German-speaking Economists in British Exile 1933-1945

Readers of the Newsletter will appreciate better than most that the generation of economists now coming sadly to the end of its natural life includes a very large number who were born in Eastern Europe before 1939. Professor Harald Hagemann of the University of Hohenheim has researched and published a number of papers on this diaspora. This is a distillation.

In his obituary on Sir Hans Singer in the April Newsletter of the RES John Toye referred to the fact that Singer received one of the first two refugee scholarships at Cambridge, due to Schumpeter’s recommendation to Keynes.1 Singer was among more than one hundred German-speaking economists who came to the United Kingdom during the Nazi period. Shortly after their rise to power the Nazis launched a new law, the ‘Restoration of Civil Service Act’ (April 7, 1933), which enabled them to fire scientists from their academic positions for racial or political reasons. This caused a group of British academics, on the initiative of the Director of the LSE William Beveridge, to found the Academic Assistance Council to help ‘University teachers and investigators of whatever country who, on grounds of religion, political opinion or race, are unable to carry their work in their own country’. The support of the AAC was one of the reasons why the UK, after the US, became the most important host country for exiled scholars.2

The Academic Assistance Council (from 1936 the ‘Society for the Protection of Science and Learning’) mainly supported émigré economists with an ‘international reputation’, i.e. members of the middle-age group, whereas a more restrictive policy was followed with regard to the younger generation of exiled scholars. The reason was that the poor prospects of the younger British scholars should not be worsened further in the world depression with high unemployment. The Rockefeller Foundation followed a similar policy. During the second half of the Weimar Republic, the Foundation had supported some of the most innovative research centres in Germany, particularly in the area of business-cycle theory. While it stopped financing shortly after the Nazis’ rise to power, the Foundation now played a major role in the continued support of many important émigré economists. This holds for the United States as well as for Great Britain, where the creation of additional jobs, the strict selection criteria of the Foundation and the high academic reputation of the émigré scholars, from which the development of economics in the host countries benefited, helped ensure that no greater animosities against the refugee scholars arose, but on the contrary an integration process was nurtured so that after the end of World War II only a few exiled scholars remigrated from the UK and the US to Germany and Austria.

The outbreak of the Second World War, and particularly the discriminations that émigrés had to suffer after the defeat of France, had the impact that British exile for many refugees became only of temporary nature. The loss of many great scholars who in the years 1939-40 moved to the United States, enforced the long-run shift of scientific power towards the US. A greater part of those émigrés who stayed since May 1940 were treated as ‘enemy aliens and interned by the British government on the Isle of Man from which many were sent further to the Dominions like Canada. The group included even prominent economists like Pierro Sraffa, who had been in Cambridge since 1927. Many younger economists from Germany and Austria were among these enemy aliens who were internment prisoners on the Isle of Man: Frank (Fritz) Burchardt (1902-58) who had held a position at the University of Oxford since January 1936 where he later became the director of the Institute of Statistics in 1948, or Heinz Wolfgang Arndt (born 1915 in Breslau), Sir Hans Singer (born 1910 in Wuppertal) and Paul Streeten (born Paul Hornig 1917 in Vienna), who all later gained international reputation as development economists. Furthermore, the group contained Erwin Rothbarth (1913-44), an outstanding young economist who was hired by Keynes as a research assistant in statistics in 1938 after he graduated from the LSE (Rothbarth later died as a volunteer in the British army in the Netherlands), and Eduard Rosenbaum (1887-1979), the former Director of the Library of the Hamburg Chamber of Commerce who became Librarian at the LSE from 1932-52. In summer 1940 Keynes, who actively fought for the liberation of many interned economists, in particular Sraffa, Rothbarth, Singer and Rosenbaum, intervened with the Home Secretary. He regarded the whole affair as ‘the most disgraceful and humiliating thing which has happened for a long time’ and finished his letter to F C Scott on 23 July 1940 with the statement: ‘If there are any Nazis sympathisers at large in this country, look for them in the War Office and our Secret Service, not in the internment camps.’3 The hope, which was expressed by Keynes, namely that the protest in the British public would lead to a correction of the policy against the ca. 65.000 ‘enemy aliens’, was fulfilled in late 1940/early 1941, when many young economists were liberated from internment, for example Burchardt, who returned to the University of Oxford in November 1940.
Among the outstanding economists who were dismissed by the Nazis, in spring 1933, and emigrated to England were Adolph Lowe (1893-1995) and Jacob Marschak (1898-1977). Both of them were consulted by the Academic Assistance Council/Society for the Protection of Science and Learning as well as by the Rockefeller Foundation on a regular basis to report on the qualification of those persecuted social scientists who were looking for help. Like his friend Marschak, who had been a member of Lowe’s research group at the Kiel Institute from 1928-30, Lowe was rated by the Rockefeller Foundation as ‘A-1, both scientifically and from the point of view of character.’

