Chapter XXV: The Reconciliation of Statics and Dynamics (2)

Those who wish to control values have their own technology. There is a technology of industry, a mechanical technology, running in terms of pistons and levers and soil-fertility-equivalents, and butter-fat-content, and ton-miles, which is governed by the values. But there is also a technology of _controlling_ values which involves advertising, making sentiment, keeping up social discipline, effecting the equilibration of values by exchange, keeping "interstitial" adjustments smooth, which involves a different kind of activity, thought, and ability, and which employs different instrumentalities. Its problems are problems of human nature and social relationships, its laws are psychological laws, particularly the laws of suggestion, imitation, and the like, its tools are the newspaper, the sign-board, the whispered word, the cigar and the dinner with wine, sound logic, money and credit instruments, the prestiges of men and institutions. For men whose work lies in controlling and making values, rather than in making passive technical adjustments to existing values, the theory of value, as I have defined it, is of supreme importance.

This, I may say for the critic who may consider the social value theory a highly speculative and theoretical notion, does not mean that the active business man or the advertising writer, has formulated the social value theory in terms of a social mind, conceived of, in the light of modern functional psychology, as a functional unity of individual minds! The advertising writer is a student of modern psychology, and reads books on the psychology of advertising, which discuss the psychology of suggestion, and the like. But long before such books were written for him, he studied the phenomena involved in his own way. It is not his business to construct a theoretical economics! It is his business to make a market for his wares. He is interested in the scientific theories of modern social psychology only in so far as they help him in that task. He has no occasion to construct a vast conspectus, which shall summarize the whole economic situation, in its social setting. But my point is, simply, that the kind of phenomena which he does study are indicated and stressed and brought into a system in the theory of social value which I have tried to elaborate. As his purposes are different from those of the economist, his method of approach, and his range of investigation, will necessarily be different.

The notion of dynamics has been in a way connected with the idea of evolution, of historical process in time, while the notion of statics has been essentially connected with the notion of a cross-section, a stage, an equilibrium of contemporary forces. How, then, bring the two together? Of course, we may conceive the evolutionary process itself as a series of stages, and the mind does tend almost inevitably to do that. The fact is, of course, a perpetual flow, with unceasing change. The mind grasps such a notion with difficulty, if at all. Logic is mechanical and mathematical, and mathematics and mechanics are static.[592] But further, we may in large measure bring the historical considerations into a cross-section picture, when it is a value system that is involved. _Past_ facts exert their influence through _present_ values; and _future_ facts, which may be expected to modify future values, come into the present equilibrium as discounted _present_ worths.

When we view the situation realistically, moreover,--which means, when we view it as a living organic, psychological process,--our cross-section does not need to be narrowed to a moment of time. We may see the values not yet in stable equilibrium, but in process of equilibration, with marginal values and prices fluctuating, tending toward a static goal, but hindered by various cross-currents, of "friction," of uncertainty, of momentary values which rest on beliefs regarding the process of transition itself--as when a "bull" on the war-stocks turns bear temporarily, because he thinks that prices may fall before recovering themselves, and going higher. We may see obstacles in the way of readjustment whose importance is itself subject to static measure--labor temporarily out of work, and labor-time lost, at so much per day; uncertainties which give rise to speculation, which calls for the employment of extra banking credit, at such and such per cent; capital-instruments which have to be "scrapped," representing the loss of so many dollars. We may see the process of building up new trade connections, at such and such a cost, to replace others which formerly functioned, but which no longer serve, which were once worth so much, and which now are valueless. Watching the realistic process of transition, through a period of time, we may still apply our static yardstick to many of its features.

Above all, do we get in this connection a realization of the fact that the "immaterial capital" of which Veblen speaks is true social wealth.[593] Whatever is necessary for the carrying on of economic life, whatever, if destroyed, must be replaced, before the economic process can go on, and will be replaced by the expenditure of labor and thought and money, is capital. The sales-force is as truly a part of the labor-force of a corporation as are the mechanics. The trade connections which the sales-force has built up is as truly a part of the capital of the business as the machines which the mechanics have made. The static theory which abstracts from this easily leads to dangerous conclusions. Removing a tariff may well, _after the transition is completed_, give a greater productive efficiency to a country. But what of the cost of transition? May not the values destroyed, and to be recreated, in the form of trade connections, social organization, accomplished adjustments, and the like, be greater than the new values to be gained by better adaptation of industry to the physical resources or the capacities of the labor supply, of the country? In large measure, this question, in a given case, is susceptible to a quantitative answer. The statesman who reckons only the gains which the final static adjustment will bring, and neglects the costs of reaching it, costs not alone in "scrapped" machines, but also, in "scrapped" social organization, has missed a substantial part of his problem.

The theory of prosperity, and the theory of value, are largely concerned with just this system of social control, by means of which value scales are altered, and by means of which altered values are brought into a new equilibrium. It is a complicated fabric of psychological relationships, partly institutionalized, partly non-institutional. The institutions--as banks, big corporations, speculative exchanges, and the like, are the nuclei, about which centre much that is temporary, shifting, and flexible. Given time, the whole system is highly flexible--it is organic, and not mechanical.

The serious injury of this system in a country may well be a greater disaster than the destruction of physical items. Let unscrupulous men--or misguided men--bring about a legal repudiation of debts, and the disaster may be greater than the destruction of a city by an earthquake. That creditors have been robbed is a minor matter, but that credit has been shaken, so that men will fear to lend again or to sell except for cash, may well mean industrial paralysis.

Considerations like these enable us, in substantial degree, to reduce "transitional" considerations to common terms with "normal" considerations. We can apply the static measure to the "transitional considerations," and we find the values which come into equilibrium in the "normal" period to be generically like those whose variations interest us in the period of transition. Indeed, the "normal equilibrium," if it were ever reached, would also contain these intangible capital items, though many of them would be much reduced, since the work that they have to do would be largely gone, if the normal equilibrium were persistent.

It does not follow from the foregoing that many of the elements in "modern business capital" are not, as Veblen's analysis suggests, sinister and anti-social. To say that their values are true social economic values, generically the same as the values of wheat or corn or whiskey or opium or Sanatogen or milk or tickets to burlesque shows, or silver sacramental sets, or Ford automobiles, is not necessarily to give them a good moral character! Some of these intangible capital goods are thoroughly anti-social, and should be destroyed. This is particularly true of monopoly power, and of popular brands whose value rests in popular delusion. But even here, caution is needed. Is it socially wise to destroy a wine cellar, containing an hundred thousand dollars worth of fine wines, even assuming that Demon Rum is as black as he is painted, and that Veuve Cliquot is his favorite daughter? Will not the economic values which have been destroyed in this moral fervor be recreated? And will not this tend to divert labor and capital from the creation of a corresponding amount of more wholesome economic goods? Might it not be wiser from the standpoint of the temperance movement itself, to sell the wine cellar--at private sale, of course!--and use the proceeds in the campaign fund of the prohibition party? Of course, there is more still to the story. The destruction of the wine cellar may be done so dramatically, and may be so well advertised, that it will arrest public attention, and tend to create new social values, of a moral and legal sort, which will prevent the recreating of that wine, by changing the direction of demand, and by lessening the sources of supply. Similarly with trade connections, and other intangible capital items. If destroying one means merely that labor and capital will be employed in making others no better, the social gain is very doubtful. And some sort of system of control of interstitial adjustment, of overcoming friction, etc., there must be.

