The Theory of Money and Credit - Ludwig von Mises [150]
[3] On the question of the dependence of economic fluctuations on credit policy, see pp. 405 f. below.
[4] See Jevons, Investigations in Currency and Finance, pp. 8, 151 ff.; Palgrave, Bank Rate and the Money Market in England, France, Germany, Holland and Belgium 1844-1900 (London, 1903), pp. 106 ff.; 138; J. Laughlin, The Principles of Money (London, 1903), pp. 409 ff.
[5] See Spiethoff, "Die Quantitätstheorie insbesondere in ihrer Verwertbarkeit als Haussetheorie," Festgaben für Adolf Wagner (Leipzig, 1905), pp. 263 f.
[6] See Helfferich, Studien über Geld-und Bankwesen (Berlin, 1900), pp. 151 f.; Schumacher, Weltwirtschaftliche Studien (Leipzig, 1911), pp. 5 ff.
[7] See White, An Elastic Currency (New York, 1893), p. 4.
[8] See pp. 150 ff. above.
[9] See Tooke, An Inquiry into the Currency Principle (London, 1844), pp. 60 ff.; 122 f.; Fullarton, On the Regulation of Currencies, 2d ed. (London, 1845), pp, 82 ff.; Wilson, Capital, Currency and Banking (London, 1847), pp. 67 ff.; Mill, Principles of Political Economy (London, 1867), pp. 395 ff.; Wagner, Geld-und Kredittheorie der Peelschen Bankakte (Vienna, 1862), pp. 135 ff. On Mill's lack of consistency in this question, see Wicksell, Geldzins und Güterpreise (Jena, 1898), pp. 78 f.
[10] See Laughlin, The Principles of Money (London, 1903), p. 412.
[11] See Wicksell, op. cit., p. v.
[12] See Fullarton, op. cit., p. 64.
[13] See Schumacher, op. cit., pp. 122 f.
[14] See Prion, Das deutsche Wechseldiskontgeschäft (Leipzig, 1907), pp. 120 ff., 291 ff.
[15] Part of the rediscounting done at the Reichsbank by the private banks shortly before the critical days of settlement is done not so much because the banks are short of capital but because they desire to pass on nearly matured bills to be called in by the Reichsbank, which is able to perform this task more cheaply than they are, thanks to its extensive network of branches. See ibid., pp. 138 ff.
Chapter 18. The Redemption of Fiduciary Media
1. The Necessity for Complete Equivalence between Money and Money Substitutes. 2. The Return of Fiduciary Media to the Issuer. 3. The Case Against the Issue of Fiduciary Media. 4. The Redemption Fund. 5. The So-called "Banking" Type of Cover. 6. The Significance of Short-Term Cover. 7. The Security of the Investments of the Credit-Issuing Banks. 8. Foreign Bills in the Redemption Fund.
1 The Necessity for Complete Equivalence Between Money and Money Substitutes
There is nothing remarkable in the fact that money substitutes, as completely liquid claims to money against persons whose capacity to pay is beyond all doubt, have a value as great as the sums of money to which they refer Admittedly, the question does arise: Are there any persons whose capacity to pay is so completely certain as to be quite beyond all doubt? And it may be pointed out that more than one bank, whose solvency nobody had dared to call in question even the day before, has collapsed ignominiously; and that so long as the remembrance of events of this sort has not entirely vanished from human memory, it must evoke at least a small difference between the valuation of money and that of claims to money payable at any time, even if, as far as human foresight goes, these latter are to be regarded as completely sound.
It is undeniable that such questions reveal a possible source of a certain lack of confidence in notes and checks, which would necessarily result in money substitutes having a lower value than money. But, on the other hand, there are reasons which might cause individuals to value money substitutes more highly than money, even if demands for the conversion of money into money substitutes were not always satisfied immediately. We shall have to speak of this later. Furthermore, quite apart from all these circumstances, it should be clearly pointed out that doubts as to the quality of fiduciary media are hardly tenable nowadays. In the case of money substitutes of medium and small denominations, among which token