The Stock Market, Credit and Capital Formation

FROM THE PREFACE TO THE GERMAN EDITION

Current affairs have prompted this study of the relationships between the stock market, credit, and capital formation. The growth of stock-exchange credits during the prosperity period evoked the interest, and in some part the serious concern, of those in charge of economic and monetary policy. Lending to the stock exchange was officially assailed during recent years in Germany (1927) and in the United States (1928-1929). Intervention against stock-exchange lending was undertaken supposedly in defence of industrial interests. This resulted in lively discussion of the problems involved, in the daily papers as well as in economic periodicals.

In a paper read before the Nationalökonomische Gesellschaft in Vienna, on 25th April, 1930, I discussed the problem of stock-exchange credit. . . . My paper contained the essential theses of this book. A discussion followed which gave rise to significant comments by several eminently competent economists. Many of the remarks of the participants in the discussion have been embodied in this book.

FRITZ MACHLUP.

VIENNA, May, 1931.