I wish to contrast the view I have been here presenting with that developed by Schumpeter, in his _Theorie der Wirtschaftlichen Entwicklung_. In Schumpeter's view, the division between statics and dynamics is much more than methodological. The phenomena of statics and dynamics are different phenomena. Statics is concerned with the influence of individual utility-scales, or utility-scales and psychic cost-scales, hedonistic phenomena. Dynamics is concerned with the influence of "_energisch_" (as distinguished from "_hedonisch_") factors. (_Loc. cit._, 128.) Most men are moved by hedonic considerations. Their economic activity tends toward the equilibrium described in static theory. Seeking to maximize satisfactions, and to minimize pains, they tend to get into the "best-possible" situation ("best-possible" under the "given conditions") and stay there. The "energetic" type of men, moved by motives like love of activity for its own sake, love of creative activity, love of distinction, love of victory over others, love of the game, etc., undertake activities which tend to alter the "given conditions" themselves, to alter the structure and technique of economic society, to introduce new ways of doing things, and so to break the static equilibrium. This last type of men is small in number, but tremendously important. Schumpeter's theory of value rests solely in an analysis of the hedonic factors mentioned, conceived of as individual psychological magnitudes. I have discussed his theory of value in the chapter on "Marginal Utility" in this book, and would refer to that discussion here. He makes virtually no use of the value concept there developed in explaining the causation of dynamic change, but instead, as I have pointed out in that chapter, invents new concepts, which do the work of the value concept, which he calls "_Kaufkraft_," "_Kapital_," and "_Kredit_," which do not rest on marginal utility, but rather on the activities of certain centres of economic power, particularly of banks.[594] His picture of economic evolution is that of a conflict between these static and dynamic forces, between "utility-curves" and the psychological factors of the "energetic" type, the former represented in a set of static price-ratios, the latter in a set of dynamic "powers," conceived of, not as sums of money (even though expressed in money-terms), but as "abstract power," which grows, not merely out of the individual psychologies of the entrepreneurs, but also, and primarily, out of the social influence centered in the banker. This power which the banker to-day supplies was in earlier periods supplied by the political power of the despot, and is distinctly a matter of social organization, and social control, an over-individual, social phenomenon, analogous to the "social value" which I have sought to put behind all prices, whether "static" or "dynamic." The dynamic man needs "power," either political or financial, to "force" the "static" men out of their accustomed ways of activity. They fear and resist him. He must coerce them. The contrast is thus sharply made between abstract price-ratios, resting on individual feeling-scales, and quantitative "powers," measured in money, resting on a social basis. Between the factors underlying static prices, and those underlying dynamic prices there is, thus, nothing in common. Statics and dynamics are concerned with fundamentally different phenomena.[595]

If my criticisms of the utility theory of value are sound, and if what has gone before in this chapter holds good, we must restate Schumpeter's contrast.[596] The static tendencies do not rest on any peculiarities of the psychological "stuff" from which static values are derived. They rest rather in the universal tendencies of all values, whatever the psychological factors behind them, to come to an equilibrium. The reason that values, whether they be the values of new and novel things, or the values of old and familiar things, tend to come to an equilibrium is that gains come from equilibrating them. When some values are too low, and some are too high, the opportunities for speculative gain are evident. Arbitraging transactions, as between different places, time-speculation, transferring labor and capital from one enterprise to another, increasing the supplies of some goods and reducing the supplies of other, changing land from wheat to corn, etc., etc.,--all these things are sources of gain, and they will be done, whatever the origin of the values involved. The new, dynamic enterprise, before it becomes actualized in concrete machinery, factory building, etc., and long before its income is actualized in money-receipts from the goods it is destined to produce, becomes an _object of value_. The value is a _future_ value. But it comes into the present as a discounted present worth. As such it functions like any other value, tending to attract in its own direction the land, labor and capital necessary for its realization. It does not differ in its functioning from the present worths of future goods of familiar sorts.[597] It tends, after a process of reequilibration--which Schumpeter, with his theory of crises, has done much to elucidate--to come into equilibrium with the older, "static" values, becomes itself a static value. Indeed, from its inception, it comes under the static, money measure. It enters at once into the scheme of static values and prices, even though it causes readjustment there.

The preexisting static values are themselves to be explained, not as growing out of individual feeling-scales, but as growing out of a complex social psychology, in which some men and groups of men have vastly greater social "power" than others. The preexisting static values are of the same stuff as the dynamic values. But this has already been made clear.

* * * * *

The possibility of presenting an equilibrium picture of social forces, to the extent that those social forces submit themselves to the money measure, the possibility of applying the methods of static price-theory wherever pecuniary concepts may be carried, does not exhaust the possibilities of the static notion, at least as a schematic device. There are many social values, particularly in the legal and moral sphere, which do not readily come under the money measure, and where such measurements as may be made in money terms seem obviously inadequate. Of these values, as of all values, however, the law of equilibration holds. _All_ tend to come into adjustment of a sort that will allow the maximum of values to be realized. Something of the exactness of the static method has recently appeared in a decision by a famous jurist, confronted with the fact of the conflict of two legal principles. Most judges would go on the legal theory that there can be no conflict in the laws of a single sovereign. Of course, we have courses in "Conflicts of Laws" in our law schools, but the subjects treated in such courses relate to conflicts, say, between the laws of New York and the laws of New Jersey. When a judge is presented with a case of conflict between two laws of New York, he will commonly feel it to be his duty to "remove" the conflict, by making distinctions, till the conflict is whittled away. Not a little bad law has thus originated! The law is "absolute." It knows no exceptions. It does not obey the law of diminishing significance. Of course, "_de minimis non curat lex_," but that means, not that there is a delicate margin, where the law ceases to apply, but merely that the law disregards trifles too insignificant to attract its attention at all. They are, in mathematical phrase, "infinitesimals of the second order," discontinuous with the interests of magnitude great enough to attract the attention of the law. There is little room in such a legal theory for notions of the sort discussed in this chapter to find place! But a different theory of the law is implied, and partly expressed, in a recent decision by Mr. Justice Holmes: "All rights tend to declare themselves absolute to their logical extreme. Yet all in fact are limited by the neighborhood of principles of policy which are other than those on which the particular right is founded, and which become strong enough to hold their own when a certain point is reached. The limits set to property by other public interests present themselves as a branch of what is called the police power of the State. The boundary at which the conflicting interests balance cannot be determined by any general formula in advance, but points along the line, or helping to establish it, are fixed by decisions that this or that concrete case falls on the nearer or farther side.... It constantly is necessary to reconcile and adjust different constitutional principles, each of which would be entitled to possession of the disputed ground but for the presence of the others." (Hudson County Water Co. vs. McCarter, 209 U. S., 349, 1908.) Here we have a scheme very like that of static economic theory! "The boundary at which the conflicting interests balance"--the _margin_ where the curves of diminishing value of the two legal principles intersect! A plurality of legal values, in marginal equilibrium! Lacking a tool of thought so convenient as money has proved for the economist, the jurist finds trouble in making his margins precise. He is dealing with quantities for which he has found no common measure. There is no "standard or common measure" of legal values. Hence, most lawyers content themselves with qualitative reasoning, seeking to avoid the necessity of quantitative weighing and comparison of the factors in their problem by making distinctions of _kind_. Mr. Justice Holmes recognizes the necessity and the existence of legal _quantities_, and of making quantitative distinctions, _i. e._, distinctions of _degree_. He sees a generic essence common to the whole body of laws, such that marginal equilibria are possible and actual.

