Interest and Prices [antikvár]

INTRODUCTION To judge tlie character cand importance of Knut Wicksell'a monetary doctrines, it is necessary to view tiiem against the background of the monetary controversy of the late nineties. For some decades the organisation of an international gold standard had been the outstanding problem. Hardly had this organisation won its victory in the seventies, when its position was threatened by the continued fall in wholesale prices. A violent propaganda for birnotaliisin set in almost everywhere. The character, working, advantages, and disadvantages of this system naturally became the central topic of discussion in the monetary field. The old debate between the currency and the banking schools had died out and the latter undoubtedly held tJie field. The quantity theory of money was discredited, even in the Anglo-Saxon countries. Most writers agreed that if credits were granted on adequate security in accordance with sound banking principles, the supply of means of payment could not exceed "the requirements of the market". There was no discussion in that connection of the level of bank rate. Two things seem to hav^e caused Wicksell to adopt an entirely different attitude to monetary problems. First of all, he was a close student and admirer of the English classical school of economists, above all of Kicardo. To Wicksell's mathematical mind the quantity theory of money, as presented by Rioardo, jnade a much stronger appeal than the vague generalisations of tlie current banking discussions, which side-stepped the question "Why do prices rise or fall?" that Wicksell at an early stage came to regard as the main problem of monetary theory. The stress which the Ricardian school placed on the influence of discount policy on the quantity of money and on prices seemed to Wicksell entirely justified. On the other hand,