This file is a short newspaper report of a public lecture. It records Schumpeter’s March 1922 address to the Austrian League of Nations association on how postwar finance, currency disorder, trade policy, and state budgets affect the League of Nations’ political mission. Its scope is deliberately practical: Austria’s credit problem is placed inside a wider European and world-economic crisis.
Schumpeter’s central thesis is that the League cannot secure peace by simply dispensing credits or cancelling debts. Fiscal and monetary disorder are not autonomous technical problems; they are symptoms of deeper economic and social dislocation left by war.
Es ist aber nicht so, sondern staatsfinanzielle und währungspolitische Fragen sind nur äußere Ausflüsse tiefer liegender wirtschaftlicher und sozialer Probleme.
English translation: But this is not so; rather, questions of public finance and monetary policy are merely the outward manifestations of deeper-lying economic and social problems.
The lecture’s first conceptual move is therefore diagnostic. Against the “lay” expectation that the League should rapidly solve Austria’s credit needs, Schumpeter insists that policy cannot treat currencies as if they were detached from production, capital, social conflict, and the world business cycle. War is defined not primarily as a diplomatic event but as economic depletion.
Der Krieg war ein Konsumtionsexzeß und ein großer Kapitalsverbrauch und hat zu einer allgemeinen Verarmung geführt.
English translation: The war was an excess of consumption and a great consumption of capital, and it led to general impoverishment.
The structure of the argument then compares national paths of postwar liquidation. England represents the harsh deflationary route: suppress inflation, restore the pound, cut away wartime organs, and accept severe unemployment. Germany and Austria represent different forms of non-deflationary adjustment, where weak governments, reparations pressures, labor and bureaucratic claims, and broken credit mechanisms interrupt “normal” capitalist discipline. Austria’s inflation is treated less as original cause than as evidence of a deeper incapacity to reconstruct.
Bei uns war die Inflation zwar nicht die Ursache des Uebels, sondern mehr die Konsequenz, aber sie war das Symptom vollständiger Apathie und sie hat zum Kapitalsverbrauch geführt.
English translation: With us, inflation was not indeed the cause of the evil but rather its consequence; yet it was the symptom of complete apathy and it led to the consumption of capital.
From this comparison Schumpeter derives the work’s political insight: divergent financial policies create new international antagonisms. Weak-currency countries appear aggressive because depreciated exchange rates can threaten producers in strong-currency countries; strong-currency countries, meanwhile, experience deflationary distress and turn toward protection. The result is a world in which economic fears harden into political hostility.
Eine solche Situation macht die Arbeit des Völkerbundes teils leichter, teils schwieriger.
English translation: Such a situation makes the work of the League of Nations partly easier, partly more difficult.
This paradox is central. The crisis gives the League urgent tasks and may encourage coordinated action, yet it also makes the League’s highest aims—legal security, cooperation, and the exclusion of war—harder to realize. Schumpeter thus rejects dramatic “League actions” understood as immediate loans to distressed states. Such credits would not cure the underlying crisis and might intensify competitive tensions by enabling weak-currency rivals to expand abroad.
Nicht von außen und nicht durch Kredite können diese Probleme gelöst werden.
English translation: These problems cannot be solved from outside, nor by means of credits.
The remedy is gradual and institutional rather than spectacular. Schumpeter expects recovery to come first from the world economy’s own healing process; only then can conscious governmental action become effective. The League’s proper work is not to exhaust itself in credit schemes, but to remove obstacles to exchange, rebuild confidence, and create conditions under which nations again become economically interdependent.
Freihandel ist in der kapitalistischen Welt der wichtigste Kitt für den Friedensgedanken.
English translation: In the capitalist world, free trade is the most important cement of the idea of peace.
The conclusion narrows the League’s task to concrete legal-economic infrastructure: lower tariff walls, protect international payments, improve international credit law, and restore security for international capital. Schumpeter’s relevance lies in this linkage between finance and peace. He sees fiscal nationalism and legal uncertainty not as secondary technical matters but as forces that can make the League itself utopian unless they are patiently reversed.
Auf diese Detailarbeit sollte zunächst das Augenmerk des Völkerbundes gerichtet sein.
English translation: It is on this detailed work that the attention of the League of Nations ought first of all to be directed.
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