So far we have a static system of laws. But the same writer, in a later decision, has said: "And yet again the extent to which legislation may modify and restrict the uses of property consistently with the constitution is not a question for pure abstract theory alone. Tradition and the habits of a community count for more than logic." (Laurel Hill Cemetery _vs._ San Francisco, 216 U. S. 358, 1910.) As these traditions and habits of a community may change, so may the legal values change, and new equilibria need to be reached in a process of readjustment.

But further, in this view, and in the view of the best students of jurisprudence in general, the legal values are not an insulated, self-contained system. In the sentence last quoted, Justice Holmes sees their root in a total social situation. And it is easy to show that economic values, in particular, are part of that social situation out of which legal values derive their power. Legal values enter into economic values. Economic values enter into legal values. And between legal values and economic values are marginal equilibria. There is a vast social system of values, legal, economic, moral, religious, etc., in constant dynamic change, but tending also to static equilibrium. Changes at any part of the system compel readjustments throughout. The process of equilibration is often slow, but slow or rapid, smooth or violent, it is in constant process. For the further elaboration of notions like these, I refer again to my _Social Value_. Here, as in the narrower economic sphere, we have men and institutions whose chief activity is concerned with the manipulation and control of these values, with effecting the readjustments, and bringing about the reequilibrations. They have their appropriate tools and technology. Money and credit are merely part of a much wider system concerned with social control and social adjustment!

* * * * *

To summarize: The problem of this chapter has been to harmonize statics and dynamics, the "theory of wealth" and the "theory of prosperity," "normal" and "transitional," and similar notions, commonly held to belong to different spheres, and to be incapable of reduction to common terms. A number of such contrasts have been passed in review, and numerous illustrations of the various types of contrast have been given. It is the contention of the present chapter that the most fundamental of these contrasts, and the one which gathers up the meaning of most of them, is that between the theory of value, and the theory of price. The theory of value is dynamic, is concerned with the phenomena of prosperity and depression, is realistic enough to deal with transitions and readjustments; the theory of price is static, and rests in the notion of accomplished equilibrium, abstracting from the problems of friction and transition. The reconciliation comes from two angles: on the one hand we have generalized price theory, showing that in large measure the phenomena with which value theory, theory of prosperity, dynamics, deal come under the money measure, are made "static" by "discounting," and by the application of accounting principles; that this tends to be more and more true as knowledge grows more accurate; that "statics" means especially quantitative, as opposed to merely qualitative, thinking. We have shown further that the static schema is applicable even where the money measure is inapplicable, and even beyond the economic sphere, as illustrated by a recent decision of Justice Holmes. The other angle of approach was to universalize value theory, dynamics, theory of prosperity, by showing that all prices, whether "static" or "dynamic" have the same fundamental sort of explanation, that value is always a matter of social psychology, and never a matter of mere individual psychical magnitudes, or of "material fact." This is not to deny that physical facts have their bearing in the scheme: (a) they are among the objects of value, even though not the only objects, and (b) material facts, technological, physiographic, and biological, are the basis on which human nature rests, out of which it has developed, even though human culture including social values has increasingly emancipated itself from immediate dependence on them, and has acquired a partially independent movement of its own. The effort was not made to reduce mind and matter to common terms, but the case was rested in an irreducible dualism, and the causal influence of non-mental factors on the value-scales themselves cannot be measured by the static scheme. The static scheme, assuming the value-scales, gives a precise answer as to the influence of the quantities of physical objects on the marginal values. The significant fact about the values with which dynamics, theory of prosperity, etc., deal is that they are the values of immaterial social relationships and institutions, in large part, which are concerned with the problems of social adjustment and control, with affecting equilibria in the economic sphere, with overcoming the friction and effecting the transitions from which static theory abstracts. This is a phase of production quite as important as the physical activities of laborers or machines. It has its own technology, appropriate to its problems. In particular, money and credit are part of its tools. Since its problems are to control men's minds, it uses psychological forces. Where the mechanic uses a storage battery, charged with electricity, to move material things, the technologist of economic readjustment employs a dollar, charged with social value, which is power over the action of men. It is as a bearer of value, in form adapted to the problem, that is in highly saleable form, that the dollar functions. It is the psychological significance of the dollar, and not its physical qualities _per se_, that enables it to do its work. The physical weight in gold, which itself is an object of social value, is commonly the immediate basis of the value of the dollar to-day, but money may get its primary value from other sources than valuable bullion. Given this primary value, the dollar may get an enhancement in that value from the services which it performs in the social technology of adjustment.

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INDEX

A

Aborn, W. H., 252, n.

Absolute _vs._ relative conceptions of value.
See VALUE, ABSOLUTE _vs._ RELATIVE.

Abstinence, 67ff., 484-85.
See COST OF PRODUCTION, INTEREST.

Abstraction, legitimate and illegitimate, 189-90, 553-54.

Acceptance house, 497, 542.

Acquisition _vs._ production, 482.

Adams, Brooks, 219.

Adams, T. S., 13.

"Adaptation," 573, n.

Advertising, 257-58, 367, 565.

Agger, E. E., 140, n.

Agio, 148-50, 390, 442-50.
See PREMIUM.

Agricultural credit, 262, 318-19, 430, 492, 504-05, 528-29.

"All other deposits," see "DEPOSITS" in KINLEY'S FIGURES.

_Americas, The_, 540.

Analytical _vs._ historical theories, 397-400.
See also HISTORICAL _vs._ CROSS-SECTION VIEWPOINTS, STATICS,
DYNAMICS, ETC.

Andrew, A. P., 170, n., 179, n., 537.

Animism, social explanation of, 16-17.

Ansiaux, M., 4, n.

"Appreciation and interest," 76ff., 333, n.
See INTEREST.

Aquinas, Thomas, 30.

Arbitrage, 268, 585.

Aristotle, 118, n.

Ashley, W. J., 181, n.

Assets of banks, 285, 489-97, Ch. XXIV;
bonds in, 250, 488, 498, 506, 508, 523;
stocks in, 491-93, 498, 506, 523;
stock exchange items chief factor in, Ch. XXIV, especially 523ff.
See Loans, "COMMERCIAL PAPER," COLLATERAL LOANS, RESERVES, ETC.

Atwood, A. W., 173, n.

Auspitz and Lieben, 91, n.

Austrian School, 56, 70, 94, 300, 486, 562, n.

Austria, paper money in, 140, 434, n.;
foreign exchange policy of, 181-82, 434, n., 444, 530;
money rates and interest rates in, 429.

Averages, meaning of, 178, 292, 312-13, 315.
See CAUSATION.
Weighted. See WEIGHTING.

B

Babson and May, 501, n.

Backwardation, 146.

Bagehot, W., 18, 37, 540, n., 580.

Baker, G. F., 518, 519, n.

Balances, required by banks, 173, 377.

Balance of trade, 320, 551.

Baldwin, J. M., 18, 37.

Balkan Crisis, hoarding of bank-notes in Austria in, 140, n.

