Summary: Joseph Alois Schumpeter, “Die Beschaffung ausländischen Kredits” (1920)

This short text is not a treatise but a public corrective letter to a newspaper editor, dated Vienna, 23 January 1920. Its scope is narrow and polemical: Schumpeter responds to remarks by the Austrian State Secretary for Finance about his proposal to link the wealth levy with the procurement of foreign credit. The piece is therefore best read as an intervention in immediate postwar Austrian fiscal debate, defending the precise mechanism of a financial program that Schumpeter says he had not yet been able to present publicly.

Schumpeter’s main concern is to prevent a misunderstanding: he had not proposed to reward the mere payment of foreign currency already circulating inside Austria. Rather, he wanted tax concessions to encourage the actual acquisition of credit abroad.

Nach meinem Vorschlag sollten Begünstigungen hinsichtlich der Vermögensabgabe jenen eingeräumt werden, welche dem Staate ausländischen Kredit im Ausland zur Verfügung stellen oder zur Beschaffung solchen Kredits im Ausland durch Bürgschaft oder Verpfändung mitwirken.

English translation: According to my proposal, concessions with respect to the capital levy should be granted to those who place foreign credit abroad at the state's disposal, or who assist in procuring such credit abroad by means of guarantee or pledge.

The central conceptual move is the distinction between foreign exchange as an internal object of speculation and foreign credit as an external financial resource. Schumpeter’s proposal treats the wealth levy not simply as a revenue instrument but as leverage: fiscal privileges could mobilize private capacity to obtain foreign loans for the state. Yet the incentive must be attached only to credit created or secured abroad, not to domestic holdings of foreign currency.

Ausländische Valuta, die sich im Inland befindet, wie überhaupt die Einzahlung fremder Valuta auf die Vermögensabgabe, war von jeder Begünstigung ausdrücklich ausgeschlossen, eben weil eine solche Begünstigung im Inland preissteigernd auf die ausländischen Valuten wirken und den Schleichhandel begünstigen müßte.

English translation: Foreign currency held domestically, and indeed the payment of foreign currency toward the capital levy in general, was expressly excluded from any preferential treatment, precisely because such preferential treatment would inevitably drive up the domestic price of foreign currencies and encourage black-market trading.

This passage is the argumentative core of the letter. Schumpeter shows that his plan was designed with price effects and informal markets in mind. A concession for domestic foreign currency would raise its local price and reward hoarding or illicit exchange; a concession for foreign credit obtained abroad would instead expand the state’s access to external purchasing power. The difference is small in wording but large in policy logic.

The letter’s structure is simple: first, Schumpeter cites the parliamentary occasion that made clarification necessary; second, he restates his proposal; third, he explains what he had explicitly excluded; finally, he justifies publication as a substitute for the public presentation he had lacked.

Ich wünsche das festzustellen, weil die Art der Argumentation des Herrn Staatssekretärs für Finanzen die irrtümliche Meinung erwecken könnte, als hätte ich etwas empfohlen, was ich ausdrücklich verworfen habe.

English translation: I wish to place this on record, because the manner of argument employed by the Secretary of State for Finance could give rise to the mistaken impression that I had recommended something which I have in fact expressly rejected.

Its relevance lies in the precision with which it separates fiscal design from monetary speculation in a period of postwar financial instability. Schumpeter is not offering a broad theory here, but the note reveals a characteristic policy sensibility: institutions matter, incentives must be carefully targeted, and a badly framed tax preference can worsen the very scarcity it is meant to solve.

Da ich keine Gelegenheit zur öffentlichen Vertretung meines finanziellen Programms hatte und dasselbe nur in einer vertraulichen Druckschrift niederlegen konnte, die dem Herrn Staatssekretär für Finanzen nicht unbekannt geblieben sein dürfte, sehe ich mich zur öffentlichen Richtigstellung gezwungen.

English translation: Since I have had no opportunity to advocate my financial programme publicly and could set it down only in a confidential printed memorandum, which will hardly have remained unknown to the Secretary of State for Finance, I find myself compelled to make a public correction.

The text thus functions as both self-defense and policy clarification. Schumpeter insists that his program was not a subsidy for domestic foreign-currency transactions but a mechanism for converting private guarantees and pledges into external state credit. Its importance is less in length than in the exact boundary it draws between useful credit procurement and inflationary encouragement of foreign-exchange dealing.