Grundlinien der Finanzpolitik für jetzt und die nächsten drei Jahre

Joseph A. Schumpeter’s Grundlinien der Finanzpolitik für jetzt und die nächsten drei Jahre is a single-author 1919 financial-policy memorandum. Written for post-Habsburg Deutschösterreich, it proposes an emergency program for the few years before production and ordinary revenues can recover. Its sections move from monetary first principles and deficit diagnosis, through credit policy and the wealth levy, to currency stabilization, a note bank, expenditure cuts, and a permanent tax settlement.

Oberster Grundsatz der Finanzpolitik muß sein, daß keine Banknote oder Staatsnote weiterhin ausgegeben werden darf, die direkt oder indirekt zur Deckung von Staatsbedürfnissen dient.

English translation: The supreme principle of financial policy must be that no further banknote or state note may be issued which directly or indirectly serves to cover state needs.

The central thesis is that fiscal survival begins with ending monetary financing. Schumpeter treats inflation not as a convenient tax but as a solvent of production, trust, and administration. Because the state faces vast transitional needs—he speaks of billions in deficits and roughly twenty billion crowns before recovery—the immediate problem is not final budget balance but how to bridge the emergency without new paper money.

Das Kreditproblem ist heute das Problem der Finanzpolitik.

English translation: The credit problem is today the problem of financial policy.

Credit is therefore the organizing concept. It must serve both Treasury and economy: food and raw-material imports are necessary before exports can revive, yet those imports would crush the exchange rate unless financed by foreign balances. Schumpeter rejects the idea that Austria can first restore internal order and only then borrow abroad; the two conditions form a “Fehlerzirkel” that must be broken. Hence his sharp opposition to default, coupon taxes, or forced reductions of obligations.

Ein Staat aber, der, um sich zu sanieren, erst Kredit braucht, darf keinen Bankerott erklären.

English translation: But a state which, in order to restore itself, first requires credit must not declare bankruptcy.

The memorandum’s most distinctive move is to turn private wealth into a public credit instrument without outright socialization. Foreign lenders, Schumpeter argues, will not yet trust the new state or socialized enterprises, but may still trust established firms, banks, and citizens. The wealth levy is thus linked to guarantees for foreign loans and subscriptions to domestic loans: fortune is preserved only where it functions as collateral for national reconstruction.

Für heute gibt es, um das Vaterland zu retten, nur eine Kreditunterlage: nicht die des Staates, nicht die des sozialisierten Kapitals, sondern nur die des privaten Vermögens.

English translation: Today, to save the fatherland, there is only one basis for credit: not that of the state, not that of socialized capital, but only that of private wealth.

This is neither simple defense of property nor socialist confiscation. Large fortunes face severe progressive burdens, but can pay over thirty years if they help obtain credit; productive capital may be spared immediate disruption when it sustains employment and investment. The levy’s proceeds are to reduce war debt or support interest, not disappear into current expenditure. In this respect Schumpeter makes credibility, not redistribution alone, the test of fiscal morality.

Currency policy follows the same realism. Foreign balances must not be wasted in artificial market support for the crown; they should finance indispensable imports and absorb shocks until production and exports restore payments capacity. Stabilization should occur only at a rate compatible with domestic prices, wages, and export ability.

Die Zusammenhänge der Volkswirtschaft lassen sich durch künstliche Mittel nicht beseitigen.

English translation: The interconnections of the national economy cannot be eliminated by artificial means.

Institutionally, Schumpeter calls for a Deutschösterreich note bank, but one rigorously separated from Treasury borrowing and devoted to rediscounting commercial bills. The state may need a monetary institution for recovery, yet it must not become another channel of deficit finance.

Der erste Grundsatz bei Gründung dieser Notenbank muß sein, daß sie außerhalb jedes Zusammenhanges mit den Staatsfinanzen gestellt wird.

English translation: The first principle in founding this note-issuing bank must be that it be placed outside any connection with state finances.

The later sections broaden the program into permanent budget policy: administrative economies, adequate salaries for state employees, higher income and inheritance taxes, cost-covering railway and postal charges, turnover fees, and heavy indirect taxes on alcohol, tobacco, and luxury consumption. Schumpeter insists that property must bear the emergency through the wealth levy, but all classes must sustain the future state. The work’s relevance lies in this fusion of crisis liberalism, coercive taxation, and reputation-based finance: Austria can receive help only by proving disciplined self-help.

Dem Ausland muß gezeigt werden, daß wir bereit sind, uns selbst zu helfen; nur dann wird und kann es zur Hilfe bereit sein.

English translation: It must be shown to foreign countries that we are prepared to help ourselves; only then will they be, and be able to be, ready to help.