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Chapter 24: The Mont Pelerin Society - Dane Starbuck, The Goodriches: An American Family [2001]

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The Goodriches: An American Family (Indianapolis: Liberty Fund, 2001).

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


Chapter 24

The Mont Pelerin Society

It is important to look in a little detail at the failure of intellectual leadership in the twentieth century, or rather at its apparent inability to offer clear and firm guidance to a perplexed humanity, because this failure or inability lay at the root of the tragedies of the age. . . .

paul johnson, Modern Times: The World from the Twenties to the Nineties

Communism and fascism in general, and the writings of Marxists, Leninists, and Hitlerites in particular, formed the intellectual foundation for much of the greatest suffering that mankind has ever known. Yet it was not just the idealism of communism and fascism that attracted their widespread adoption in the first half of the twentieth century. As Paul Johnson suggests in his book Modern Times, the failure of Western intellectual leaders to argue persuasively that democratic-capitalist principles are worth defending allowed both left-wing and right-wing authoritarian ideologies to be uncritically accepted.

In the spring of 1947, a group of classical liberal scholars came together at Mont Pelerin, Switzerland, to address this failure. They met at a time when the fascist Axis powers had just been defeated in a cataclysmic world war and the sphere of influence (political, military, and intellectual) of the communist Soviet state was rapidly expanding.

These liberal scholars, political leaders, and journalists recognized that unless a proper intellectual framework could be established in support of the “free society,” including the virtues of the market economy, there was no reason that totalitarian ideologies such as fascism and communism could not continue to prosper. Moreover, this group of thinkers also realized that another threat—not as violent as that of authoritarian regimes but potentially as oppressive of individual liberty—existed in the false doctrines taught by proponents of the socialist (welfare) state. This made even democratically elected governments, classical liberal scholars warned, the breeding ground for “collectivist ideas” that would result in the denial of individual freedom.

Pierre Goodrich considered the Mont Pelerin Society one of the most important associations to which he ever belonged. The society is not noteworthy because of Goodrich’s influence on it (Goodrich was more a student than a teacher at the conferences and meetings he attended). Rather, the significance of the Mont Pelerin Society lies in the way this relatively small group of thinkers influenced Goodrich and reinforced his own beliefs that ideas could have a transforming effect on individual behavior as well as on public policies.

From April 1 to April 10, 1947, thirty-nine participants from ten countries met at the Hotel du Parc on Mont Pelerin sur Vevey, in Switzerland, to discuss classical “liberalism and its decline, the possibility of a liberal revival, and the desirability of forming an association of people who held certain common convictions about the nature of a free society.”1 The conference was the brainchild of the eminent Austrian economist Friedrich A. Hayek, who was then teaching at the London School of Economics, but other leading liberal scholars, such as Wilhelm Röpke, Albert Hunold, John Jewkes, Karl Popper, Walter Eucken, Ludwig von Mises, Frank Knight, Aaron Director, Milton Friedman, and Fritz Machlup, were also important in sustaining the society in its early years.2

The group of thinkers who attended the founding meeting of the Mont Pelerin Society realized that the war of recent ideas had been dictated by a long series of distinguished intellectuals dating back at least one hundred years to the time and writings of Marx and Engels. Among these thinkers were such notable scholars as John Maynard Keynes, Arnold Toynbee, Bertrand Russell, Oswald Spengler, T. S. Eliot, and J. A. Schumpeter. They argued collectively that capitalism was a flawed economic and social system for several reasons: It was immoral because it allowed a great inequality of incomes between rich and poor; because its short-sighted principles had led to two great depressions (beginning in 1894 and 1929); and because capitalism contained a corrupting influence and could be blamed for everything from environmental pollution to disregard for human dignity in search of profits.3

Coupled with the widespread criticism of capitalism was the equally broad belief that governmental intervention could serve to mitigate the pitfalls of capitalist principles. It was these beliefs, combined with a defeated Europe that was still smoldering after World War II, that confronted the founding members. The members of the society

concluded that the threat to freedom had its origins in theories about society [socialist interventionist ideas] that were demonstrably false but widely accepted almost unquestioningly; they agreed, therefore, that “the battle for ideas” had to be won before there could be a substantial reversal of political trends towards dirigisme. In forming a Society to combat intellectual error and doctrinal absolutism, the members also sought strength, courage, friendship, information, and ideas from each other, and they sought an institutional means of continuous association and of spreading their ideas widely.4

