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Strictly Confidential:

The Private Volker Fund

Memos of Murray N. Rothbard

Strictly Confidential:

The Private Volker Fund

Memos of Murray N. Rothbard

Edited by David Gordon

Foreword by

Brian Doherty

© 2010 by the Ludwig von Mises Institute and published under the Creative

Commons Attribution License 3.0. http://creativecommons.org/licenses/by/3.0/

Ludwig von Mises Institute

518 West Magnolia Avenue

Auburn, Alabama 36832

mises.org

ISBN: 978-1-933550-80-0

v

Foreword by Brian Doherty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix

Introduction by David Gordon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I. Setting the Stage. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Rothbard’s Confidential Memorandum to the Volker Fund,

“What Is to Be Done?” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

II. Political Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

1. Are Libertarians “Anarchists”? . . . . . . . . . . . . . . . . . . . . . . . 25

2. In Defense of Demagogues . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

3. Willmoore Kendall, Lectures on Democratic Theory

at Buck Hill Falls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

4. Review of Charles L. Black, Jr., The People and the Court:

Judicial Review in a Democracy . . . . . . . . . . . . . . . . . . . . . . . . . .51

5. Review of Leon Bramson, The Political Context

of Sociology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

6. Review of Charles Percy Snow, Science and Government . . . 59

7. Report on the Voegelin Panel . . . . . . . . . . . . . . . . . . . . . . . . . 62

III. History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

1. Marxism and Charles Beard. . . . . . . . . . . . . . . . . . . . . . . . . . 69

2. Review of Jackson Turner Main, The Antifederalists. . . . . . . 75

3. Review of R.W. Van Alstyne, The Rising American Empire. . . 80

4. Review of Robert V. Remini, Martin Van Buren and the

Making of the Democratic Party. . . . . . . . . . . . . . . . . . . . . . . . . 82

5. Report on George B. DeHuszar and Thomas Hulbert

Stevenson, A History of the American Republic, 2 vols. . . . . . 86

Table of Contents

vi Strictly Confidential

6. Review of Douglass C. North, The Economic Growth of the

United States, 1790–1860 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .188

7. Review of William Appleman Williams, The Tragedy of

American Diplomacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .193

8. Review of Edgar Eugene Robinson, The Hoover

Leadership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197

9. Review of Paul W. Schroeder, The Axis Alliance and

Japanese-American Relations, 1941 . . . . . . . . . . . . . . . . . . . . . 200

10. Review of J. Fred Rippy, Globe and Hemisphere . . . . . . . . . . 203

11. Review of the Veritas Foundation, Keynes at Harvard.. . . . 208

12. Review of Alexander Gray, The Socialist Tradition . . . . . . . .215

13. Review of T.S. Ashton, An Economic History of England:

The Eighteenth Century . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .218

IV. Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223

1. Spotlight on Keynesian Economics . . . . . . . . . . . . . . . . . . . 223

2. Fisher’s Equation of Exchange: A Critique . . . . . . . . . . . . . .240

3. Note on the Infant-Industry Argument . . . . . . . . . . . . . . . .249

4. Report on Ronald Coase Lectures . . . . . . . . . . . . . . . . . . . . 253

5. Review of Lawrence Abbott, Quality and Competition

and Anthony Scott, Natural Resources: The Economics

of Conservation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

6. On the Definition of Money . . . . . . . . . . . . . . . . . . . . . . . . . 259

7. Review of John Chamberlain, The Roots of Capitalism . . . . 265

8. Letter on Henry Hazlitt and Keynes . . . . . . . . . . . . . . . . . . 277

9. Business Advocacy of Government Intervention . . . . . . . .279

10. Review of Lionel Robbins, The Great Depression. . . . . . . . . 289

11. Review of Lionel Robbins, Robert Torrens and the

Evolution of Classical Economics . . . . . . . . . . . . . . . . . . . . . . . .292

12. Untitled Letter Critical of Chicago School Economics . . . .295

13. Review of Benjamin Anderson, The Value of Money . . . . . .301

14. Review of Colin Clark, Growthmanship . . . . . . . . . . . . . . . . 302

15. Competition and the Economists. . . . . . . . . . . . . . . . . . . . . 307

Table of Contents vii

V. Foreign Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

1. For a New Isolationism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .321

2. Review of Alan S. Whiting, China Crosses the Yalu. . . . . . . .327

3. Review of Frank S. Meyer, The Moulding of Communists . . .332

4. Critique of Frank S. Meyer’s Memorandum . . . . . . . . . . . . 343

5. Review of Walter Millis (ed.), A World Without War . . . . . .375

6. Review of George F. Kennan, Russia and the West

Under Lenin and Stalin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .379

VI. Literature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383

1. Romanticism and Modern Fiction . . . . . . . . . . . . . . . . . . . . 383

2. Letter on Recommended Novels . . . . . . . . . . . . . . . . . . . . . .392

3. Review of Edmund Fuller, Man in Modern Fiction. . . . . . . .395

Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399

ix

I never met Murray Rothbard.

