Joseph Alois Schumpeter · 1919
This newspaper report records Joseph A. Schumpeter’s public address as Finance State Secretary before the Viennese Verein »Währungsschutz« in March 1919. Its subject is the fiscal and monetary emergency of postwar German-Austria: war debts, the depreciation of the krone, the threat of reparations, social unrest, and the proposed wealth levy. Schumpeter presents the levy not as punishment of property but as an extraordinary instrument for restoring solvency, confidence, and monetary order.
He begins from a situation of acute uncertainty, sharpened by labor conflict and the breakdown of inherited imperial structures. Yet the tone is deliberately anti-catastrophic. Crisis requires discipline, not panic:
Wir wissen nicht, was uns noch in der nächsten Zeit bevorsteht und doch will ich Ihnen zurufen: Köpfe hoch!
English translation: We do not know what still lies ahead of us in the near future, and yet I want to call out to you: heads up!
The address links domestic stabilization to international danger. Schumpeter fears that indemnities or continued currency destruction would reduce wage earners to dependency and make radicalization intelligible. Monetary collapse is therefore not merely a technical problem; it is a social and political threat. The defense of the “Lohnkrone” becomes a defense of civil order.
The central argument is that the wealth levy is justified only if it serves one defined end: the reduction of war burdens and the reconstruction of public credit. It must not become a general fiscal reservoir or a pretext for arbitrary confiscation.
Die Vermögensabgabe darf zu nichts anderem verwendet werden als zu diesem Abbau.
English translation: The capital levy must not be used for anything other than this reduction [of debt].
This limitation is the speech’s conceptual hinge. Schumpeter contrasts an open, extraordinary sacrifice with the hidden expropriation produced by inflation. If the state finances itself through depreciation, the burden falls chaotically and regressively; if it levies wealth under clear rules, it can help restore calculability. The aim is not revenge against capital but the stabilization of prices, wages, budgets, and expectations.
For that reason, the levy must be paired with credit policy. Schumpeter’s most characteristic insight is that taxation cannot be detached from the institutions that sustain enterprise. A fiscal measure that destroys credit would undermine production and defeat reconstruction.
Es wäre blutiger Dilettantismus, wenn man nicht dafür sorgen würde, daß gleichzeitig für eine entsprechende Kreditorganisation vorgesorgt werde.
English translation: It would be sheer dilettantism if one did not at the same time see to it that a corresponding credit organization was provided for.
The speech therefore joins fiscal austerity, monetary discipline, and productive recovery. German-Austria had been severed from the economic organism of the former monarchy, yet it still needed trade, credit relations, and accommodation with the successor states. Schumpeter rejects both passive despair and nationalist economic illusion: the country can survive only by becoming solvent, productive, and commercially reliable.
His political position is a pragmatic middle course. He does not defend laissez-faire as an absolute doctrine and acknowledges sympathy for socialization, but he insists that any remaining private economy must be allowed to function. Endless administrative interference, uncertainty, and harassment would drive away both capital and labor.
Die immerwährenden Eingriffe in die Wirtschaft müssen restringiert werden.
English translation: The perpetual interventions in the economy must be restricted.
The report thus shows Schumpeter treating taxation, money, credit, production, and social peace as one problem. The wealth levy is acceptable only as part of a reconstruction compact: property must contribute visibly to the liquidation of war burdens; the state must restrain expenditure and avoid the printing press; credit must be organized; and economic life must be protected from destructive arbitrariness. Its purpose is not confiscation, but the reestablishment of a habitable economic order.
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