Part III The Value of Money
| CHAPTER XX RECAPITULATION OF POSITIVE DOCTRINE | |
|---|---|
| Recapitulation of constructive theses of Parts I and II, and program of Parts III and IV | 387-396 |
| CHAPTER XXI THE ORIGIN OF MONEY, AND THE VALUE OF GOLD | |
| Problem stated | 397-401 |
| Value vs. saleability: degrees of saleability; theory of saleability; “buying price” vs. “selling price”; indirect exchange in barter economy; development of commodity of superior saleability into money | 401-406 |
| Money never unique | 406-407 |
| Origin of gold money: ornament; store of value; social prestige of prodigality and of ornament; love of approbation, sex-impulse, and competitive display; elastic value-curve of gold; industrial employments of gold | 407-413 |
| Distribution of wealth and power, and value of gold | 413-416 |
| CHAPTER XXII THE FUNCTIONS OF MONEY AND THE VALUE OF MONEY | |
| Classification | 417-418 |
| Measure of values (standard of value) distinguished from medium of exchange; former does not add value to money metal, latter does | 418-424 |
| Reserve function | 424 |
| Money as “bearer of options”; distinguished from store of value; the dynamic function of money par excellence; explanation of low rates on call loans, and short loans, and low yield of high grade bonds, which share “bearer of options” function; “pure rate” of interest vs. “money rates”: Austria; the New York money market | 424-432 |
| Legal tender; the Staatliche Theorie | 432-436 |
| Standard of deferred payments; which functions add to value of money metal? | 436 |
| Relation of money rates to capital value of money | 436-442 |
| Agio when coinage is restricted: India vs. Western World | 442-450 |
| Equilibrium of gold in arts and gold as money: difficulties of marginal analysis; the money-market phenomena | 450-458 |
| CHAPTER XXIII CREDIT | |
| Analysis rather than definition: “futurity” not essence of credit; credit part of general value system; stocks as credit instruments; juridical and accounting phases | 459-462 |
| Confidence; involved in general value phenomena as well as credit; social psychology of confidence; contagions; influence of centers of prestige; nothing unique in credit; selling vs. borrowing | 462-469 |
| Definition of credit; credit vs. credit transaction; credit and exchange; bulk of credit grows out of dynamic conditions | 469-474 |
| Functions of credit; increasing saleability of non-pecuniary wealth; corporate organization; limits of credit expansion | 475-478 |
| Consideration of objections: that personal loans do not rest on wealth; public loans; that value behind loan would not exist if loan were not made | 478-484 |
| Schumpeter’s “heresies”; his view of the function of the banker: “dynamic credit”; America vs. Continental Europe | 484-488 |
| Peculiarities and functions of bank credit; technique of banking: capital; assets; reserves; “liquidity”; money market | 488-496 |
| CHAPTER XXIV CREDIT—BANK ASSETS AND BANK RESERVES | |
| Traditional view that liquid commercial loans normal and dominant type of bank asset disproved; cannot exceed 11½ per cent of assets of American banks; analysis of bank assets: “other loans and discounts”; stock collateral loans; loans on “other collateral security”; stocks and bonds held by banks; classes of banks; various combinations; excluding real estate loans, more than half of credit extended by State and national banks and trust companies is to stock market; rapid development of stock collateral loans: New York; Europe | 498-512 |
| Activity of different types of loans: banking assets get liquidity chiefly from stock market, and from produce speculators | 512-516 |
| Credit extended to Wall Street not at expense of ordinary commerce; country banks and Wall Street | 516-518 |
| Federal Reserve Banks should rediscount stock collateral loans; “Money Trust” a trust in financing corporations, not ordinary commerce; panics and Federal Reserve System | 520 |
| Quantity theory, putting all exchanges on a par, grotesque: volume of trade and prices in the stock market | 520-523 |
| Direct and indirect financing of corporations by banks; “margin dealer” as “banker” | 523-526 |
| Adam Smith’s view of banker’s functions, and of safe bank loans | 526 |
| Correct on basis of facts of his day, but corporate organization and organized stock market have made smelting house as liquid as consumers’ goods | 527 |
| Division of labor in banking: America vs. Germany | 527-528 |
| Agriculture in money market | 528-529 |
| Reserve problem: special case of problem of liquid assets; many flexible substitutes for cash | 529-532 |
| Causal relation runs from deposits to reserves; gold production and reserve-ratio | 532-535 |
| No static law or “normal ratio” possible; reserve function entirely dynamic function; reserve not needed in “static state”; illustrated by London money market; “ideal credit economy” | 536-544 |