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The Theory of Money and Credit
by Ludwig von Mises

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This classic treatise on monetary theory remains the definitive integration of microeconomics and macroeconomics. First published in 1912-and remaining in print since that time-it catapulted Mises into the ranks of Europe's most respected economists. Rothbard aptly describes it as "the best book on money ever written," economists have yet to absorb all its lessons.

Mises shows how money had its origin in the market, and how its value is based on its usefulness as a commodity in exchange. In a step-by-step manner, Mises presents the case for sound money with no inflation, and presents the beginnings of a full-scale business cycle theory.

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Publication information: This online text corresponds to the 1953 Yale University Press Edition, New Haven.

Table of Contents



Preface to the New Edition (p. 9)

Introduction by Professor Lionel Robbins (p. 11)

Preface to English Edition (p. 14)

Preface to Second German Edition (p. 23)

PART ONE: THE NATURE OF MONEY

CHAPTER 1—THE FUNCTIONS OF MONEY
1. The General Economic Conditions for the Use of Money (p. 29)

2. The Origin of Money (p. 30)

3. The "Secondary" Functions of Money (p. 34)

CHAPTER 2—ON THE MEASUREMENT OF VALUE
1. The Immeasurability of Subjective Use-Values (p. 38)

2. Total Value (p. 45)

3. Money as a Price-Index (p. 47))

CHAPTER 3—THE VARIOUS KINDS OF MONEY
1. Money and Money-Substitutes (p. 50)

2. The Peculiarities of Money-Substitutes (p. 54)

3. Commodity Money, Credit Money, and Fiat Money (p. 59)

4. The Commodity Money of the Past and of the Present (p. 62)

CHAPTER 4—MONEY AND THE STATE
1. The Position of the State in the Market (p. 68)

2. The Legal Concept of Money (p. 69)

3. The Influence of the State on the Monetary System (p. 71))

CHAPTER 5—MONEY AS AN ECONOMIC GOOD
1. Money Neither a Production Good Nor a Consumption Good (p. 79)

2. Money as Part of Private Capital (p. 86)

3. Money not a Part of Social Capital (p. 90))

CHAPTER 6—THE ENEMIES OF MONEY
1. Money in the Socialist Community (p. 91)

2. Money Cranks (p. 92)
PART TWO: THE VALUE OF MONEY

CHAPTER 7—THE CONCEPT OF THE VALUE OF MONEY
1. Subjective and Objective Factors in the Theory of the Value of Money (p. 97)

2. The Objective Exchange-Value of Money (p. 100)

3. The Problems Involved in the Theory of the Value of Money (p. 102)

)

CHAPTER 8—THE DETERMINANTS OF THE OBJECTIVE EXCHANGE-VALUE, OR PURCHASING POWER, OF MONEY

I. The Element of Continuity in the Objective Exchange-Value of Money
1. The Dependence of the Subjective Valuation of Money on the Existence of Objective Exchange-Value (p. 108)

2. The Necessity for a Value Independent of the Monetary Function Before an Object Can Serve as Money (p. 110)

3. The Significance of Pre-existing Prices in the Determination of Market Exchange-Ratios (p. 111)

4. The Applicability of the Marginal-Utility Theory to Money (p. 114)

5. "Monetary" and "Non-Monetary" Influences Affecting the Objective Exchange-Value of Money (p. 123)
II. Fluctuations in the Objective Exchange-Value of Money Evoked by Changes in the Ratio between the Supply of Money and the Demand for It

6. The Quantity Theory (p. 124)

7. The Stock of Money and the Demand for Money (p. 131)

8. The Consequences of an Increase in the Quantity of Money while the Demand for Money Remains Unchanged or Does Not Increase to the Same Extent (p. 137)

9. Criticism of Some Arguments Against the Quantity Theory (p. 146)

10. Further Applications of the Quantity Theory (p. 151)
III. A Special Cause of Variations in the Objective Exchange-Value of Money Arising from the Peculiarities of Indirect Exchange

11. "Dearness of Living" (p. 154)