Banks. See ENGLAND, BANK OF, STATE BANKS, PRIVATE BANKS, ETC.
As book-keepers for business, 365;
correspondent relations of, 355, n.;
bank capital, 489, 491, 524;
bank-credit, Ch. IX, 261, 484ff., 489-97, Ch. XXIV;
elasticity of, 129, 183, 216, 281-88, 299, 320;
relation of, to trade, 260ff., 281.
See Trade. Functions of, 484-89, 492-95.
See CREDIT, FUNCTIONS OF.
Technique of, 489-97, Ch. XXIV;
bank-drafts, 355-58, 367;
on New York and other centers, 356-58;
bank-notes, 129, 139, n., 289, 322-23, 447, 448, 472, 473, 487, 495,
496, 511, 530, 539;
as "capital," 261, 484-88;
elasticity of, 129, 298, 448.

Banking School, 283ff., 395.
See CURRENCY SCHOOL.

Banker as centre of power, 32, 466, 484ff., 577, 583.

Banker's psychology, 141, 304.

Barbour, David, 154, 218, n.

Barnett, G. E., 347, n.

Barter, 99, 100, 130, 133, Ch. XI, 220, 226, 265, 369, 394, 404-07,
419-21, 493, 536;
highly important in modern life, Ch. XI, 394;
made easier by money as a measure of values, 201, 394, 421;
intellectual difficulties of, 418-20;
physical difficulties of, 423.

Bastiat, F., 552.

Bears. See BULLS AND BEARS.

"Bearer of options" function of money, 148, 201, 314, n., 418, 424-32,
436, 442, 451, 495, 536, 543;
distinguished from store of value, 425;
dynamic function of money _par excellence_, 426, 495, 536;
reserve function a special case of, 426, n., 536ff.

Belgium, National Bank of, 182.

Belief, as element in values, 40, 136, 462-68, 486ff., 574-75;
relation of, to credit, 262, n., 462-68, 486ff., 581.
See CREDIT.

Bendixen, F., 435, n.

Bergson, H., 579, n.

Bilgram, H., 3, n.

Bills of exchange, 167, 181-82, 201, 254-55, 288-90, 369, 444, 490-91,
530;
speculation in, 254-55, 514, 515, n.;
as reserves, 181-82, 444, 530.
See also FOREIGN BILLS, AND GOLD MOVEMENTS, INTERNATIONAL.

Bimetallism, 219, n., 221;
not logically related to quantity theory, 219, n.

Biological factors in social life, 571-73, 590.

Boehm-Bawerk, E. von, 9, n., 44, 48, 51, 70, 78, n., 91, 94, 96, n.,
113, n., 146, n., 301, n., 303, n., 437, 563, n.

Bonds, as bearers of options, 147-48, 425, 428;
listed, sold "over the counter," 250, 514;
bonds sold on Stock Exchange, not "cleared," 370;
held by banks.
See ASSETS OF BANKS.
"One house bond," 147.

Book-credit See CREDIT.

"Borrowing and carrying," See STOCKS.

Bosanquet, B., 18, n.

Boston, 289, n., 354, 368, 429 n., 503.

Brassage, 450.

Brokers, 168, 199, 235, 287, n., 367-68, 371, 372, 374-79, 409,
496-97, 429, n., 521, n., 531, 575.

Brown, H. G., 301, n.

Business, speculation in, 252ff.

"Business capital" vs. capital-goods, 482, 484ff., 560-61, 569,
580-82.
See also "GOOD WILL," STATICS, DYNAMICS, FRICTION, ETC.

Business confidence, 40-41, 97, 118, 185, 210-11, 214, 463-68, 530-31,
536, 574-75, 577.

Business cycle, 187-89, 254, 548-49, 555, 573-75.

"Business distrust," 426, 427, n.

Business man _vs._ economist, as value theorist, 573-78.

Bulls and bears, 145, 371-73, 406, 471-72, 522, 576, 579.

"Buying price" _vs._ "selling price," 402-04, 406-07, 476.

C

Cairnes, J. E., 47, 50, 55, n., 57-59, 62, 64, 67-69, 220, n., 428, n.

Call loans, 73, n., 375-78, 382, 425, 428ff.;
as "bearers of options," 425, 428ff.

Call rates, why low, 428ff.
See MONEY RATES, INTEREST.

Canada, 216, 284, n., 448, 450.

Cannon, J. G., 347, n.

Capital, Ch. IV, 98-99, 220, 222-23, 408, 410, 425, 429, 461, 484ff.,
526, 551, n, 560-62, 564-66, 569-70, 580-82;
circulating _vs._ fixed, 526.

Capital goods. See GOODS, INSTRUMENTAL.

Capitalist, 264.

Capitalization theory, Ch. IV, 260, 297, 300ff., 316, 318, 389,
416, n., 436-42, 459-60, 494, 562-64, 575;
assumes "banker's psychology," 305-06;
assumes fixed absolute value of money, 76ff., 313-14, 389, 438;
limitations of, 305-06,316-17, 481, n., 562, n.;
applied to value of money, Ch. IV, 111, 424, 436-42, 456;
conflicts with quantity theory, 300ff., 310-11, 389.
See also INTEREST, CAPITAL, RENT.

Capital value, Ch. IV, 149, 224, 318-19, 402, 424, 436ff., 452, 459.

Carey, H. C., 106.

Carlile, W. W., 37, n., 397, 400, 407, 411, n.

Carver, T. N., 4, n., 419, n., 453, n., 573, n.

Causation, 142-43, 190, 204, 224, 279, 292, 312, 315, 336, 403,
433, n., 437, 438, 454, 548;
exhibited by _change_, 190, 454-55.

Causal theory of value, 14ff., 90ff., 96, 114, n., 163, 165-66,
176-77, 186, 192, 204, 296, Ch. XV, 310, 336, 400-01,
433, n, 437-38.

Cause, a definition as, 143, 400-01.

Checks, 167, 168, 184, 281, 339ff., 354ff., 364-81, 499;
"accommodation checks," 243;
certified, 200, 322, 349, 370, 376;
cashier's, 349;
collection of, 354ff.;
proportions of checks and money in payments, 174, 338, 447, 449,
463.

Checking accounts, 173-74.
See DEPOSITS.

Chen-Huang-Chang, 407, n.

Chicago, 246, 259, 289, n., 354, 379-80, 503, 542;
chief centre for check collections, 354;
Board of Trade, 252-52, 268, 327, 379-80, 503, 542;
Board of Trade clearing house, 369, 379-80.

Circular reasoning in value theory, 15, 88, 89, 92, 100-01, 105, 112,
113, 115, 117, 132, 135, 143, 279, 438, 452.

Clark, J. B., 12-13, 48, 96, n., 264, n., 439, n., 440, n., 554-55.

Clark's Law, 439.

Clark, J. M., 3, n., 11, n., 14, n., 98, n., 413, n.

Classical School, 69.
See COST OF PRODUCTION, CAIRNES, SENIOR, RICARDO, JAS. MILL,
J. S. MILL, LABOR THEORY OF VALUE, ETC.

Clearing houses in speculative exchanges.
See STOCK EXCHANGE.

Clearing houses, bank.
See CLEARINGS.
New York Clearing House, 346, 354;
New York Clearing House banks, 179, 344.

Clearings, 200, 237-41, 345-46, 378, 392;
as index of "ordinary trade," 240-41, 516;
as index of speculation, 237ff., 378, 392, 516;
in New York City, 237-41, 339, 341-42, 345-47, 357-59, 360, 516;
of New York City trust companies, 345-47;
outside New York City, 239-41, 339, 340, 342, 348-53, 357-59,
516, n.;
ratio of, to "deposits," 341-42, 348-59, 516, n.;
ratio of, to "total transactions," 348-51, 353, 359, n.

