Ludwig von Mises: Review of Walter Huth’s Study of German and French Large Banks

Published in 1920 in a journal volume designated 1919/20, this short scholarly review assesses Walter Huth’s comparative study of German and French banking. Mises’s central objection concerns the distinction between explaining institutional differences and defending one institutional arrangement. He credits Huth’s diligence and skill, but argues that the comparison gives insufficient attention to the industrial and commercial structures within which banks develop.

Huth takes Adolf Weber’s Depositenbanken und Spekulationsbanken as his point of departure and, like Weber, concludes that mixed banking deserves preference over a division of banking functions, despite shortcomings in German credit organization. Mises acknowledges Huth’s careful use of abundant material, then identifies two weaknesses. The study apparently relies on printed sources and sometimes lacks both insight into banking operations and independence of judgment. More fundamentally, its evaluative orientation displaces the explanatory task:

Der Verfasser bemüht sich weniger, aufzuzeigen, wie die Verschiedenheit des Charakters der beiden Banktypen zu erklären sei, als die Vorzüge und Nachteile der beiden Systeme gegenüberzustellen.

English translation: The author makes less effort to show how the difference in character between the two types of bank is to be explained than to compare the advantages and disadvantages of the two systems.

For Mises, an inventory of advantages and disadvantages cannot adequately explain why different banking systems emerged. He finds the treatment apologetic: whatever Huth’s intention, it reads as a defense of the German combination of banking functions. The criticism is therefore directed at the organization of the inquiry, not simply at its favorable verdict on German banking.

Dabei übersieht er, wie die Mehrzahl jener, die vor ihm über das gleiche oder verwandte Probleme geschrieben haben, daß der Schlüssel für das Verständnis der Verschiedenheit der Entwicklung des deutschen und französischen Bankwesens viel mehr in der Struktur der Industrie und des Handels als in banktechnischen Momenten zu suchen ist.

English translation: In doing so, he overlooks, like the majority of those who have written before him on the same or related problems, that the key to understanding the difference in the development of German and French banking is to be sought much more in the structure of industry and commerce than in technical aspects of banking.

This is the review’s principal conceptual move: banking institutions should be understood in relation to the wider economy, rather than explained chiefly through banking techniques. Mises states this explanatory priority without developing a comparative history of his own.

The review closes with Huth’s final chapter on how German and French banks weathered the shocks of the World War. Mises praises several observations while emphasizing that an exhaustive treatment remains premature. His judgment is thus qualified throughout: useful research and perceptive remarks coexist with an explanatory framework weakened by advocacy and insufficient economic context.