12. Wagner's Theory: The Influence of the Permanent Predominance of the Supply Side over the Demand Side on the Determination of Prices (p. 155)

13. Wieser's Theory: The Influence on the Value of Money Exerted by a Change in the Relations between Natural Economy and Money Economy (p. 157)

14. The Mechanism of the Market as a Force Affecting the Objective Exchange-Value of Money (p. 162)
IV. Excursuses

15. The Influence of the Size of the Monetary Unit and its Subdivisions on the Objective Exchange-Vlaue of Money (p. 166)

16. A Methodological Comment (p. 167)

CHAPTER 9—THE PROBLEM OF THE EXISTENCE OF LOCAL DIFFERENCES IN THE OBJECTIVE EXCHANGE-VALUE OF MONEY

1. Inter-local Price Relations (p. 170)

2. Alleged Local Differences in the Purchasing Power of Money (p. 172)

3. Alleged Local Differences in the Cost of Living (p. 175))

)CHAPTER 10—THE EXCHANGE-RATIO BETWEEN MONEY OF DIFFERENT KINDS
1. Coexistence of Different Kinds of Money (p. 179)

2. Static or Natural Exchange-Ratio (p. 180) )

CHAPTER 11—THE PROBLEM OF MEASURING THE OBJECTIVE EXCHANGE-VALUE OF MONEY AND VARIATIONS IN IT
1. The History of the Problem (p. 187)

2. The Nature of the Problem (p. 188)

3. Methods of Calculating Index Numbers (p. 189)

4. Wieser's Refinement of the Methods of Calculating Index Numbers (p. 191)

5. The Practical Utility of Index Numbers (p. 194))

CHAPTER 12—THE SOCIAL CONSEQUENCES OF VARIATIONS IN THE OBJECTIVE EXCHANGE-VALUE OF MONEY
1. The Exchange of Present Goods for Future Goods (p. 195)

2. Economic Calculation and Accountancy (p. 203)

3. Social Consequences of Variations in the Value of Money When Only One Kind of Money is Employed (p. 206)

4. The Consequences of Variations in the Exchange-Ratio between Two Kinds of Money (p. 212)

CHAPTER 13—MONETARY POLICY
1. Monetary Policy Defined (p. 216)

2. The Instruments of Monetary Policy (p. 219)

3. Inflationism (p. 219)

4. Restrictionism or Deflationism (p. 231)

5. Invariability of the Objective Exchange-Value of Money as the Aim of Monetary Policy (p. 236)

6. The Limits of Monetary Policy (p. 238)

7. Excursus: The Concepts, Inflation and Deflation (p. 239)

CHAPTER 14—THE MONETARY POLICY OF ETATISM
1. The Monetary Theory of Etatism (p. 242)

2. National Prestige and the Rate of Exchange (p. 244)

3. The Regulation of Prices by Authoritative Decree (p. 245)

4. The Balance-of-Payments Theory as a Basis of Currency Policy (p. 249)

5. The Suppression of Speculation (p. 252)

PART THREE: MONEY AND BANKING

CHAPTER 15—THE BUSINESS OF BANKING
1. Types of Banking Activity (p. 261)

2. The Banks as Negotiators of Credit (p. 262)

3. The Banks as Issuers of Fiduciary Media (p. 263)

4. Deposits as the Origin of Circulation Credit (p. 268)

5. The Granting of Circulation Credit (p. 271)

6. Fiduciary Media and the Nature of Indirect Exchange (p. 275)

CHAPTER 16—THE EVOLUTION OF FIDUCIARY MEDIA
1. The Two Ways of Issuing Fiduciary Media (p. 278)

2. Fiduciary Media and the Clearing System (p. 281)

3. Fiduciary Media in Domestic Trade (p. 286)

4. Fiduciary Media in International Trade (p. 291)

CHAPTER 17—FIDUCIARY MEDIA AND THE DEMAND FOR MONEY
1. The Influence of Fiuciary Media on the Demand for Money in the Narrower Sense (p. 297)