Clow, F. R., 135, n., 144, n.

Coin, 139, n., 167, 443-50;
coinage, 443-50;
statistics of, 412, n.

Collateral loans, 461, 462, 463, 493, 494, 497, 502-06, 513, 523-26;
percentages of, on stocks and bonds, and on "other collateral
security," 502-09;
on "other collateral security" analyzed, 502ff.

Collection of out of town checks, 354-55.
See CHECKS.

Commerce. See TRADE.

Commercial banks, 357, 488, 490, 498-99, 519-20, 523-29;
financing commerce no longer the chief function of, Ch. XXIV,
esp. 523ff.

Commercial cities, outgrow manufacturing cities, 259.

"Commercial paper," 431, 457, 490, 496-97, 498-520.

_Commercial and Financial Chronicle_, 272.

Commodity theory (Metallist theory, Bullionist theory), 81, 85, 129,
135, 144, 151-53, 330, 390, 391, 435, n.;
hypothetical case illustrating, 151-53, 327-28, 390, 421;
contrasted with quantity theory, 151-53.

Competitive display, relation of, to value, 410-11, 438-42, 452.

Conant, C. A., 73, n., 182, n., 323, n., 347, n., 412, n., 418, n.,
428, n., 502, 510, n., 511, n., 535, n.

Conant, L. Jr., 252, n.

Concatenation of values and prices.
See VALUES, PRICES.

Consols, 470.

Contango, 145.

Cooley, C. H., 3, 4, n., 19, 21, n., 30, 37, 484, n.

Corporations. See STOCKS, BONDS, STOCK EXCHANGE.
Consolidations of, 198-258, 366-67;
lead to duplications of "deposits," 366-67;
corporation finance, 198-99, 201, n. 3, 432, 460-61, 476-77;
corporation securities as credit instruments, 460-61, 476-77,
492-93, 527.

Correlation, coefficient of, 237, 237, n.

Cost of production, Ch. III, 193, 221, n., 257ff., 295, 300, 306-07,
309, n., 389, 562, n., 565-66;
inapplicable to value of money, Ch. III, 389, 451;
relation of, to supply and demand, 50, Ch. III;
not related to quantity theory, 46ff.;
conflicts with quantity theory, 300, 306-07, 310-11, 389;
assumes fixed absolute value of money, Ch. III, 313-14, 389, 451;
"real costs," 44-45, 64ff., 96, 117, n. See LABOR THEORY OF VALUE.
Money costs, Ch. III, 90, 95;
Austrian cost theory, 56, Ch. III, 90, 95, 116, n.
See also SELLING COSTS.

Cotton speculation. See NEW YORK COTTON EXCHANGE, AND SPECULATION.

Credit, 42, 98-99, 130, 143-44, 166ff., Ch. IX, Ch. XIII,
Ch. XIV, 318, Ch. XVIII, 392-393, 395, 427, 441, 447,
Ch. XXIII, Ch. XXIV, 581;
not based on money, 326-27;
based on values, 326-27, 478-86, 485-86, 528-29;
part of general system of values, 40-41, 460, 462-68, 480, 486ff.,
574-75;
definition of, 459-60, 472-74, 489;
distinguished from credit transaction, 473;
juridical aspects of, 395, 460-61, 468-73; relation of, to belief.
See BELIEF.
Functions of, 263-66, 391-92, 395, 407, 441, 475-78, 484ff., 511-12,
523-29;
relation of, to money, Ch. IX, Ch. XVIII, 393, 395. See also
RESERVES.
Relation of, to trade, Ch. XIII, Ch. XIV, 391-92, 393;
volume of, a function of dynamic change, 474;
elastic. See BANK CREDIT.
As "capital," 261, 461, 484ff.;
in "equation of exchange," 166ff.;
book-credit, 167ff., 226, 369; time-credit, 168.
See LOANS, INTEREST.
See also BANK-CREDIT, DEPOSITS, LOANS, COLLATERAL LOANS, CALL LOANS,
ASSETS OF BANKS, BELIEF, BUSINESS CONFIDENCE, etc.

_Credit Lyonnais_, 530, n.

Credit theory of paper money. See PAPER MONEY and GREENBACKS.

Crises, 213, 254, 520, 548-49, 555.
See PANICS, BUSINESS CYCLES, BUSINESS CONFIDENCE, THEORY OF
PROSPERITY.

Cross-section analysis. See HISTORICAL _vs._ CROSS-SECTION VIEWPOINTS.

Curb, 250.

Currency School, 283ff., 395;
"currency theory of deposits," 283.

Curves applied to money, 451-53.
See MARGINAL ANALYSIS.

Custom, 36, 109, 135, 136, 183-84, 205ff., 391, 405, 562, n., 589.
See HABIT.

D

Davenport, H. J., 12, n., 14, n., 21, n., 25, 65, n., 67, 78, n., 80,
91, n., 94, 103, n., 113-15, n., 218, n., 314, 418, n.,
419, n., 426, n., 429, n., 434, 447, n., 482, n.

Davidson, T., 18, n.

Dean, Rodney, 354, n.

Debtor Class, 139.

Debts, 433, n. ff., 472-75, 489;
repudiation of, 581.

DeCoppet and Doremus, 249, 370.

Definition, a, as cause for the circulation of money, 143, 400-01.

DeLaunay, L., 412, n., 415, n.

Demand. See SUPPLY AND DEMAND.
Increase of, 53;
nominal increase of, 54;
elasticity of, 55, 224-27, 411-13;
for money, in what sense used, 62;
elasticity of, 224-27;
demand curves, 51;
applied to gold, 451ff.;
social value explanation of, 42, Ch. II, 93;
distinguished from utility curves, 49, 52, 70, 80, 113, n.,
115, n., 116.

"Demand Notes," 322, 448, n.

Deposits, 129, 143, Ch. IX, 186, 296, 344, 345-47, 453, 472, 487;
by one bank in another, 358, n., 349, 355, n., 357, 365, n.,
367, n., 500, n., 508, 515, n., 530-32;
relations of, to "money in circulation," Ch. IX, 185, 294;
relation of, to reserves, Ch. IX, 286-87, 298-99;
activity of, 345-47, 512-16;
in Europe 262.
SEE GIRO-SYSTEM.
Deposits as "bearers of options," 425;
relation of, to loans, 285ff., 512;
relation of, to trade and prices, Ch. XIII, Ch. XIV, 287;
of private banks, 344;
deposits distinguished from "deposits," 339, n., 343-44, 512;
relation of, to "deposits," 512ff.

"Deposits" in Kinley's studies of payments, 230, 232-36, 242-43,
338ff., 392, 512-16;
retail "deposits," 232, 243, 269, 338, 367, n., 368, 392, 513;
wholesale "deposits," 232, 243, 338, 392, 513;
"all other deposits," 232, 235-37, 243, 338, 514;
relation of, to trade, 230, 243-45, 248, 339-40.
See OVERCOUNTING AND UNDERCOUNTING.
New York City, 233, 234, 242, 246, 340ff.;
country, 246;
in Pittsburg, 245-46;
check "deposits," volume of, 339, 360-62, 392.

_Deutsche Bank_, 530, n.

Dewey, John, 17, n., 22, 579, n.

Dibblee, G. B., 259-60.

