatism grudgingly gave way under the pressures of liberalism.

Ferrero captured part of the idea behind the Graduate Institute. He offered the sweep of history for understanding man’s long struggle for social order, economic liberty, and political legitimacy. He linked the intellectual currents of the liberal nineteenth century with the rise of the collectivist state in the twentieth century that included that new ideology of total war and total state control of humanity. Ferrero expressed its impact on ordinary people in a volume offering Words to the Deaf (1926), written while he was still living in fascist Italy:

Little by little, states become monstrous and all-powerful divinities. They force people to work, to fight. They no longer let them sleep; they grind them down and fleece them mercilessly, in the name of liberty, of progress, of country, of king, of emperor, of the republic, of socialism, of the people, of the proletariat. Multiple names of one and the same duty: to obey, to work, to pay.

And the more demanding the States become, the more complete is the surrender of the people. They coalesce in homogeneous masses; races, nations, classes, parties, professions; they learn to work without rest, like soldiers; they allow themselves to be indoctrinated by the teacher, oppressed by the treasury; maltreated by the magistrate; manhandled by the sergeant; they go to the school, the factory, the barracks; and in this age … they wear the uniform of three disciplines: labor, state, and army.

Hans Kelsen and Ludwig von Mises, the “Austrian” contingent

The year 1934 saw two significant additions to the Graduate Institute’s faculty: the Austrian jurist Hans Kelsen (1881–1973) and the internationally renowned Austrian economist Ludwig von Mises (1881–1973). Kelsen had been a primary author of the 1920 constitution of the postwar new Austrian Republic, following the breakup of the old Austro-Hungarian Empire, a generally liberal constitution that remained in effect until 1933, when a fascist-type dictatorship was established in Austria. He left Austria in 1930 for a professorship in Germany but was removed from his position by the Nazis in 1933 with the purging of those with Jewish ancestry from the German university system. He accepted a professorship in international law at the Graduate Institute beginning in the autumn of 1934 and remained there until he moved to the United States in 1940, where he accepted a position at the University of California at Berkeley.

Ludwig von Mises was recognized in the 1920s and 1930s as one of the leading figures of the Austrian School of Economics, having developed the “Austrian” theory of money and the business cycle and having also challenged the viability of a centrally planned economic system by questioning the ability for rational economic calculation in a socialist society that has abolished private property in the means of production and ended a functioning competitive price system.

Mises was also widely known as a critic of both communism and Nazism. Indeed, already in 1925, he had analyzed the emerging anti-Marxist ideology of “national socialism” in Germany. He warned that many Germans were “setting their hopes on the coming of the ‘strong man’ — the tyrant who will think for them and care for them.” He asked, if such a German national socialism came to power and if it wished to militarily strike out in revenge for Germany’s defeat in the First World War, which country might be its logical ally? Mises’s answer was Soviet Russia, the other pariah and outsider of European politics. After all, he said, “German Anti-Marxism and Russian Super-Marxism are not too far apart.” In other words, Mises anticipated the Nazi-Soviet Pact of August 1939, almost 15 years before the Hitler-Stalin alliance that set the stage for the beginning of the Second World War in Europe.

When William Rappard wrote to Mises in March 1934 with an offer of a visiting position at the Graduate Institute as a Professor of International Economic Relations, Mises almost immediately accepted the invitation and moved to Geneva for the autumn 1934 term. This visiting professorship ended up being renewed each year, and Mises remained at the Graduate Institute until the summer of 1940, when he moved to the United States, where he lived until his death in 1973.

Wilhelm Röpke, outspoken enemy of national socialism

Adolph Hitler’s coming to power in Germany in January of 1933 opened a floodgate of refugees looking for a new resting place in the face of Nazi brutality, terror, and anti-Semitism. In the weeks following Hitler’s appointment as German chancellor, the liberal, free-market economist Wilhelm Röpke (1899–1966) publicly warned his fellow Germans of the evil that was being set lose on their country. Nazism represented a new “illiberal barbarism” based on: “servilism,” with the state “the subject of unparalleled idolatry”; “irrationalism,” with its call back to “blood,” “soil,” and a “storm of destructive and unruly emotions”; and “brutalism,” under which “every immoral and brutal act is justified by the sanctity of the political end.” If the German people actively or passively accepted this, then “a nation that yields to brutalism thereby excludes itself from the community of Western civilization.”

Röpke’s public criticisms and scorn for the new Nazi epoch in Germany, which included his protests against the expelling of Jewish professors from German universities, resulted in his own dismissal from the University of Marburg and a visit from two Nazi thugs who warned him of the consequences of being out of step with the “new order.” For the safety of his family, Röpke went into exile with an appointment at the University of Istanbul in Turkey in 1934. He accepted a professorship at the Graduate Institute in Geneva in 1937, a position that he held until his death in 1966. Three times during the war years, he had offers of teaching positions in the United States. Each time, he politely declined, saying that his duty was to remain in neutral Switzerland and to be a voice of market-oriented liberal reason for the reconstruction of a postwar Europe, including a post-Nazi Germany.

Röpke spent the war years at the Graduate Institute writing a trilogy: The Social Crisis of Our Time (1942), Civitas Humana (1944), and International Order (1945), in which he insightfully analyzed the philosophical, social, cultural, and economic ideas and ideologies that had brought about the demise of the older liberal world order. Copies of his books were smuggled into Nazi Germany during the war years, and they greatly influenced and inspired the surviving liberal-oriented German economists, who used his ideas and policy views to help bring about free-market reforms in postwar West Germany after 1945.