In furthering their objectives, this small group of a few dozen leading scholars set out to discuss what they believed were the critical questions that challenged the “free society”:

What are the essential characteristics of the competitive order, and how can competition be maintained? What should be done, therefore, about monopolies, both labor and industrial? . . . What, in particular, is the liberal response to the problems of inequality and poverty? How important are order, security, and solidarity compared with competition and increasing wealth? . . . How can the world be reeducated so that people understand liberal principles and their functions in a free society? Two other questions, of direct political relevance, were also asked. What should be the appropriate policy for the rehabilitation of Germany? What are the chances of achieving European federation?5

The Mont Pelerin Society is not a think tank in the traditional sense in which that term is understood in the United States, because it has no permanent headquarters or staff. More important, it has no unified policy objectives. As R. M. Hartwell, author of A History of the Mont Pelerin Society, states, by holding regular conferences and meetings, the society “sets out to educate the intellectuals, . . . and to lay the intellectual foundation of a liberal society and economy. This is not to say it has not influenced governments, only that it has not tried to do so directly, and that any influence it has had has been through the ideas it generated, not through political action.”6

Pierre Goodrich’s first contact with the Mont Pelerin Society occurred in September 1951, when he attended the fourth annual conference in Beauvallon, France, as a guest.7 Goodrich’s trip to the southern French coastal city started a close association with the society that lasted the rest of his life. The 1951 invitation had been extended by Friedrich Hayek and Albert Hunold, Mont Pelerin Society president and secretary, respectively, through John Van Sickle, a conservative economics professor at Wabash College.8 Goodrich had first become acquainted with Van Sickle when Pierre began serving as a trustee of the college. In fact, it was Goodrich who had provided funds enabling Van Sickle to attend, besides the Beauvallon conference, earlier Mont Pelerin Society meetings at Seelisberg, Switzerland (1949), and Bloemendaal, The Netherlands (1950).9

The meeting at Beauvallon brought together a truly impressive list of thinkers, including Ludwig von Mises and Frank Knight, with both of whom Goodrich later established friendships. It was at Beauvallon that Rebecca West presented a detailed discussion of the source of the pro-Soviet bias outside Russia. The topic that captured the most interest among the participants, however, was the treatment of capitalism by the historians. The resulting series of papers was later published in book form as Capitalism and the Historians.10

By the time Goodrich was invited to join the society, its membership had grown from the original 39 participants in 1947 to 167 members in 1951. The early members were an imposing group that included three future Nobel Prize winners in economics (Hayek, Friedman, and George Stigler); prominent businessmen such as Jasper E. Crane of the DuPont Corporation; politicians such as Ludwig Erhard (the future chancellor of West Germany), Luigi Einaudi (president of the Italian Republic), and the prime minister of Morocco; and top economic advisers from most western European countries. Also among the members were well-known American journalists such as Walter Lippmann, Max Eastman (Reader’s Digest), Henry Hazlitt (Newsweek), and Felix Morley (editor of the Washington Post).11

In the following years, Goodrich attended many of the Mont Pelerin Society’s annual conferences: Seelisberg, Switzerland, 1953; Berlin, Germany, 1956; St. Moritz, Switzerland, 1957; Princeton, New Jersey, 1958; Kassel, Germany, 1960; and Aviemore, Scotland, 1968. To those that Goodrich could not attend, he sent his dutiful secretary Helen Schultz. After each conference, she wrote lengthy summary reports for Goodrich on the papers and discussions held. Nominated by Goodrich, Schultz became a member of the society in 1970.12

In an embarrassing situation, Goodrich was indirectly (and apparently unwittingly) involved in an incident that threatened the society’s very existence. It is an example of how individuals, even highly intelligent and distinguished persons, can jeopardize a larger cause in pursuit of their own personal agendas. The gravity of the incident is suggested by the fact that Hartwell, in his history of the Mont Pelerin Society, devotes an entire chapter to the matter.13

In April 1959, society secretary Albert Hunold used the small surplus of funds from the 1958 Princeton, New Jersey, meeting of the society to publish the first issue of the Mont Pelerin Quarterly. This was followed by publication of the journal in July and October 1959. Hunold then secured funding for the quarterly for another year by obtaining a grant from the Winchester Foundation through Goodrich (a Hunold admirer). Goodrich served as president and sole benefactor of the small foundation.14