Differential principle, and theory of rent, 430-41;
applied to money, 439-41, 529.

Director of the Mint, statistics of gold consumption, 413, n.

Discount. See TIME-DISCOUNT and CAPITALIZATION THEORY;
rate of, see INTEREST;
rate of, _vs._ money rates, see INTEREST;
on Greenbacks, see GREENBACKS, PREMIUM, AGIO.

"Discounting," 298, 597.

Distribution of wealth, 15, 31, 33, 37, 38, 97, 102-03, 246, 247, n.,
413-16, 465-67.
See also INTEREST, CAPITAL, CAPITALIZATION THEORY, RENT, IMPUTATION
THEORY.

Division of labor in banking, America and Germany contrasted, 527;
extent of in England, 530, 540-41, 542.

Dodo-Bones, 82, CL VII, 155, 280, 304, 321, 325.

"Dollar exchange," 541.

"Domestic trade" _vs._ foreign trade, appendix to Ch. XIII.
See TRADE.

Double counting in estimating volume of trade. See OVERCOUNTING.

Dualism, most useful metaphysics for social sciences, 571-72.

_Dun's Review_, 272, n., 273, n.

Dynamics, 42, 106, 178, n., Ch. X, 254, 262-66, 392-93, 395-96, 426,
474, 484-89, 495, 527-28, Ch. XXV;
dynamics and statics, reconciliation of, 42, 395-96, Ch. XXV;
"dynamic credit," 484-89.
See TRANSITION PERIODS, PROSPERITY, THEORY OF, STATICS, "NORMAL,"
FRICTION, FLUIDITY, LIQUIDITY, SALEABILITY, EQUILIBRIUM,
BUSINESS CAPITAL, INTANGIBLE CAPITAL, etc.

E

Elasticity. See DEMAND, ELASTICITY OF, AND BANK-CREDIT, ELASTICITY OF.

Ellwood, C. A., 4, n., 21, n.

Emery, H. C, 146, n., 371, n., 576, n.

England, 142, 184, 447-48, 450, 530, 534, 536-43.
See LONDON, and LIVERPOOL.
Bank of England, 183, 319, 323, 350, 538ff.;
"Bank Restriction" in, 323, n.

English School, 96.
See CLASSICAL SCHOOL.

Entrepreneur, 67, 485ff., 539, 583-85.

"Epi-phenomenon," money as, 266.

"Equation of Exchange," Ch. VIII, 186, 188, 191, 204, 283,
Ch. XV, 326, 363, 520-22, 527, n., 528, n.;
as equation of "values," 159;
mathematical analysis of, 158-66;
factors in, highly abstract, 162-63, 176-77;
"equation of exchange" _vs._ causal theory, 163, 165-66, 186,
189, n.
See CAUSAL THEORY OF VALUE.
Statistics of, Ch. XIX.
See QUANTITY THEORY, DEPOSITS, VELOCITY, TRADE, VOLUME OF,
PRICE-LEVEL, etc.

Equation of supply and demand, 51.
See SUPPLY AND DEMAND.

Equilibrium, 91ff., 105, 115, n., 116, 117, 119, 156, 187, 190, 222,
225, 254, 262-66, 293, 298-99, 328, 333, n., 392-93, 401,
451-57, 557, 570-73, 583, 586-89.

European Banking, 262, 497, 511, 523, 527, 530.
See ENGLAND, GERMANY, FRANCE, AUSTRIA-HUNGARY, BELGIUM, etc.

Exchange, 9-11, 133, 224ff., 398ff., 468-69, 520-23;
creates _values_,
not _utilities_, 111, n., 145, 423-24, 424, n.;
in static state, 262-66, 401-02;
relation of, to value, 9-11, 401ff., 468-69.
See TRADE, GOLD MOVEMENTS, INTERNATIONAL, ETC.

Exchangeability. See SALEABILITY.

F

Fashion. See SUGGESTION.

Federal Government, 147, 322, 332, 368, 432, 476, 549;
Federal war tax as index of grain speculation, 251.

Federal Reserve System, 299, 490, 499, 518-20;
should rediscount stock collateral loans, 518-20;
"money trust" and, 518-20.

Fetter, F. A., 7, n., 48, 78, n., 301, n., 303, n., 437, 440, n.,
562, n.

Fiat theory, 136, 142.
See also LEGAL THEORY, _Staatliche Theorie_.

Fichte, J. G., 22, 137.

Fisher, I., 47, 56, 81, 91, n., 99, 117, n., 124, 128, 130, 143, 152,
154ff., 172ff., 186ff., 196, 200, n., 203ff., 209ff., 216ff.,
222, 226-29, 231, 240, 247, 248, n., 254, 256, 261, 262, 274,
281ff., 291ff., 301, n., 302-04, 306, 308, 311, 312, 324,
326, 331, 333, n., 335ff., 348-49, 351-52, 360ff., 371, 376,
381-83, 400, 437, 455, 522, 537, 555, 559, 563.

Fite, W., 21, n.

Fluidity, 143, 403, 456, 476, 542, 563, n.
See also LIQUIDITY, SALEABILITY, STATIC THEORY, ETC.

Flux, W. A., 49.

Foreign bills of exchange, in reserves, 181-82.
See BILLS OF EXCHANGE AND GOLD MOVEMENTS, INTERNATIONAL.

Foreign trade, 261, 265, 503;
ratio of, to "domestic trade," appendix to Ch. XIII.
See TRADE, BILLS OF EXCHANGE, GOLD MOVEMENTS, INTERNATIONAL.

France, 136, 139, n., 450, 530, n., 533;
_Banque de_, 136, 183, 425, 538-39.

Friction, 11, 94, 262-66, 392, 426, 543-44, 554-55, 563.
See also STATICS, DYNAMICS, SALEABILITY.

Functions of money, 76, 81, 83, 93-94, 110-11, 144-48, 151-53, 201,
263-66, 313-14, 327-28, 390-91, 394, 399, Ch. XXII, 536ff.,
543;
in relation to value of money, 144ff., 390-91, 309-400, Ch. XXII.

Functions of value. See VALUE, FUNCTIONS OF.

"Futures," 243, 251.
See STOCKS, "BORROWING AND CARRYING" OF.

Future values, 40, 107, 459-60, 480, 486, 585.
See CREDIT, PART OF GENERAL SYSTEM OF VALUES.

Futurity, not peculiar to credit, 459-60, 475.

G

George, Henry, 78, n., 301, n.

Germany, 136, 139, n., 145-46, 167, 425, 433, n., 435, n., 527,
530, n.;
giro-system in, 150, 167, 289;
great use of domestic bills of exchange in, 288-89;
limited division of labor in banking in, 527;
Reichsbank, 182, 183.

Giddings, F. H., 87, n., 556-57, 571, 573, n.

Giro-system. See GERMANY.

Gold, 84, 143, Ch. XXI, 422, 432, 436, 441-43, 443-44, n., 530,
535-56, 538-39, 567, 591;
in arts, 84, 135, 151-53, 224, 314, 330, 390, 400, Ch. XXI, 451-57;
as money, 84, 135, 141, 146, 224, 304, 322-23, 390, 408-16, 441-43,
445, 451-57, 495-96, 530, 535-56, 538-39;
value of, 84, Ch. XXI, esp. 408-16, 451-57;
in reserves, 147, 180-81, 324-28.

Gold mining camps, high prices in, 220, n.