Because I am the author of Radicals for Capitalism: A Freewheeling

History of the Modern American Libertarian Movement, that was highly

unfortunate. More than any other person, Murray Rothbard was the

modern American libertarian movement.

Intellectually, he was the most prolific and active advocate and

scholar for the ideas and concerns that most vividly mark libertari￾anism as a distinct tendency and movement; he brought together

Austrian economics, natural-rights ethics, anarchist politics, and a

burning interest in history—in the actual facts of the intellectual heri￾tage of antistate thinking, and of how and why in specific incidents

governments oppress and rob the bulk of the populace.

Institutionally, he helped form or worked closely with every sig￾nificant libertarian group or organization from the 1940s to the 1990s,

from the Foundation for Economic Education to the Volker Fund,

to the Institute for Humane Studies, to the Libertarian Party, to the

Center for Libertarian Studies, to the Cato Institute to the Ludwig

von Mises Institute.

Every other significant libertarian thinker was personally influ￾enced by him or felt obligated to grapple with him where they dis￾agreed, from Leonard Read to Robert Nozick.

When it comes to modern American libertarianism, Rothbard was

the Man. That I was not able to meet him and get his fresh words

into my book is my greatest regret associated with it.

Foreword

x Strictly Confidential

This does not mean that my book was not shaped by Rothbard’s

words or interpretations. He was also the most prolific and thought￾ful theorist of institutional and movement libertarianism. From the

1950s to the 1990s, he wrote on where the movement had been, where

it was going, and what he thought it needed to do. He left hundreds of

thousands of words of great insights on these matters, words that are

sometimes general and theoretical and often—especially in the pages

of his great 1968–84 journal, Libertarian Forum—precise and personal.

As a researcher into libertarianism, I was greatly fortunate to have

not only his many, many published essays, columns, and interviews

to rely on for Rothbard’s thoughts and actions; the Mises Institute,

the repository of Rothbard’s library and papers, granted me wide￾ranging access to his heretofore unpublished memos, essays, and let￾ters. These documents are a treasure well beyond my comparatively

parochial needs in researching my book. They are a joyful alternative

career of Rothbard’s writings and research, and as such inherently

one of the most valuable (and most fun) intellectual resources of the

past century.

David Gordon—probably the only man around who knows as

much about as much as Rothbard did when it comes to the histori￾cal, philosophical, and economic background of libertarianism—has

compiled this new book of letters, memos, and reviews from Rothbard

on the value—and often on the libertarian bona fides—of dozens

of thinkers and books that came to the attention of the Volker Fund

and Volker-associated groups such as the National Book Foundation,

which helped promote and publish libertarian-friendly scholars and

scholarship in an age when it was welcome almost nowhere.

The reader of this book—and of editor Gordon’s introduction—

will find out for themselves in the best way possible the scope of

what Rothbard accomplishes here. There are useful and rich nuggets

covering every aspect of Rothbard’s intellectual project, starting with

his bold call for the necessity of a pure and unsullied libertarian set

of institutions and activists.

I was most delighted to notice subtle little throughlines that help

remind the reader of Rothbard’s perspicacity (his consistent recognition

Foreword xi

of the not-to-be-forgotten distinctions between the modern libertarian

and the modern conservative or right-winger) and of the disciplined

humane concern that could almost be said to constitute the heart

of Rothbard: his recognition, from the War of 1812 to the Cold War

and every war in between (no matter how beloved by historians

nowadays), that the monstrous crime of state-launched murder and

rapine and destruction so blithely called “war” has been the greatest

enemy not only of life but of American liberty.

Rothbard wrote a wonderful four-volume history of colonial

America, published as Conceived in Liberty. His fans have long wished

he had managed a full-on history of America. He never had the time

to do so.

But in this volume’s bravura centerpiece, disguised as a simple

book-review memo of George B. DeHuszar and Thomas Hulbert

Stevenson’s A History of the American Republic, we have in essence at

least the outline or study guide to one. It’s a marvelously detailed

step-by-step discussion of the primary points, personalities, and con￾troversies in American history that should most interest the historian

who loves liberty. How I wish someone could add more meat to this

already strong and imposing skeleton of an American history. Alas,

the man who had the knowledge and stamina and proper perspec￾tive to do so left us in 1995.

