The Theory of Money and Credit - Ludwig von Mises [178]
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[1] The fact that I have followed the terminology and method of attack of Böhm-Bawerk's theory of interest throughout this chapter does not imply that I am an adherent of that theory or am able to regard it as a satisfactory solution of the problem. But the present work does not afford scope for the exposition of my own views on the problem of interest; that must be reserved for a special study, which I hope will appear in the not too distant future. In such circumstances I have had no alternative but to develop my argument on the basis of Böhm-Bawerk's theory. Böhm-Bawerk's great achievement is the foundation of the work of all those who until now have dealt with the problem of interest since his time, and may well be the foundation of the work of those who will do so in the future. He was the first to clear the way that leads to understanding of the problem; he was the first to make it possible systematically to relate the problem of interest to that of the value of money.
[2] See Hume, Essays, ed. Frowde (London), pp. 303 ff.; Smith, The Wealth of Nations, Cannan's ed. (London, 1930), vol. 2, pp. 243 ff.; see also J. S. Mill, Principles of Political Economy (London, 1867), pp. 296 f.
[3] See, for example, Georg Schmidt, Kredit und Zins (Leipzig, 1910), pp. 38 ff.
[4] The transaction is conducted by the bank selling part of its consols "for money" and buying them back immediately "on account." The on-account price is higher, because it contains a large part of the interest that is almost due; the margin between the two prices represents the compensation that the bank pays for the loan. The cost that this entails is made up for by the fact that the bank now gets a larger proportion of the lending business. See Jaffé, Das englische Bankwesen, 2d ed. (Leipzig, 1910), p. 250.
[5] See, for example, Arendt, Geld—Bank—Börse (Berlin, 1907), p. 19.
[6] See Gilbart, The History, Principles and Practice of Banking, rev. ed. (London, 1904), vol. 1, p. 98.
[7] See Wicksell, Geldzins und Güterpreise (Jena, 1898), p. 74. Indeed, even the writers of that period do frequently deal with the problem of a change in the rate of interest; see, for example, Tooke, An Inquiry into the Currency Principle (London, 1844), p. 224.
[8] See Tooke, An Inquiry into the Currency Principle (London, 1844), pp. 121 ff.; Fullarton, On the Regulation of Currencies, 2d ed. (London, 1845), pp. 82 ff.; Wilson, Capital, Currency and Banking (London, 1847), pp. 67 ff. Wagner follows the train of thought of these writers in his Die Geld-und Kredittheorie der Peelschen Bankakte, pp. 135 ff.
[9] See Torrens, The Principles and Practical Operation of Sir Robert Peel's Act of 1844 Explained and Defended, 2d ed. (London, 1857), pp. 57 ff.; Overstone, Tracts and Other Publications on Metallic and Paper Currency (London, 1858), passim.
[10] See Wicksell, op. cit., pp. 1 ff.
[11] See Fisher, The Rate of Interest (New York, 1907), pp. 94 f.
[12] See Böhm-Bawerk, Kapital und Kapitalzins, p. 622.
[13] See Fisher and Brown, The Purchasing Power of Money (New York, 1911), pp. 58 ff.
[14] See, for instance, the most recent literature on the German banking reform; for example, the above-cited work by Schmidt (see p. 379 n. 3). An historical study would have to examine the extent to which Law, Cieszkowski, Proudhon, Macleod, and others, are to be regarded as inventors and adherents of this doctrine.
[15] See Wicksell, op. cit., pp. v ff.
[16] See ibid., pp. v ff., III; also "The Influence of the Rate of Interest on Prices," Economic Journal 18 (1907): 213 ff.
[17] See Wicksell, "The Influence of the Rate of Interest," p. 215.
[18] See Wicksell, Geldzins und Güterpreise, pp. 104 f.
[19] See Walras, Études d'économie politique appliquée (Lausanne, 1898), pp. 345 f.
[20] See Böhm-Bawerk, op. cit., pp. 611 ff.
[21] Ibid., pp. 151 ff.
[22] The fact that the two movements occur in opposite directions, so that they cancel one another, had been emphasized by Mill (Principles, pp. 391 ff.)