Ludwig von Mises on Money and Inflation.pdf - The Ludwig von ...

men do e trains are running and the money was coming in. e government
had said: “What a wonderful thing are the railroads. ey are
making lots of money. It is so easy, of course. Just set the trains running
and everybody will want to go somewhere. Or they will want to ship some
goods on this railroad. erefore, the railroads are a wonderful thing. Let
us nationalize the railroads and we, the government, will get their profits.”
So they nationalized the railroads. Bismarck was not the only one to do
this; he was only the most important man to do it. All other countries,
or most other countries, tried to do the same thing. ey nationalized
the telegraph, the telephone, and so on. en there appeared something
very interesting. After the railroads, that had been making profits, were
nationalized, they began making deficits. And the deficits had to be paid.
e citizens said, “You are nationalizing more and more. You are taxing
more and more. And what is the result More deficits!”
In this regard, let us say only parenthetically that the United States did
not nationalize the railroads. But the United States pays foreign aid, subsidies,
to many countries that have nationalized their railroads. e United
States government collects taxes from the American railroads which, after
all, still have some surpluses and not deficits, like many foreign railroads. 1
And these surpluses are used by foreign countries to pay the deficits of
their nationalized railroads. Some may say it might have been better to
nationalize the American railroads also and to have deficits than to pay the
deficits of the foreign nationalized enterprises. We do have in this country
one monument to this deficit system—the American Post Office: one
billion dollars almost, or perhaps more—one doesn’t know. But the fact
that the U.S. government Post Office makes deficits serves as a warning to
the U.S. government against nationalizing other industries.
In the second half of the nineteenth century, if an individual country
kept the interest rate lower than it ought to be in order to increase
the quantity of money and spend more, the tendency was for short term
capital to move, within a very short period of time, to a foreign country.
For example, if Germany, so often the evil-doer preceding the First World
War, kept a very low interest rate, short term capital moved out of Germany
to other countries where the interest rate was not so low. is meant
people were trying to withdraw gold from Germany in order to transfer it
to England, France or the United States. e Reichsbank, seeing its gold
reserves dwindling and fearing it would not be able to fulfill its obligations
because of its shortage of gold, was forced to go up again with the interest
1 ese lectures were delivered by <strong>Mises</strong> in the 1960s. —BBG
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