American Support for German Economists after 1933: The Kiel Institute and the Kiel School in Exile

the widespread racially and politically motivated attacks on German scientists in the spring of 1933 came as a surprise to many, not only in the local academic community but also in America and elsewhere. Some institutions, among them the Rockefeller Foundation (the Foundation hereinafter), were forced to make rapid decisions about whether to adapt or to cease entirely their support for those organizations affected by "the full force of the German blast of intolerance" (Van Sickle 1933a). In many cases, it was the academic excellence of the expelled scholars themselves that had been the reason for the Foundation's engagement since the 1920s. Now, after the Machtergreifung—the Nazis' seizure of power—the questions were whether and how to support the refugees in exile and how to deal with their former employers.

Other kinds of institutions, such as American universities, were faced with the choice of whether to react at all to the events on the other side of the ocean. Many chose not to, whereas some, most notably the New School for Social Research in New York, decided to employ huge numbers of German emigrants.

One case in which the different attitudes and strategies can be analyzed and assessed is the Institute for the World Economy at the University of Kiel (the Kiel Institute), which became one of the main "centers of expulsion" from Germany in 1933, when eight members of the Kiel School were forced into exile.

In the two decades leading up to 1933, the Kiel Institute had profited from the already widespread antisemitism and political intolerance in the German academic community. Its director, Bernhard Harms, pursued a liberal policy and was therefore able to attract large numbers of highly talented scholars who did not see adequate career opportunities for themselves at more distinguished universities. From 1926 onwards, most of these scholars were employed in a new department for business cycle research, and thus engaged in one of the most promising fields of economics in the interwar period. During the following "seven years of world class" economics (Hagemann 2008), they made significant contributions, especially with regard to the empirical observation and theorization of business cycles, global structural change, and the problem of technological unemployment. It has been convincingly argued that the heads of the department, Adolph Lowe¹ and Gerhard Colm, founded a "Kiel School" (Hagemann 1997, 298), which asserted itself against the traditional German Historical School as well as against the Austrian liberals. Among its most striking characteristics were the attempts to create a synthesis between a socialist form of economic organization and planning on the one hand and an open society with a liberal market on the other. As one of many national and foreign observers, the Foundation followed its scientific progress closely and made highly positive evaluations:

The Kiel Institute constitutes one of the bright spots in German economics. … Much of the work of German university professors is philosophical speculation or minute historical investigation. The work of a more scientific character is carried on in relatively few places. Kiel is one of these and may perhaps be regarded as the most important.

(Van Sickle 1932)

During the 1920s, the Foundation supported the Kiel Institute in its endeavor to enlarge its research capacity, to establish contacts with international scholars, and to develop the biggest social science library in Europe. When the budget of the Institute had to be cut by about 50 percent during the Great Depression, the Foundation stepped in and secured the continued existence of the department for business cycle research—and hence the Kiel School—through a large grant. In reaction to the Preußenschlag (Prussian Coup) in the summer of 1932, the Foundation concentrated its funding of German economics even more on larger institutes such as the one in Kiel, which it deemed "to offer reasonable guarantees of permanence" (Kittredge 1932). Hence, the Foundation was heavily invested financially in the Kiel Institute by the time the Nazi regime took power in early 1933. In the case of John Van Sickle and Tracy Kittredge, the heads of...