The group of dislocated economists comprised 328 scholars. While 253 had already acquired academic degrees, there was a so-called ‘second generation’, a group of 75 economists who were young students or pupils who emigrated with their parents and later made an academic career as economists, for example, Frank Hahn, Walter Eltis and Sir Claus Moser. They did not contribute to the transfer of scientific methods or approaches and were socialized in the host countries, particularly at Anglo-Saxon universities, but can be regarded as part of the long-term brain drain. One hundred and forty-eight members of the first generation were dismissed from the universities, whereas 57 came from other research institutions, 28 from the public administration, and 20 had just finished their studies, like Richard A Musgrave who emigrated to the United States shortly after receiving the diploma degree from the University of Heidelberg in May 1933. Comprising about 20 per cent of the total, the share of the Austrian economists was considerably higher than the relative size of the population. Whereas the second generation comprised exclusively émigrés, 221 out of the 253 dismissed economists emigrated. This is a share of 87 per cent. Of those 32 scholars who did not emigrate almost one half died in the Holocaust, concentration camps or Gestapo prison, for example Carl Grünberg, Käthe Leichter, Robert Liefmann, and Cläre Tisch. The same fate befell the émigrés Rudolf Hilferding, who was arrested in Marseille and died in a Gestapo prison in Paris in February 1941, and Robert Remak, who had emigrated to the Netherlands but was caught there after the Nazi occupation and sent to Auschwitz.

In 1935 Marschak became the founding director of the Oxford Institute of Statistics (OIS), an institution that had been created with the assistance of funds from the Rockefeller Foundation, and which had already financed some of Marschak’s research projects in Germany. The Institute soon got a high reputation in theory-guided empirical research. Marschak himself continued his studies on theoretical and statistical aspects of demand analysis, an area in which the former student of Slutsky did pioneering research as well as Ragnar Frisch, Henry Schultz and Wassily Leontief. Furthermore, he published a series of articles with Helen Makower and H W Robinson (1938-40) on the causes of regional mobility of labour which showed for the United Kingdom differences in the unemployment rates as the decisive determinant. These studies were part of a more comprehensive research programme which can be considered as a ‘multi-faceted attack on the problem of the business-cycle’.4 They were published in the first volumes of the Oxford Economic Papers, a journal which also had been founded as an outlet for the research results of the Institute. From November 1939 onwards the OIS also published a Diary with actual information on economics statistics which was soon afterwards expanded to another regular economic journal, published as the Bulletin since October 1940. It still exists today as the Oxford Bulletin of Economics and Statistics.

Together with Roy Harrod, James Meade, E H Phelps Brown and others, Marschak, too, helped ensure that economics at Oxford, where Edgeworth originally had created an open-minded international atmosphere, made great achievements in the ‘Years of High Theory’.5 He also played an instrumental role in the genesis of Harrod’s pathbreaking 1939 article which laid the foundations of post-Keynesian growth theory.6 On July 6, 1938 Harrod wrote to Keynes: ‘We have a sort of minor Tinbergen here in the form of Marschak.’7 The OIS had already hosted the sixth European meeting of the Econometric Society which was opened on 26 September 1936 with the famous symposium on Keynes’s General Theory where Harrod, Meade and Hicks presented their interpretations.

