Joseph Alois Schumpeter · 1919
This file is a confidential cabinet appendix and attached administrative report, not a theoretical treatise or multi-author volume. The protocol note records that Staatssekretär Dr. Schumpeter presented a report to the Austrian Cabinet Council; the substantive text explains preparatory measures for financing the wealth levy, socialization, and industrial promotion in July 1919. Its central thesis is practical and institutional: Austria’s postwar fiscal-social program requires a credit mechanism that can mobilize private capital under public direction, because neither ordinary state finance nor purely private initiative can carry the burden.
Das St.A.f. Finanzen konnte sich gegenüber diesen wichtigen Fragen weder passiv, noch rein deliberierend verhalten.
English translation: The State Office for Finance could not confine itself to a passive or purely deliberative stance in the face of these important questions.
That sentence gives the report its administrative urgency. Schumpeter frames the finance ministry as an organizer of future capacity: it must have an institutional basis ready before concrete demands for the Vermögensabgabe, socialization, and industrial support arise. The problem is not simply lack of money, but mistrust. Private capital distrusts these purposes, while state, provincial, and municipal finances are already overburdened.
In letzter Linie wird man daher doch gezwungen sein, wieder an das private Kapital zu appellieren, und es wird sich im Wesentlichen darum handeln, eine möglichst glückliche Form für diesen Appell zu finden.
English translation: In the last analysis one will therefore be compelled once again to appeal to private capital, and it will essentially be a matter of finding as felicitous a form as possible for this appeal.
The report’s key conceptual move is to turn an ideological conflict between public and private finance into a problem of institutional form. A purely state credit institute is rejected as too slow, costly, politically vulnerable, and unlikely to enjoy strong emission credit.
Begreiflicherweise tauchte zunächst das Projekt auf, ein rein staatliches neues Kreditinstitut für die Durchführung der genannten Zwecke zu errichten. Dieser Weg erwies sich jedoch sofort als praktisch nicht gangbar.
English translation: Understandably, the project first arose of establishing a purely state-owned new credit institution for carrying out the aforementioned purposes. This path, however, immediately proved impracticable.
Schumpeter therefore moves toward the mixed-economy bank: not a new state bureaucracy, but a transformed existing institution. This is the core strategy of the memorandum—public control over an already functioning private credit apparatus.
Infolgedessen entschloß sich das St.A.f.Finanzen, zu versuchen, ob es nicht möglich wäre, eines der schon bestehenden Finanzierungsinstitute in eine gemischtwirtschaftliche Form zu überführen und sich sodann seiner zur Lösung der eingangs erwähnten drei Aufgaben zu bedienen.
English translation: As a result, the State Office for Finance resolved to try whether it might not be possible to convert one of the already existing financing institutions into a mixed-economy form and then to make use of it for solving the three tasks mentioned at the outset.
The report then surveys possible banks. Several are dismissed as too closely tied to Großbanken, too weak, or too burdened by exposures. The Austrian Credit Institute for Transport Enterprises and Public Works appears usable because it already has emission capacity, links to public oversight, experience in issuing obligations, a good reputation, and workable relations with banks.
Dagegen eröffnete sich bei dem letzten privatwirtschaftlich organisierten Institute mit Emissionsbefugnis, nämlich bei dem österr. Credit-Institute für Verkehrs-Unternehmungen und öffentliche Arbeiten, ein gangbarerer Weg.
English translation: By contrast, a more practicable path opened up in the case of the last privately organized institution with the power of issue, namely the Austrian Credit Institution for Transport Enterprises and Public Works.
The practical section describes how state influence is to be secured: the Escompte-Gesellschaft’s dominance is removed, statutes are revised, a state majority in management bodies becomes possible, and posts are reserved for Länder and banks. The point is not nationalization in name, but command over governance.
Gleichzeitig wurde eine durchgreifende Revision der Statuten des Institutes durchgeführt, die auch bereits die Zustimmung des St.A.f. Inneres gefunden hat und im Wesentlichen dahin geht, daß der Staat berechtigt sein wird, sowohl im Vorstand als auch im Verwaltungsrate des Institutes die Mehrheit der Stellen zu besetzen, als auch dem bisherigen Direktor Hofrat Dr. Werner einen staatlichen Vertrauensmann an die Seite zu stellen.
English translation: At the same time a thorough revision of the institution's statutes was carried out, which has already met with the approval of the State Office of the Interior and essentially provides that the state will be entitled to fill the majority of positions both on the executive board and on the supervisory board of the institution, and also to place a state trustee at the side of the current director, Hofrat Dr. Werner.
The report is relevant because it shows Schumpeter as a postwar financial administrator designing a public-private credit instrument for social policy, capital taxation, and industrial reconstruction. It treats socialization less as a slogan than as a financing problem requiring market confidence, administrative competence, and discreet state intervention.
Im Ganzen stellen sich die bisher durchgeführten Vorsorgen für die Finanzierung der Vermögensabgabe, der Sozialisierung und der Industrieförderung als der erste Versuch dar, ohne jede Beunruhigung der Öffentlichkeit einen gemischtwirtschaftlichen Bankbetrieb ins Leben zu rufen.
English translation: On the whole, the arrangements made hitherto for financing the capital levy, socialization, and the promotion of industry represent the first attempt to bring a mixed-economy banking operation into being without in any way alarming the public.
Its final claim is experimental: the mixed-economy institution will test whether such a form can work in practice. The memorandum thus links emergency finance to a broader theory of institutional capitalism—private credit mobilized through a state-shaped vehicle for public economic purposes.
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