Michael Heilperin and the dangers of economic nationalism

One other member of the Graduate Institute’s faculty is worth mentioning, Michael A. Heilperin (1909–1971). Originally from Warsaw, Poland, Heilperin joined the faculty in 1937, around the same time as Wilhelm Röpke. His writings included International Monetary Economics (1939), Economic Policy and Democracy (1943), The Trade of Nations (1952), Studies in Economic Nationalism (1962), and Aspects of the Pathology of Money (1968). A continuing theme in these works was the political and economic danger of collectivist planning, the neomercantilism in Keynesian economics, and the instabilities arising from paper monies in undermining economic prosperity through monetary inflations. For a time during the war, he worked in New York City for Bristol-Myers Company, for which he wrote free-market pamphlets, including one on “How Full is ‘Full Employment?’” (1944) challenging Keynesian “stimulus” policies in the United States.

William Rappard, an international man against totalitarianism

But the guiding figure at the Graduate Institute was its director, William E. Rappard. Born in New York City of Swiss parents while his father was working in the United States, he completed his graduate studies in economics at Harvard University (1906–1908) and then spent the following academic year (1908–1909) at the University of Vienna attending, among other courses, Eugen von Böhm-Bawerk’s graduate seminar. He taught political economy at Harvard University (1911–1913), following which he was appointed a professor of economic history and public finance at the University of Geneva in Switzerland.

Besides bringing together a high-caliber faculty of international scholars at the Graduate Institute, Rappard initiated an annual series of guest lectures on a wide variety of topics concerning political, economic, social, and legal issues surrounding international peace, prosperity, and order. The lectures were published in an annual series under the general title, Problems of Peace, which appeared in print from 1928 through 1939. In addition, in 1938, a volume of essays, The World Crisis, was published marking the tenth anniversary of the Graduate Institute written by members of the Institute’s faculty; the contributions to the volume, especially those by Mises, Röpke, Heilperin, and Ferrero analyzed and refuted the collectivist ideologies and policies engulfing Europe.

Every year, individual guest scholars were invited to the institute, usually in the spring, to deliver a series of weeklong lectures on some chosen theme relating to international political and economic relations, with a good number of them later published as books; among these latter lecturers and authors were F. A. Hayek, Lionel Robbins, Louis Rougier, Quincy Wright, Mortiz J. Bonn, and Wilhelm Röpke (before his appointment at the Graduate Institute).

Rappard himself was a prolific writer. If an underlying concern might be assigned to virtually all of Rappard’s writings, especially in the 1930s, it would be the threats to a peaceful, prosperous, and free world brought about by the rise and spread of totalitarian and nationalist regimes. In Rappard’s eyes, the great achievement of the nineteenth-century liberal movement had been the freeing of the individual from the often harsh and unjustifiable constraints of oppressive governments in the areas of personal, social, political, and economic life. The twentieth century, however, had seen a return to a dominating political order in the form of communist, fascist, and Nazi regimes.

All of these alternatives on the collectivist theme claimed to be imposing rigid and all-encompassing political-economic systems on society in the name of “the people” and their well-being; unfortunately, too many, especially in European societies, were enraptured by the ideas of the rise of paternalistic governments promising to take care of them and provide for all their needs and desires. Or as he expressed his concern: “The individual has increasingly demanded of the state services which the state is willing to render. Thereby, however, he has been led to return to the state an authority over himself which it was the main purpose of the revolutions in the beginning of the nineteenth century to shake and break.” This had created what Rappard called, The Crisis of Democracy (1938), in which the free society was facing the challenge of being totally undermined and overthrown in all of its political, economic, and social facets.

Central to the free and liberal world community, Rappard argued in a number of insightful essays, was the ideal of an international order in which countries respected the individual rights of their own citizens and mutually those of the citizens of other nations through a regime of free and open commerce and exchange. These noticeable achievements of the pre-World War I era were being supplanted by economic nationalism and protectionism in the form of dangerous economic and military armaments. All the best efforts of friends of a peaceful and prosperous world had failed, and finally lead to the disaster of the Second World War.

In the post–World War II period, Rappard continued to warn of the dangers from superpowers attempting to plan and “police” the world, and he articulated the premises and principles behind Swiss neutrality and nonintervention as a guide for international politics in general.

The Geneva Graduate Institute’s lasting legacies

By serving as that European oasis of liberal sanity in the interwar period of the 1920s and 1930s, Rappard and the Graduate Institute not only most likely saved the lives of some scholars who might otherwise have been imprisoned, tortured, or even murdered by the Nazis, especially those like Ludwig von Mises, Hans Kelsen, and Michael Heilperin, who were Jewish. They also provided the safe and peaceful intellectual environment for some of the surviving classical liberals in Europe to preserve and advance the ideas of liberty in a surrounding ocean of totalitarianism.

In the memoirs Mises wrote after coming to the United States in 1940, he looked back at his six years at the Graduate Institute and said: “There was a friendly atmosphere between teachers and students, and the spirit of genuine liberalism flourished in that unique institution. All round us the barbarian flood was rising and we all knew we were fighting with nothing but forlorn hope.” But as Mises also expressed it in the foreword to the first edition of his 1949 treatise Human Action, in the “serene atmosphere of this seat of learning,” he was able to write the original German version of his great work on economics and the social philosophy of the free society.

The Geneva Graduate Institute of International Studies’ lasting legacies from that period between the world wars are the ideas of some of the great European classical liberals of the twentieth century who found a tranquil place of safety to reside or visit in that rising tide of tyranny, terror, and war. Let us hope that such oases always exist somewhere to help preserve the spirit of classical liberalism during times of ideological and philosophical crisis.

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