In the late 1930s and early 1940s émigré economists from Central Europe dominated the research work at the OIS. This is shown in an exemplary way by the famous study The Economics of Full Employment which was published in October 1944. The main aim of this cooperative effort is to give ‘an outline of the strategic factors on a policy of permanent full employment in industrial countries’.8 With this concern the study transcends the White Paper on Employment Policy of the British government which was published shortly before and which wanted to avoid mass unemployment by the application of anti-cyclical policy measures in the case of a beginning depression. The editor of The Economics of Full Employment was Frank Burchardt who also had built up the Institute’s Bulletin since his release from internment on the Isle of Man in the autumn of 1940. With Burchardt, Kurt Mandelbaum (since 1947 Martin) (1904-1995), Ernst F Schumacher (1911-77), the Hungarian born Thomas Balogh and the Pole Michal Kalecki, who was the towering intellectual figure at the OIS between 1940 and 1944, five of the six contributors came from Continental Europe (the exception was G D N Worswick). Schumacher, who had come to know Burchardt during their shared internment as ‘enemy aliens’ in summer 1940, was delegated by the OIS to support Sir William Beveridge, whose report Social Insurance and Allied Services (1942) to the British government had laid the basis for post-war social policy in the welfare state, in the writing of the further report Full Employment in a Free Society (1944). In close cooperation with Nicholas Kaldor, Joan Robinson et al. Schumacher drafted the greater parts of the report and was instrumental in the transformation of Beveridge to Keynesian economics.

Josef Steindl (1912-1993), who had to emigrate from Austria after the Anschluss in 1938 and first got a research fellowship at Balliol College in Oxford, also moved to the OIS in 1941 where he became a member of Bowley’s research team and came under the intellectual influence of Kalecki. In his autobiographical reflections Steindl (1984) names Kalecki as his ‘Guru’.9 Steindl had already returned from Oxford to Austria (1950) when his magnum opus Maturity and Stagnation in American Capitalism (1952) was published, which must be seen as the fruit of his Oxford years, revealing the deep influence of Kalecki’s analytical methods.

Other émigrés from the German language area who worked at the OIS during the war years were Moritz Julius Elsas, Karl Forchheimer, Detlev Bruno Halpern and Siegfried Moos. Due to a great demand for economists in the war administration in 1941 besides G D N Worswick only two other British economists were left at the OIS. When Marschak decided to stay in the U S after the outbreak of the war, H E Caustin succeeded him as the director for an interim period of a few months before A L Bowley, who had already retired, became the director from 1940 until the end of 1944. During that period a lot of the daily coordinating work was done by Burchardt who was an able organiser of research and, due to his personality a great team-player. His own most important contribution to economic analysis was his first attempt to combine the schemes of the stationary circular flow of Böhm-Bawerk and Marx (Burchardt 1931-32), i.e. the vertical (Austrian) and horizontal (sectoral) approach to the disaggregation of production structures, which came out of his close co-operation with Adolph Lowe during their Kiel years. Burchardt’s habilitation thesis had already been submitted to the Goethe University in Frankfurt in the winter semester 1932-33, but the process was not finalised due to the Nazis’ rise to power. After Champernowne’s term came to an end, Burchardt succeeded him as the Director of the Oxford Institute of Statistics at the end of 1948.10

Development economics, which evolved predominantly in Great Britain and in the United States at the United Nations and its ancillary organisations after the war, is among those areas where the contributions made by German-speaking émigré economists are most significant. Besides Alexander Gerschenkron and Albert O Hirschman, Paul N Rosenstein-Rodan, Kurt Martin, and Hans Singer have to be mentioned. During the formative period of the early and mid-1940s in particular the Universities of London and Oxford became institutional centres for the flourishing of development economics. This had a strong impact also on several of the brightest younger émigés who studied at these universities and later made names in this field, among them Heinz W Arndt, Warner Max Corden, Gerard O Gutmann, Alexandre Kafka, John H Mars, and Paul Streeten.

