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A TREATISE ON MONEY

BK. HI

Before, however, we embark on. a detailed develop-ment of these ideas, it may be useful to outline theaccepted doctrine as it has been developed historicallyand as it exists to-day. It is surprisingly difficult todo this. No systematic treatment of the subject existsin the English language, so far as I am aware. Youwill search in vain the works of Marshall, Pigou ,Taussig or Irving Fisher . Even Professor Cassel’s treat-ment, which is somewhat fuller, does not examinethe train of causation in any detail. 1 Mr. Hawtreyhas a little more to say ; but he is somewhat un-orthodox on this matter and cannot be quoted as anexponent of the accepted doctrine. There remains,however, one outstanding attempt at a systematictreatment, namely Knut Wicksell’ s Geldzins und Guter-preise, published in German in 1898, a book whichdeserves more fame and much more attention than ithas received from English -speaking economists. Insubstance and intention Wicksell ’s theory is closelyakin (much more closely than Cassel’s version of Wick-sell) to the theory of this Treatise, though he was notsuccessful, in my opinion, in linking up his Theory ofBank-rate to the Quantity Equation.

“ Bank-rate Policy ”, in the modern sense, wasoriginated in the discussions which followed the mone-tary crisis of 1836-37 and preceded the Bank Act of1844. Before 1837 such ideas did not exist—in theworks of Ricardo, for example, nothing of the sort isto be found; and the explanation is not far to seek.For throughout the life of Ricardo, and up to therepeal of the Usury Laws in 1837, the rate of interestwas subject to a legal maximum of 5 per cent. 2 For

1 There are many incidental references to Bank-rate scattered throughProf. Cassel’s post-war writings. But the most systematic treatment withwhich I am acquainted is to be found in his Theory of Social Economy,chap. xi.

2 I believe that there is still a legal maximum (of 6 per cent) in force in