Problems arose because Hunold had failed to obtain the approval of the society president, Wilhelm Röpke, before continuing the publication of the quarterly. Hunold, who despite contributing a large amount of time, energy, and funds in service to the society, had become a very unpopular figure in the society because of his dictatorial manner and his desire to see the society become more politically active. There were several members who defended Hunold, however, and Goodrich was foremost among them. During the controversy, Goodrich wrote Hunold such a gushing letter of support that the Swiss economist sought Pierre’s permission to publish the letter openly in the Mont Pelerin Quarterly.15

The crisis came to a head in August 1962, when Hunold released the quarterly’s last publication, “How the Mont Pelerin Society Lost Its Soul.” The sixty-page journal was little more than a propaganda piece designed to inflate the importance of Hunold’s work to the society and to publicize the “vendetta” that Hunold claimed Hayek and Machlup were conducting against him. Earlier, in April 1962, Goodrich received a tersely worded letter from the normally urbane Hayek castigating him for providing funds for the quarterly.

Dear Mr. Goodrich,

. . . I do not know precisely what promises you have made to Dr. Hunold but I cannot believe that they can be of a nature which bind you to finance an illegal publication. Dr. Hunold is certainly not entitled to receive any funds on behalf of the Society.

For your personal information I will add that I have now formally moved that Dr. Hunold be expelled from the Society.

Sincerely yours,

F. A. Hayek16

The real issue was not so much the “illegal” publication, but the matter of who had ultimate control over the operations and direction of the society. A perusal of the letters that circulated among Goodrich, Hayek, Van Sickle, F. A. Harper, and Röpke over the Hunold affair makes it evident that Goodrich gained firsthand knowledge about the ruinous aspects of power. The bitter tone of Röpke’s letter to Goodrich captures the disappointment that the scuffle for domination created:

To me, there is something so regrettable that it verges on the crudely humorous, that a Society organized to further the search for principles of a voluntary society of free men, should become rocked to its very roots by a contest for or of power. That such a thing could happen suggests that perhaps we should be ready to start all over again in whatever way may be required to avoid such an occurrence. And this is not a thought to be ignored, for any society devoted to liberty in any real sense of hope.17

The society survived the struggle between the pro- and anti-Hunold forces. It was not, however, without casualties: Röpke resigned in December 1961, and Hunold resigned nine months later, taking several members with him.18 Goodrich withstood the ordeal and kept his membership intact. Moreover, he continued to attend conferences and meetings when his business commitments allowed him to do so. Goodrich, true to his nature, kept up a regular correspondence with many of the members, especially foreign scholars.19

The significance of Goodrich’s association with the Mont Pelerin Society is twofold: first, association with like-minded thinkers reinforced his own belief that without a proper intellectual understanding of the dynamics that sustain a society, any society will be continually susceptible to the promises of false ideologies, to the detriment of individual liberty. Goodrich undoubtedly saw how important it was to have a proper setting in which this understanding could be pursued.

Second, the Mont Pelerin Society provided Goodrich with the opportunity to associate with leading scholars, statesmen, and journalists to the extent that his own learning and breadth of experience were greatly enlarged. The importance of many of these intellectual friendships will be discussed in chapter 25. Goodrich’s long association with the Mont Pelerin Society clearly provided him with an education of the first rank and helped him to formulate his plan to establish Liberty Fund.

[1. ]R. M. Hartwell, A History of the Mont Pelerin Society (Indianapolis: Liberty Fund, 1995), p. 26. For a thorough account of the establishment of the Mont Pelerin Society, see chapters 1 and 2 of Hartwell’s work. For a briefer account of the early history of the Mont Pelerin Society, see Dr. Albert Hunold, “The Mont Pelerin Society,” World Liberalism, spring 1955. World Liberalism is a publication of the Liberal International.

[2. ]A complete list of the thirty-nine participants can be found in Hartwell’s History of the Mont Pelerin Society, pp. 45–46.

[3. ]Hartwell, A History of the Mont Pelerin Society, pp. 10–12.

[4. ]Ibid., preface, p. xii.

[5. ]Ibid., pp. 34–35. For the proceedings of the first Mont Pelerin Society meeting, including subjects discussed and speakers, see Hartwell’s History of the Mont Pelerin Society, pp. 47–49.