I never met Murray Rothbard. Likely you didn’t either. But most

especially in this book—because of its immense range, its private

purpose, and its easy and wide erudition—you are meeting the

man at his finest: impassioned, funny, learned, brilliant, unfoolable,

relentless. I advise you to read this with pen and notebook in hand.

Rothbard is going to teach you so many things, in so many unforget￾table formulations, that you are going to want to take note of them;

just as Rothbard, in his decades of staggering reading and thinking,

took notes for us, and passed on his insights tirelessly.

That benefit accrues now not just to his friends and colleagues

who sought his advice on matters libertarian in years gone by, advice

solidified in these memos; thanks to Gordon and the Mises Institute,

that benefit is for the ages.

xii Strictly Confidential

Writing from the 2010 perspective of the “Ron Paul Revolution,”

the first mass-political movement to make a splash in America in

our times—a movement clearly animated by Rothbardian style and

ideas about currency, war, and the evils of the state—I believe the

ages will more and more note Rothbard and his message. And the

world will be a better place for it.

Brian Doherty

Los Angeles, California

March 2010

1

The recent publication of Rothbard versus the Philosophers, edited by

Roberta Modugno, brought to many readers’ attention a not very

well-known aspect of Murray Rothbard’s work. His vast published

output did not exhaust his writing. To the contrary, a large number

of important items had never been published. Many of these were

reports on books and conferences that Rothbard wrote while he

worked for the William Volker Fund, which during the late 1950s

and early 1960s was the principal American foundation supporting

classical liberalism. Professor Modugno drew from Rothbard’s papers,

housed at the Mises Institute, several of these unpublished reports.

Strictly Confidential continues the project that Modugno has so

ably begun. It presents over forty new items from the unpublished

papers. These range over political theory, history, economics, foreign

policy, and literature. We begin, though, with a confidential memo,

“What Is to Be Done?” which Rothbard prepared for the William

Volker Fund. The Leninist echo in the title is not accidental. In this

memo, Rothbard addresses an issue that concerned him throughout

his adult life: how can a libertarian society be created? He thought

that the Volker Fund should not view itself as just another conser￾vative organization. Instead, it should favor a militant strategy that

emphasized aid to scholars fully committed to a radical libertarian

ideology. Libertarianism is a system of belief that in many respects

is revolutionary rather than conservative.

The radical nature of Rothbard’s libertarianism becomes clear when

we turn to the section on political theory. He thought that classical

Introduction

2 Strictly Confidential

liberals who favored limited government had not fully thought

through their position. If the market was desirable and government

intervention bad, why need there be a government at all? In “Are

Libertarians ‘Anarchists’?” he asks whether libertarians who accept

his view about government should designate themselves by a very

controversial word. (In the years after this article was written, he

became much less ambivalent about this word.)

Another item in this section is of fundamental importance. One

of the major conservative political theorists of the 1950s and 1960s

was Willmoore Kendall, a teacher of William Buckley, Jr. at Yale and

a senior editor of National Review. Unlike most conservatives, Kendall

thought highly of Jean-Jacques Rousseau and his “general will.”

American conservatism, he argued, reflects the “deliberate sense of

the community.” Kendall was entirely ready to endorse suppression of

civil liberties if a public consensus that met his conditions supported

this. Rothbard subjected this view to merciless criticism, arguing that

Kendall’s principle would justify the Crucifixion.

Rothbard could make little of another figure much in favor among

the conservatives of the time: Eric Voegelin. His skeptical remarks

on a panel devoted to Voegelin’s work contrast with almost all other

studies of him. I well remember Rothbard’s asking me in puzzlement

what Voegelin might have meant by a “leap in being.”

Rothbard’s criticism was of course not confined to assaults on

conservative thinkers. He found little use for Charles Black’s attempt

to create a political myth to elevate the Supreme Court in the public’s

estimation. Here Rothbard foreshadowed a theme prominent in his

last years: he sympathized with populism and deplored attempts by

an elite to justify government. Of course, as his critique of Kendall

makes clear, he did not support populist suppression of rights. The

point, rather, is to what extent in the American system one should

place weight on the Supreme Court to protect these rights.

The section on history demonstrates, if proof were needed,

Rothbard’s remarkable knowledge of both historical events and

historiography. In his long report on George B. DeHuszar and

T.H. Stevenson’s A History of the American Republic, Rothbard shows