Originally posted on Tuesday, October 15th, 2013

A fascinating article, The Twilight of the Planners, by William Henry Chamberlain, in the May 1, 1964 issue of The Freeman  throws a ray of light on the economic statesmen who restored a war-ravaged Europe to prosperity.

Image courtesy of ReadInk Books

The prominence of Jacques Rueff, mentor to Lehrman Institute founder and chairman Lewis E. Lehrman, is striking:

The recovery of Europe from postwar desolation to its present state of booming prosperity would never have taken place if early reliance on rationing, bilateral trade, government allocation of resources had not been scrapped and replaced by the normal meth­ods of a free economy. And in this connection much credit is due to such statesmen as Ludwig Erhard in Germany, Reinhard Kamitz in Austria, the late Luigi Einaudi in Italy, and to truly liberal (not statist “liberal”) economists, such as Jacques Rueff, Wilhelm Roepke, the late Walter Eucken, and, last but far from least, the late Per Jacobsson, who by their writings and official and unofficial reports strongly influenced the return to traditional economic wisdom.

Jacobsson was a mighty battler against the dangers of inflation and the fallacies of “dirigism,” the European word for state directed economy. His reports for the Bank for International Settlements in Basel were beacon lights of com­mon-sense realism. And in the post which he occupied until his death as Secretary-General of the Inter­national Monetary Fund he was able to strike many blows for three basic economic freedoms, free movement of men, money, and goods across frontiers.

Jacobsson’s contacts as repre­sentative of the IMF included the leading statesmen of Europe; and the transformation of the French franc from one of the softest cur­rencies in Europe to one of the hardest may be, at least in part, the result of one of his talks with General de Gaulle. He recalled the fact that not the least of Napo­leon’s achievements was the crea­tion of a stable French currency, an achievement which long out­lasted his empire. De Gaulle showed lively interest at the men­tion of the name of Napoleon and shortly after this talk meas­ures were put into effect which stopped the continual erosion in the value of the franc.

Another military head of state, General Franco of Spain, proved amenable to the arguments of Erhard and Rueff, whom he had invited to Spain to offer advice as to how best to revive the Span­ish economy, which had been limp­ing along under a good deal of government interventionism. Con­trols were abolished or relaxed, the currency was stabilized, tour­ists flocked into the country in increasing numbers, and exports boomed.

One can but wish that Chamberlain’s optimism about the Planners’ sun having set had proved better founded.  That said, one cannot but note how well-founded, by the outcomes, is his accolade for the “truly liberal (not statist ‘liberal’) economists, such as Jacques Rueff.”

One cannot but be struck by the historically obscure, yet important, fact of Rueff’s benevolent influence on Franco, and thus Spain.

And how crucial having a classical liberal at the helm of the IMF proved… and, if again tried, would prove … to the restoration of dignity, liberty, and their attendant handmaiden, equitable prosperity.