Two weeks ago, an old dear friend in the financial freedom movement died at the age of 85: Hans Sennholz.
Hans Sennholz was an inspirational speaker at investment conferences in the 1970s and 1980s. I heard him first at a Howard Ruff conference in the early 1980s. Speaking in a mesmerizing German accent, he was spellbinding and always got a standing ovation. I wished I had his facility of expression.
But Hans Sennholz was also a doomsayer who throughout his life was probably wrong more than right about the outlook for stocks and bonds. He always thought high inflation was just around the corner, and Wall Street was headed for collapse at a moment’s notice.
Sennholz was a thorough-going gold bug, a devoted follower of Ludwig von Mises and a critic of anyone who opposed the gold standard. He wrote books with titles such as “Inflation or Gold?”, “Debts and Deficits,” “The Age of Inflation,” and “Money and Freedom.” When Milton Friedman died late last year, he took the Chicago school to task for advocating monetary inflation. “In its search for stability,” wrote Sennholz, “the Friedman amendment, unfortunately, proceeds on the old road to nowhere. There is no absolute monetary stability, never has been, and never can be.” For Sennholz, a true Misesian, there was only one solution to inflation: return to the classical gold standard, where the dollar is backed by gold.
Hans Sennholz’s plane was shot down by allied troops and he spent several years as a POW in the United States. After the war, he discovered Mises and returned to the United States to earn his Ph. D. in economics in 1955 from New York University, where Mises taught. For 37 years, he taught some 10,000 students Austrian economics at Grove City College in western Pennsylvania. (Peter Boettke, top Austrian economist at George Mason University, is one of his students.)
Sennholz was a prolific advocate of the Austrian school, writing 17 books and over 500 articles during his career. He wrote regularly for “The Freeman,” “Human Events,” and financial publications such as “The Inflation Survival Letter.” Since 2000, he wrote online columns. He and his wife Mary (also an editor and writer) once met Ronald Reagan, who said “I’ve been plagiarizing you for years.”
But Hans Sennholz was best as a powerful electric speaker with that unforgettable German accent. He flew his plane all over the country giving speeches on the evils of inflation, deficit spending, and the falling dollar before bankers, stockbrokers, businessmen and religious leaders. I first met him at a Howard Ruff conference in the late 1970s. After hearing him for only a few minutes, you were smitten by this true believer and a gold bug. He was the Douglas McArthur of Free-Market Economics.
Like Ludwig von Mises, Sennholz was a pessimist. In the 1970s, he warned that America was headed toward an inflationary Armageddon. During the inflationary seventies, he debated John Exter, a former Citibank executive, on “Inflation or Deflation?” While Exter predicted massive deflation, Sennholz warned of triple-digit inflation. Both were proven wrong, and did not anticipate the supply-side revolutions of Reagan and Thatcher, which brought sanity back to the global economy.
Even then, Sennholz thought the Reagan-Thatcher revolution was temporary, and remained a pessimist. His final column, “Money is flooding the world markets,” written May 19, 2007, states: “A few pessimistic economists are convinced that a devastating economic cataclysm lies ahead. They usually point to three threats that may have a serious impact on the American economy. There is the burgeoning tower of public and private debt resting on a foundation of greed and overindulgence. There are a multimillion dollar list of promises to a retirement system and a vast building of government guarantees and promises that are bound to be unkept. There even is a world of complex derivatives, the value of which depends on something else, such as stocks, bonds, futures, options, loans, and even promises. They all, according to these economists, will be the victims of the coming cataclysm. This economist, who has observed central bank policies since the 1950s, is in basic accord and feels sympathy for these pessimists.”
Yet the amazing thing is that despite this negative outlook, Hans Sennholz was an astute investor and died a very wealthy man. How is this possible? He was always predicting a crash in the stock market, he was bearish on bonds, and he seldom did well trading commodity futures. What’s left? Surprisingly, he made millions in small town real estate! Over the past 50 years he bought and sold numerous rental properties in his college town of Grove City, Pennsylvania, and other near-by locations. At one time Hans Sennholz was probably the largest landlord in Grove City. He even owned the property where we held his funeral!
He sold off a lot of his real estate when, in 1992 at the age of 70, he and his wife Mary took on the daunting task of reviving the Foundation for Economic Education. FEE was the first free-market think tank founded by Leonard Read in 1946 in Irvington-on-Hudson, New York. After Read died in 1983, FEE struggled financially and lost its influence. Sennholz came in and over the next five years righted the ship. He fired people and slash the budget, and got it back on course. In 1996, FEE celebrated its 50th anniversary by having Margaret Thatcher as the keynote speaker.
It was during his tenure as president of FEE that I got to know Hans Sennholz personally. He frequently invited me to speak at FEE’s monthly lecture series. I invite all my subscribers to come and we had big crowds at the FEE mansion. At the beginning of my talk, I’d turn to Hans and ask him to tell my subscribers all about FEE. In that unmistakable German accent, he spoke eloquently for 10-15 minutes and convinced people to donate to a good cause. Later he asked me to be a columnist for “The Freeman.” He also had FEE published the third edition of my book, “Economics of a Pure Gold Standard.” I am convinced that my becoming the president of FEE in 2001-02 was directly the result of Hans Sennholz’s unwavering support.
I was privileged to participate in writing a collection of essays in honor of Sennholz when he retired from full-time teaching at age 70, A Man of Principle (Grove City College, 1992). My favorite book by Hans Sennholz is called “The Politics of Unemployment” (Libertarian Press, 1987). His books are available here, a site run by his son Robert.
Douglas McArthur used to say, “Old soldiers never died, they just fade away.” Hans Sennholz may have faded away, but he shall never be forgotten.
for Markets and Money