Heinrich Rittershausen was born on August 5th, 1898 in Schleswig, Germany, the son of a government official. He attended grammar school in his home town, received his diploma in Erfurt, began with technical studies at the University of Hannover and was drafted into the military in 1918. Afterwards, probably motivated by war experiences, he changed to economic and social science studies at Jena, Greifswald and Frankfurt on Main with Adolf Weber, Fritz Schmidt and Wilhelm Kalveram. He earned his doctorate in 1922, writing his dissertation on the subject, “The Raising of the Reparations.” In that same year, Foreign Minister Walther Rathenau appointed him to a position within the Department for Foreign Affairs. However Rathenau was assassinated on the very day that Rittershausen went to Berlin to assume his post. From 1921 to 1923 he was employed by the department of taxation in Frankfurt and by the Thuringian State Bank in Weimar. In 1924, he co-founded a trust company in Berlin. After severe health problems he went to London as a scholarship holder. His first book (“Die Reform der Muendelsicherheitsbestimmungen und der industrielle Anlagekredit, zugleich ein Beitrag zum Erwerbslosenproblem” – [The Reform of the Trustee Acts and the Industrial Investment Credit, also a Contribution to the Problem of Unemployment]) appeared in Jena in 1929. In 1930, he published “Arbeitslosigkeit und Kapitalbildung” (Unemployment and Capital Formation), which J.M. Keynes appreciated with the words “… I am quite on your lines …”.
Heinrich Rittershausen began his academic career in 1930, teaching mortgage banking at Frankfurt University. After two “politically incorrect” book publications and a complaint of Nazi student leaders in 1933, his teaching credential was revoked, although he had been granted the postdoctoral lecture qualification in political economy. He then took a job as an authorized bank officer. In Berlin in 1938, he served as chief referent in the price control office, a known centre of the July 20th 1944 resistance under count Yorck, with whom he became friends. When count Yorck and many executives were put to death after the failed tyrannicide against Hitler, Rittershausen and Ulrich von Beckerath, who also worked in that office in 1939, had feared for their lives. However, they were both saved, because many of the Gestapo files with Rittershausen’s and Beckerath’s names in them had disappeared; a strange circumstance not clarified up to the present time. It is assumed that a former student of Rittershausen, working at this vindictive tribunal (“Volksgerichtshof”, which ordered the execution of about 5000 people, involved in this liberation attempt, including family members) had destroyed the files. Not until 1939 – after two stays abroad, 1931 in Paris and 1935 in Madrid – did Heinrich Rittershausen succeed in returning to the academic world as substitute lecturer at Berlin University of Economics, and from 1940 to 1944, as adjunct professor for financial sciences in Breslau. He co-founded a construction company in Neustadt, later one of the biggest cement consumers in South-West Germany on whose advisory board he served for decades. Being friends with people of the July 20th 1944 resistance and being politically unblemished, in 1945 he became executive officer and later head of the department of “Prices” in the economics administration in Minden, an organization which was later transformed into the federal ministry of economics of West Germany. He was one of the most outspoken critics of the continuing price controls and other “Zwangswirtschaft” measures; his last important operation in the department was to prepare free markets with free prices. Starting in 1948, he worked for two years as a columnist for the “Neue Zuericher Zeitung”, the “Tagesspiegel” and the precursor of the “Frankfurter Allgemeine Zeitung”. At the same time he taught at the University of Frankfurt on Main. In 1950 he became a professor at the University of Mannheim, staying there for three years. Afterwards he held the position of professor of business economics at Cologne University from 1953 until 1966, when he retired. For several years he was also Dean of the University of Cologne. During that time, he initiated the so-called “practitioner-seminars”, in which high ranking practitioners were invited to lecture. This approach facilitated the interchange between the University and those involved in the business of banking, and it was widely imitated by others.
Heinrich Rittershausen was also engaged in social reform. His technical studies and practical banking work, as well as his entrepreneurial and financial activities, combined with his studies in three foreign countries, certainly helped him to understand the whole economy much better. In his correspondence with Ulrich von Beckerath that spanned several decades, still mostly unpublished, he also attacked “caesarism”, his cover word for Nazism. Together with Beckerath, he was one of the seven co-authors of the “Four Law Drafts” which were about to be passed by the German Chancellor Bruening in 1932 and could have changed the history of Germany and mankind by their radical transformation of the prevailing dysfunctional monetary system. His proposals for monetary reform (“Das andere System“, 1933, revised, in manuscript form, just before the German currency reform of 1948) as well as his monetary theory followed and enhanced the tradition of the German school on money.
Besides being a monetary theorist and academic lecturer, whose interests encompassed national economy, management and banking, he published extensively. There are several books of extraordinary importance. A combination of his banking and finance teachings, translated into Spanish, was for many years used as an academic textbook in Spain. His publications and lectures were, often, very well timed, especially his: “Der Neubau des deutschen Kreditsystems” (The Reconstruction of the German Credit System) and his “Am Tage nach dem Zusammenbruch” (On the Day after the Collapse). On the other hand, his book “Das andere System” (The Other System), in which he discussed the “Four Law Drafts” at length, was printed just a bit too late and, accidentally, most copies got into the great book burning by the Nazis, on the road from the printer to the publisher. Whilst the 1948 update of this book was not printed in time before the 1948 currency reform and thus was not published, except much later and on microfiche only. Among his numerous sophisticated publications is also an 820 page scientific textbook about central banks, “Die Zentralnotenbank, ein Handbuch ihrer Instrumente, ihrer Politik und ihrer Theorie” (The Central Bank, a Compendium of its Instruments, its Policy and its Theory). According to Ulrich von Beckerath, he wrote this book to help to make as good use of such an institution as could be made, with the object of avoiding the worst kinds of mistakes that are all too common in such institutions. Many outside the academic world came to know Heinrich Rittershausen as the author of an economics dictionary (the Fischer Lexikon “Wirtschaft”) which has achieved a large circulation of several hundred thousand copies. His most outstanding work, however, might well be “MONETARY THEORY” (German: “Geldtheorie“), which was never completely finished and remained unpublished until 2005. In this manuscript, Rittershausen has developed a new groundbreaking scientific approach to money, far surpassing both mainstream Keynesian and dogmatic Austrian doctrines.
His wife once told that, in spite of his reputation, he did not get as many or as profitable consultation jobs as other professors did. Probably because, through his critical frankness regarding financial and banking practices in Germany, he had created too many enemies in banking, commerce and industrial circles, e.g. with his remark: “Not the gold standard has failed but those, to whom it was entrusted!” Highly respected by his colleagues during his lifetime, Heinrich Rittershausen died on June 15th, 1984 in Cologne, leaving behind a treasure of ideas far ahead of his time, yet still not fully understood by most, nor appreciated in their significance for social reform and monetary science.
T. Megalli
Many thanks to John Zube and Thomas H. Greco for their assistance. Also to Prof. Hans E. Büschgen for his biographical notes on Prof. Rittershausen on the occasion of his 70th birthday.
This biography draft should be regarded as a work in progress, appealing to all of his students, fellow academics and readers as well as his surviving relatives to help flesh it out with their information.
Reinventing Money 