The presence of several exile-governments of Central, Eastern and Southeastern Europe in Great Britain during the war years as well as the high concentration of émigré economists coming from these regions and working in the Institute of Statistics and Nuffield College in Oxford and The Royal Institute of International Affairs in London before and during the war provided a great stimulus to the analysis of the economic problems and conditions for a successful reconstruction and industrialisation of backward areas, and explains why ‘backward areas’ were especially identified with Eastern and Southeastern Europe, as in Rosenstein-Rodan’s (1943) pathbreaking article or Mandelbaum’s (1945) follow-up study. In 1941 Rosenstein-Rodan accepted the offer from the RIIA to become Secretary of the new ‘Committee on Reconstruction-Economic Group’ which marked the beginning of systematic research on development questions at the Institute.

Heinz W Arndt was the author of the 1942 study Agricultural Surplus Population in Eastern and Southeastern Europe for the RIIA research team chaired by Rosenstein Rodan which wanted to employ the ‘excess population’ in the agricultural sector as a key factor in their programme of industrialisation of backward areas. This required an exact quantification of ‘hidden unemployment’ which in the Arndt report was defined as ‘the number of people engaged in agriculture (active and dependants) who, in any given conditions of agricultural production, could be removed from the land without reducing agricultural output’.11 On the basis of Arndt’s estimations Rosenstein-Rodan calculated the excess population in the agricultural sector as in the range between 20 and 25 percent in his pioneering article 'Problems of Industrialisation of Eastern and Southeastern Europe' (1943) which marked the beginning of modern development economics. From here onwards the concept of hidden unemployment in the agricultural sector played a key role in the explanation of economic backwardness, and the overcoming of this obstacle, i.e. the increase of productivity in agriculture, an essential condition of development. Other obstacles to economic development diagnosed by Rosenstein-Rodan in his pathbreaking article are discrepancies between the private and the social marginal net product, i.e. externalities in the sense of Pigou — Rosenstein-Rodan distinguished here between pecuniary and technological externalities — and further market failures in the provision of public goods, i.e. the lack of a public infrastructure. Rosenstein-Rodan thus identified those elements which played a key role in his theory of the ‘big push’, i.e. as conditions of a successful start of a balanced growth path. The government had to launch development programmes which should comprise investment in education and research, i.e. human capital,12 as well as in the building up of a functioning infrastructure. In order to ensure ‘external economies will become internal profits’, Rosenstein-Rodan (1943, p. 207) considered it necessary that these programmes comprise the whole economy to exploit complementarities in production and consumption for the development process. Although the analysis of disproportionate growth processes had been at the very basis of his understanding of problems of economic (under-)development, Rosenstein-Rodan, and later the Estonian born Ragnar Nurkse (1953),13 laid the foundation for the balanced growth-strategy which dominated the first decade of development economics. Interestingly, with Albert O Hirschman (1958)14 and Paul P Streeten (1959)15 it was two younger émigrés who became the architects of the opposite ‘unbalanced growth-strategy’, which favoured the concentration of investment funds in a few carefully selected growth poles to set a development process in motion by a chain of disequilibria, thus launching a major controversy which lasted for years.