[6. ]Ibid., preface, p. xvi. Hartwell’s observation is supported by the concluding paragraph of the society’s statement of aims: The group does not aspire to conduct propaganda. It seeks to establish no meticulous and hampering orthodoxy. It aligns itself with no particular party. Its object is solely, by facilitating the exchange of views among minds inspired by certain ideals and broad conceptions held in common, to contribute to the preservation and improvement of the free society. (Hartwell, A History of the Mont Pelerin Society, p. 42. For the complete statement of aims, see pp. 41–42.)

[7. ]Goodrich was one of six guests who attended the Beauvallon conference. A total of fifty-three members attended. For a more thorough treatment of the conference, see Hartwell, A History of the Mont Pelerin Society, pp. 92–94; and Swiss Review of World Affairs, November 1951.

[8. ]Goodrich mentions this in his paper “Why Liberty?” which he read at the Princeton, New Jersey, conference in 1958.

[9. ]See letter from John V. Van Sickle to Pierre F. Goodrich, July 24, 1951, Pierre F. Goodrich Collection, John Van Sickle folder, Archives, Hoover Institution.

[10. ]Hartwell, A History of the Mont Pelerin Society, pp. 93–94; Friedrich A. Hayek, ed., Capitalism and the Historians (Chicago: University of Chicago Press, 1954).

[11. ]See Hartwell, “The Founding of the Society,” chap. 2 in A History of the Mont Pelerin Society. Hartwell’s work also contains a list of participants at the first conference (pp. 45–46) and a list of members of the society (p. 51).

[12. ]Schultz attended several Mont Pelerin meetings during Goodrich’s lifetime, including Semmering, Austria, 1964; Stresa, Italy, 1965; Vichy, France, 1967; Aviemore, Scotland, 1968; Caracas, Venezuela, 1969; Munich, Germany, 1970; and Mont Pelerin, Switzerland, 1972. After Pierre Goodrich’s death, Schultz attended meetings of the Mont Pelerin Society with Enid Goodrich in Brussels, Belgium, in 1974, and Saint Andrews, Scotland, in 1976. Letter from Helen E. Schultz Fletcher to author, April 21, 1995. Schultz was nominated by Goodrich and accepted into the society in 1970. See various folders under the names of conferences, Pierre F. Goodrich Collection, box 1, Hoover Institution.

[13. ]See Hartwell, “The Hunold Affair,” chap. 5 in A History of the Mont Pelerin Society.

[14. ]Ibid., p. 70.

[15. ]See letter from Pierre F. Goodrich to Hunold, June 16, 1961; letter from Hunold to Goodrich, January 9, 1962, Pierre F. Goodrich Collection, Hunold file, Archives, Hoover Institution. Goodrich refused Hunold’s request to publish his (Goodrich’s) letter of June 16, 1961. See letter from Goodrich to Hunold, January 22, 1962, Pierre F. Goodrich Collection, Hunold file, Archives, Hoover Institution.

[16. ]Letter from F. A. Hayek to Goodrich, April 15, 1962, F. A. Hayek Collection, box 34, folder 17, Archives, Hoover Institution.

[17. ]Letter from Wilhelm Röpke to Goodrich, July 1, 1961, Pierre F. Goodrich Collection, Röpke folder, Archives, Hoover Institution. See also Hartwell, A History of the Mont Pelerin Society, p. 123; John V. Van Sickle’s letter to Goodrich, November 10, 1961, Pierre F. Goodrich Collection, Van Sickle folder; letter from F. A. Harper to Goodrich, May 16, 1960; and Goodrich’s rejoinder letter to Harper, May 20, 1960, Pierre F. Goodrich Collection, Harper folder, Archives, Hoover Institution.

[18. ]Hartwell, A History of the Mont Pelerin Society, p. 124 and note 80. Hunold’s letter of resignation, dated August 2, 1962, was sent to members along with the last publication of the Mont Pelerin Society Quarterly.

[19. ]Goodrich’s correspondence with members of the Mont Pelerin Society was prolific and included more than twenty scholars throughout the world, including Bruno R. Shenoy, director of economics, Research Center, New Delhi, India; Enoch Powell, member of the British Parliament; Wilhelm Röpke, German scholar and successor to F. A. Hayek as president of the Mont Pelerin Society; and Manuel F. Ayau, the president of the board of the Universidad Francisco Marroquin in Guatemala City, Guatemala. See Pierre F. Goodrich Collection, box 2, Archives, Hoover Institution.