Gold movements, international, 60-61, 129, 142, 181-82, 183, 261,
280, 292, Ch. XVI, 434, n., 531, 533-34.

Gold production and prices, Ch. XVIII, 535-36;
new world discoveries, 219ff.;
Californian and Australian discoveries, 220-21, 221, n.

Goods, consumers', 34ff., 82, 96, 481;
ranks or orders of. See RANKS.
Instrumental, 38, 81, 297, 482, 484, 500, 569, 579.

"Goods side" of "equation of exchange," no, 159.

"Good will," 260, 482-83, 561, 564.
See BUSINESS CAPITAL, INTANGIBLE CAPITAL, SELLING COSTS, ETC.

Grain speculation. See SPECULATION, COMMODITY.

Greenbacks, 141, 146, 147, 194, 304, 322-23, 332-33, 422, 432, 435,
436, 567-68.

Gresham's Law, 129, 140, n., Ch. XVII;
conflicts with quantity theory, Ch. XVII;
quantity theory version of, 321-22.

H

Habit, 104, 109, 138, 225, 554-55, 589.
See also CUSTOM.

Hadley, A. T., 157.

Haig, R. M., 552, n.

Hamburg, coffee speculation in, 252;
Giro-Bank, 150.

Haney, L. H., 3, n.

Harvey, "Coin," 327.

Havre, coffee speculation in, 252.

"Hedging," 243, 253, 264.

Hegel, G. W. F., 18, n.

Helfferich, Karl, 14, 82, n., 110, n., 134, 418, n., 419, n.

Heredity, 571-73.

Hermann, F. B. W. von, 438, n.

History, economic interpretation of, 33.

Historical vs. cross-section viewpoints, 101ff., 119-20, 135-39,
397-400, 548, 553-54, 578-81.
See also STATICS, DYNAMICS.

Hoarding, 140, n., 174, 207, 208, 211, 333, n.

Hobson, J. A., 73, n., 308, n.

Hollander, J. H., 154, 250, n.

Holmes, Justice O. W., 24, 587-90.

Holt, Byron W., 222, 249, 370.

Hubbard, Guy C., 260, n.

Hughes Commission, 252, n.

Hume, David, 21, 47.

I

Ideal credit economy, 543.

Ideal values, 467, 480.

Imitation. See SUGGESTION.

Imputation theory, 28, 38-40, 99, 300, 389, 424, 481;
conflicts with quantity theory, 300, 303-04, 310-11, 389.

Income, money. See MONEY INCOME.

Income, net, of the United States, appendix to Ch. XIII.

Index numbers, of check circulation, 361-62, 383;
of net income of the United States, 278;
of prices, 278, 381-82, 383, 436;
of railway gross receipts, 278;
of trade, 227-29, 255-56, 278, 363, 381, 383.
See STATISTICS.

India, 140, 143, 149, 181, 443, 444, n., 449;
a liability, rather than an asset, to quantity theory, 444, n.

Individual interest and social advantage, 397-99.

Individual values, 19, 43-45.
See also VALUE, SUBJECTIVE, PERSONAL, SUBJECTIVE EXCHANGE.

Individualistic theories, 14-16, 20, 21, 22ff.

Individuality, a social product, 16-19.

Industry, rather than commerce, chiefly financed by modern banks,
Ch. XXIV, esp. 523-29.
See ASSETS OF BANKS, BANK CREDIT, FUNCTIONS OF.

Inertia. See HABIT, CUSTOM.

Institutional values, 29-30, 413, 484.

Institutions, 19, 27, 484, 487, 562, n., 570.

Insurance policies as credit instruments, 472.

Intangible "capital" _vs._ capital goods, 482-83, Ch. XXV.
See also GOOD WILL, BUSINESS CAPITAL, ETC.

Interest, 146, 219, 223-24, 225, 301ff., 333, n., 416, n., 428-32,
437, 471, 472;
"appreciation and," 76-78;
productivity theory of, 224, 302-03, 437;
"use" theory of, 437, 438, n.;
"pure rate" of, 75, 76, 77, 428-29;
_vs._ "money rates," Ch. IV, 224, 428-32, 461, 521, n., 523-24,
526, 529.
See also MONEY RATES, CALL RATES, CAPITALIZATION, TIME DISCOUNT.

International banker, 409, 446, 539ff.
See GOLD MOVEMENTS, INTERNATIONAL.

International trade. See FOREIGN TRADE.

Investment, 270, 523ff., 528;
_vs._ speculation, 521, n., 523-26;
banker, 489, 519, 523, n., 527-28.

"Invisible items" in foreign trade, 268, 270, 320.

J

James, William, 579, n.

Jenks, J. W., 260, n.

Jevons, W. S., 25, 48, 91, n., 107, 522, n.

Jewelers, 409, 454-57;
paper of, in the money market, 454-57.

Johnson, A. S., 4, n., 13, 105, 115, n., 265, n., 403, n., 440, n.,
563, n.

Johnson, J. F., 73, n., 333, n., 418, n.

Joint Stock Banks, 184, 530, 539.
See LONDON, ENGLAND.

Jurisprudence, 23-24, 588.
See LAW, LEGAL VALUES.

Juristic thinking, 24-25, 29, 433, n., 586-88;
contrasted with economic thinking, 433, n.

K

Kant, I., 22, 137.

Kemmerer, E. W., 48, 129, 135, 140, 141, 156, 157, 167, 170, 175, n.,
220, n., 226, 240, n., 254, 256, 274, 312, n., 321, 334-37,
359, n., 361, n., 363-65, 381-83, 400, 426, n., 443, n.,
444, n., 522, n., 537, 538, n.

Keynes, J. M., 180, 181, 182, n., 184, 207, 443, n., 535.

King, W. I., 242, 243, 246, n., 247, n., 248, n., 269, 271-72, 275, n.

Kinley, D., 13, 48, 78, n., 80, 110-11, 174, 208, n., 230, 233-36,
237, n., 242-45, 249, 254, 256, 269, 321, 337-45, 349,
350-52, 360, 365, n., 368, 376, 383, n., 419, n., 447, 449,
463, 498, n., 512-15.

Kirkbride and Sterret, 347, n.

"Kiting," 368.

Knapp, G. F., 49, 150, 418, n., 433-5, n.

Knies, Carl, 12, 133, 323, n., 418, n., 419, n.

Kuhn, Loeb & Co., 343-44, 515, 515, n.

L

Labor theory of value, 12, 44-45, 64ff., 139, 570.
See VALUE, COST OF PRODUCTION, ADAM SMITH, RICARDO, MARX, CAIRNES.

Land speculation, 254, 264, 317.
See SPECULATION.

Laughlin, J. L., 48, 135, 141, 144, 146, 177, 219, n., 281, 282, n.,
283, n., 284, 312, n., 319, n., 327, n., 418, n., 419, n.,
443, n., 444, n., 459.

Law, theories of, 23ff., 586-89;
statics and dynamics of, 586-88.

LeBon, G., 37.

Legal tender, 147, 418, 422, 432-36, 442, 445-47, 448, n.
See FUNCTIONS OF MONEY.

Legal theory of money, 134, 136, 405, 433n., ff.
See _Staatliche Theorie_.

Legal thinking. See JURISTIC THINKING.

Legal values, 23-29, 40, 138-39, 413, 414, 435, n., 562, n., 586-89.

Lewes, G. H., 87, n.