Hans Singer’s ‘two heroes’, Schumpeter (Bonn) and Keynes (Cambridge), revealed the advantages of a double education which made several of the émigrés, particularly in the age group between 1910 and 1918 (Austria), into Emigrationsgewinner (emigration profiteers), despite all the hardships caused by expulsion and emigration.16 Singer had the main ideas of Schumpeter’s Theory of Economic Development in his emigration baggage, including the emphasis on technological innovation, the role of the entrepreneur, and the importance of credit for financing innovational activities, i.e. a deeper understanding for the necessity of breaking up the traditional circular flow. The high concentration of development economists born between 1910 and 1917 (Arndt, Baran, Hirschman, Hoselitz, Kafka, Singer, Streeten et al) does not only show that they were benefiting from a double education in economics and a mutual insemination at a time when different national traditions were still important. They themselves were for a greater part instrumental in the internationalisation process of the discipline. In the discussion of the ‘Americanisation’ of economics in the post-1945 period it is often overlooked that a great part of ‘the’ American economists were for a greater part colleagues who came from Hitlerian or Stalinist Europe. In interviews with emigrated economists the author of the present article was often told (by members of the age group born between 1890 and 1910) how deeply they had been influenced by national traditions before, and that emigration had made them feel they were becoming citizens of the world’ or, in the words of Paul Streeten (1986), adopting ‘aerial roots’.17 It is no accident that a greater number of the younger ones, particularly of those who went to the U K, developed a deep concern for the problems of the developing world and engaged themselves professionally in the improvement of living standards in ‘backward areas’.


1. J Toye (2006), ‘Sir Hans Singer’, Royal Economic Society, Newsletter no. 133, April, 16-17.

2. H Hagemann (2005), ‘Dismissal, Expulsion and Emigration of German-Speaking Economists After 1933’, Journal of the History of Economic Thought, 27 (4), 405-20.

3. The Collected Writings of John Maynard Keynes, Vol. XX: Activities 1939-45: Internal War Finance, London 1978: Macmillan, p. 191.

3. W Young and F S Lee (1993), Oxford Economics and Oxford Economists, Basingstoke/London: Macmillan, p. 125.

4. See Young and Lee (1993), particularly chapters 4 and 5.

5. See W. Young (1989), Harrod and his Trade Cycle Group. The Origins and Development of the Growth Research Programme, London: Macmillan, ch. 5, and D Besomi (1999), The Making of Harrod’s Dynamics, Basingstoke and London: Macmillan.

6. The Collected Writings of J.M. Keynes. Vol. XIV: The General Theory and After. Part II: Defence and Development, London 1973: Macmillan, p. 298.

7. F Burchardt (1944), The Economics of Full Employment, Oxford: Basil Blackwell, p. IV.

8. J Steindl, ‘Reflections on the Present State of Economics’, Banca Nazionale del Lavoro Quarterly Review, no. 148, 1984, pp. 3-14.

9. On Burchardt’s work in Germany and in Oxford see the contributions by A Lowe and G D N Worswick in the Bulletin of the Oxford Institute of Statistics 21, 1959, pp. 59-71.

10. H W Arndt (1942), ‘Agricultural Surplus Population in Eastern and Southeastern Europe’, reprinted in H.W. Arndt, Fifty Years of Development Studies, Canberra 1993: Australian National University, p.4.

11. ‘The first task of industrialisation is to provide for training and “skilling” of labour.’ P N Rosenstein-Rodan (1943), ‘Problems of Industrialisation of Eastern and South-Eastern Europe’, Economic Journal, 53, p. 206.

12. R Nurkse (1953), Problems of Capital Formation in Underdeveloped Countries, Oxford: Oxford U P.

13. A O Hirschman (1958), The Strategy of Economic Development, New Haven: Yale U P.

14. P P Streeten (1959), ‘Unbalanced Growth’, Oxford Economic Papers, N.S., 11, pp. 167-190.

15. See H W Singer, ‘The Influence of Schumpeter and Keynes on the Development of a Development Economist’, in H. Hagemann (ed.), Zur deutschsprachigen wirtschaftswissenschaftlichen Emigration nach 1933, Marburg 1997: Metropolis, and D.J. Shaw, Sir Hans Singer. The Life and Work of a Development Economist, Basingstoke and New York: Palgrave Macmillan.

16. P P Streeten (1986), ‘Aerial Roots’, Banca Nazionale del Lavoro Quarterly Review, No. 157, pp.135-159.

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