2. The Fluctuations in the Demand for Money (p. 300)

3. The Elasticity of the System of Reciprocal Cancellation (p. 302)

4. The Elasticity of a Credit Circulation Based on Bills, especially on Commodity Bills (p. 305)

5. The Significance of the Exclusive Employment of Bills as Cover for Fiduciary Media (p. 313)

6. The Periodical Rise and Fall in the Extent to Which Bank Credit is Requisitioned (p. 314)

7. The Influence of Fiduciary Media on Fluctuations in the Objective Exchange-Value of Money (p. 318)

CHAPTER 18—THE REDEMPTION OF FIDUCIARY MEDIA
1. The Necessity for Complete Equivalence between Money and Money Substitutes (p. 319)

2. The Return of Fiduciary Media to the Issuer (p. 321)

3. The Case Against the Issue of Fiduciary Media (p. 322)

4. The Redemption Fund (p. 325)

5. The So-called "Banking" Type of Cover (p. 331)

6. The Significance of Short-Term Cover (p. 334)

7. The Security of the Investments of the Credit-Issuing Banks (p. 335)

8. Foreign Bills in the Redemption Fund (p. 337)

CHAPTER 19—MONEY, CREDIT, AND INTEREST
1. On the Nature of the Problem (p. 339)

2. Money and Interest (p. 346)

3. Equilibrium Rate and Money Rate of Interest (p. 349)

4. Interest Policy and Production (p. 357)

5. Credit and Economic Crises (p. 365)

CHAPTER 20—PROBLEMS OF CREDIT POLICY

I. Prefatory Remark
1. The Conflict of Credit Policies (p. 367)
II. Problems of Credit Policy Before the War

2. Peel's Act (p. 368)

3. The Nature of Discount Policy (p. 373)

4. The Gold-Premium Policy (p. 377)

5. Systems Similar to the Gold-Premium Policy (p. 382)

6. The "Illegitimate" Demand for Money (p. 384)

7. Other Measures (p. 386)

8. The Promotion of Cheque and Clearing Transactions (p. 387)
III. Problems of Credit Policy in the Period Immediately After the War

9. The Gold-Exchange Standard (p. 391)

10. A Return to a Gold Currency (p. 394)

11. The Freedom of the Banks (p. 395)

12. Fisher's Commodity Standard (p. 399)

13. Future Currency Policy (p. 406)

PART FOUR: MONETARY RECONSTRUCTION

CHAPTER 21—THE PRINCIPLE OF SOUND MONEY
1. The Classical Idea of Sound Money (p. 413)

2. The Virtues and Alleged Shortcomings of the Gold Standard (p. 416)

3. The Full-Employment Doctrine (p. 423)

4. The Emergency Argument in Favor of Inflation (p. 426)

CHAPTER 22—CONTEMPORARY CURRENCY SYSTEMS
1. The Inflexible Gold Standard (p. 429)

2. The Flexible Standard (p. 429)

3. The Freely-Vacillating Currency (p. 431)

4. The Illusive Standard (p. 432)

CHAPTER 23—THE RETURN TO SOUND MONEY
1. Monetary Policy and the Present Trend Towards All-Around Planning (p. 435)

2. The Integral Gold Standard (p. 438)

3. Currency Reform in Ruritania (p. 442)

4. The United States' Return to a Sound Currency (p. 448)

5. The Controversy Concerning the Choice of the New Gold Parity (p. 452)

6. Concluding Remarks (p. 456)

APPENDIX A—ON THE CLASSIFICATION OF MONETARY THEORIES
1. Catallactic and Acatallactic Doctrine (p. 461)

2. The "State" Theory of Money (p. 463)

3. Schumpeter's Theory (p. 469)

4. "Metallism" (p. 473)

5. The Concept of "Metallism" in Wieser and Philippovich (p. 475)

6. The Two English Schools of Banking Theory (p. 481)

APPENDIX B—TRANSLATOR'S NOTE ON THE TRANSLATION OF CERTAIN TECHNICAL TERMS (p. 482)