Liabilities of banks, 285;
relation of, to loans, 286.
See DEPOSITS, BANK-NOTES, ETC.

Liquid paper, 455, 489-91, 499ff., 513-18.

Liquidity, 455, 475, 489, 495, 499ff., 508, 513-18, 526-27, 529-44.
See SALEABILITY, STATICS, FRICTION.

Liverpool, 252, 259.

Loans, on call. See CALL LOANS.
On cotton, 481, 504, 508, n.;
on grain, 380, 503, 508, n.;
to stock market, 375ff., 379, n., 430, 488, 502-03, 507-12,
518-20, 523-28;
to wholesalers and retailers, 504-05;
consumption, 463;
war, see WAR LOANS.
Collateral, see COLLATERAL LOANS.
Activity of, 512-14;
relation of, to deposits, 285ff.;
relation of to "deposits," 375-81, 512-14;
relation of, to trade, 287, 287, n.;
relation of, to international gold movements, 318-19;
short loans as bearers of options, 425, 428-32.
See also ASSETS OF BANKS, "COMMERCIAL PAPER," "MORNING LOANS,"
"OVERCERTIFICATIONS."

Locke, John, 47.

London, 145, 251, 259, 259, n., 497, 522, n., 539ff.;
stock exchange, 451;
money market, illustrates assumptions of static theory, 539ff.

M

"Manipulation," of values and prices, 575ff., 589.

Manufacturers' "paper," 454, 457, 500, 513, n.

"Margins," 372, 488, 489, 493, 521, n., 523-26, 528;
"margin operator" as "banker," 524-26.

Marginal analysis, 24, 51, 440, Ch. XXV;
applied to law, 586-89;
applied to money, 152-53, 199, 208, 225, 227, 451-57, 534.

Marginal utility, 13, 14-15, 30, 34-35, 38, 40, 42, 44, 46, 49,
Ch. V, 137, 440, n., 562, n., 570, 583-86;
applied to value of money, Ch. V, 137;
essentially static theory, 106ff.;
Schumpeter's version of, 44, 90ff., 113, n., ff., 583-86;
limitations of, 92ff.;
"relative marginal utility," 113-114, n., 115, n., 440, n.;
quantity theory and, 46.

"Market letter," 222, 575.

Marshall, A., 48, 105, 265, n.

Marx, Karl, 12.

Mathematical economics, 91, n., 117, 139, 142, Ch. VIII, 310, 438,
553.

McCulloch, J. R., 66.

Mead, G. H., 4, n.

Meade, E. S., 198, n., 202, n., 477, n.

Measure of values, 133, 150-53, 201, 265, n., 325, 327-28, 391, 417,
418-23, 436, 451, 543, 567-69, 538;
must have value, 133, 326;
relation of, to commodity theory, 151-53;
applied to non-economic values, 567-69.
See also FUNCTIONS OF MONEY.

Medium of exchange, 133, 201, 327-28, 391, 404, 418, 420-24, 425-26,
433, n., 434, n., 436, 442, 543;
must have value, 133.
See FUNCTIONS OF MONEY.

Meinong, A., 467.

Menger, Karl, 14, 48, 82, n., 88, 96, n., 110, 397, 398, 400, 401, n.,
402-04, 406, 407, n., 418, 476, 493.

Mercantilism, 225, 551.

Merriam, L. S., 13, 419, n.

Metallist theory. See COMMODITY THEORY.

Middlemen, effect of eliminating, on price level, 306-07.

Mill, James, 66.

Mill, J. S., 46, 47, 50-52, 55, n., 58, 59, 61, 67, 69, 94, 129, 132,
161, n., 172, 192, 193, n., 265, 285, n., 319, n., 333, n.,
548.

Minneapolis, bills of exchange in, 289, n.

Mises, L. von, 14, 48, 49, 80, 83, 88, 100, 109-11, 120, n., 182, n.,
418, n., 429, n., 434, n., 556.

Mitchell, W. C., 91, n., 179, n., 188, 213, n., 265, n., 286, n.,
323, n., 329, n., 332-34, 363, 412, n., 430, n., 448, n.,
449, n., 522, n., 533, 536, 568, 574.

Mode. See SUGGESTION.

Money, abstracted from by static theory, 99, 265-66, 392;
definitions of, 167, 169, 325-26, 495-96;
functions of, see FUNCTIONS OF MONEY;
must have value from non-pecuniary source, Ch. VII, 326, 390-91,
417, 440, 449, 591;
origin of, 394, Ch. XXI;
money not unique, 82-83, 85, 137, 145, 147, 148, 325, 329-30, 389,
406-07, 417, 425, 437-50, 477-78, 535, 542, 544;
peculiarities of, 3, 57-58, 64, 69, 71, 74ff., 78-79, 81-83, 85,
88, 91, 101, 124, Ch. VII, 132, n., 134, 144-45, 153, 392-93,
Ch. XXI, Ch. XXII, 406, 437ff.;
tool or instrumental good, Ch. IV, 82-83, 224, Ch. XXII, 591;
theory of, developed in isolation, 46ff.;
theory of, must be dynamic, 262-66, 393.
See also STATICS, DYNAMICS.
Value of, _vs._ "reciprocal of price-level," 8, 56-57, 77, 100,
123, 128-29, 155-56, 312-13, 382, 388-89, 433, n., 449.
See VALUE, ABSOLUTE _vs._ RELATIVE.
Relation of, to credit. See CREDIT, RESERVES, RATIO, FIXED, M:M'.
Relation of, to trade, Ch. XIII, Ch. XIV.
See TRADE.
See ANALYTICAL TABLE OF CONTENTS.

"Money in circulation," Ch. VIII, 173, 175, n., 179, 185.

Money economy, 90, 220, 225, 265, n., 397, 399, Ch. XXI,
Ch. XXII, 555.

"Money-funds," distinguished from money, 63, 427, 453, 495-96.

Money income, distinguished from real income, 89;
distinguished from quantity of money, 90, 307-310.

Money market, 32, 62, 221, 222, 319, 406, 427, 430, 453-58, 461,
495-97, 516-20, 522, n., 524, 529-44, 575-76.

"Money Post," on New York Stock Exchange, 372, 375, 430-31.

Money rates, Ch. V, 145, 149, 183, 223, 224-26, 316, 319-20, 378,
406, 428-32, 453-57, 461, 495, 523-24, 526, 529-30, 534;
_vs._ interest rates. See INTEREST.
Relation of, to bank reserves, 378;
to clearings, 378;
to international gold movements, 316, 318-20;
to dividend and interest payments, 522, n.;
to plans for corporate consolidations, 198;
to jewelers' profits, 454;
to trade, 223, 224, 226;
to volume of speculation, 378, 522, n.

"Money Trust," 518-20.

Monism, unsatisfactory metaphysics for social sciences, 571-72.

Moore, H. L., 237, n., 238, n., 574.

Morality, theories of, 22-23.

Moral values, 22-29, 40, 137-38, 480, 562, n., 567-69, 582, 589.

Morgan, J. P., 140, 519, n., 577;
J. P. Morgan & Co., 343-44, 375, 515, n.

"Morning loans," 376, 377, 509, 510.
See "OVERCERTIFICATIONS."

N

National banks, 234, 338, 342, n., 343, 345, 347, 355, n., 359, 375,
498-99, 502-03.

National City Bank, 375, 521, n., 540, n.

Negative values, as "real costs," 71, n.