Index

INDEX A Abstinence theory of interest, 43 51 ; crude form of agio theory contained in, 54. Acoommodation paper, 244. Accumulation of wealth, process and causes of, 231-235, 290; cycles of, and distribution, 233. Agio. theory of interest, 43, 340-341 ; Bohm-Bawerk's theory called, 53 (see Bohm-Bawerk); early forms of, in abstinence theories, and in Rae's, Jevons's, Sax's, and Launhardt's works, 54 ; author's version of, 87-88. AgriCUlture, annual cycle in income stream in connection with, 314, 384-385. See Farming. II Aldrich Report" cited, 274, 319 n. l , 427. America, increasing income-streams exemplified in, 304-306; cycle of incom.e-stream fluctuations and rates of interest in, 315. See .United States. Andrews, Benjamin, quoted, 286 n.2• Annuities and the waiting theory of interest, 46-48. Appreciation, influence of monetary, on rate of interest, 78 ff., 358 ff. ; relation between rate of, and rate of interest illustrated, 80 81; of monetary standard, con cept of, 257 fi.; of gold during period of paper inflation, 259 265 ; theory of, applied to periods of rising and falling prices, 270-285; rates of interest an.d, in London, Berlin, Paris, and New York, 272-275; in India, Japan, and China, 276; of gold as compared with silver as shown by rates of interest on Indian loans, 265-270; history of theory of, and -interest, 356 358.

Aristocracy, rise of an, traced, 232. Aristotle, ground of opposition of, to interest-taking, 4, 22. Australia, loans and rates of interest in, 309-310. Average .production period postu lated by Bohm-Bawerk, 55 ; discussion of, 56-58. B Bacon, N. T., cited, 294. Bagehot, Walter, cited, 304, 333. Baldwin, cited, 333. Bank of England, the, 240. Bank loans, imperfect foresight and, 286 n. l • Bank reserves and rate of interest, 322-324. Banks, function of, 252-253. Basis of security, 210-211, 337. Baxter, Robert, quoted, 280-281. Bayley, R. A., cited, 421. Berlin, rates of interest in, relative to rising and falling prices, 273, 319, 418-421. Betterments, repairs which may be called, 188, 190. Billeter, cited, 424. Bimetallists, 287. Bland Act of 1878, 269. Bloch, cited, 292. Bohm-Bawerk, Eugen von, 4 n. 1, 2, 12, 16, 38, 39;. on "indirect productivity theories," 13 n. ; quoted on exploitation theory of interest, 40; on abstinence or waiting theory of interest, 43 45, 49; deservedly high esteem for work of, 53; at one point de fective, 53; consideration of theory of, 53-74; summary of theory of, 54-55; quoted on importance of his "tech nical" theory, 73; author's tribute to, 74; theory of, mar..

429 430 INDEX ginal rate of return on sacrifice and, 163 fi.; on consumption loans, 241 ; mathematical refutation of theory of, 351 355; cited, 45 n., 84,88, 92 n., 93, 98, 103, 383, 384. II Bohm-Bawerk on Rae," Mixter's, 54 n. l . Bondholders, 125; freedom of, from element of risk, 215-216, 245, 256 ; and war loans, 239 ; position oi, as typical creditors, 288. Bonds, explicit and implicit rates of interest on, 10; selling value dependent on expected income, 15; risk element and the price of, 216; issue of, for war loans, 239; for public improvements, 240; mortgage, of corporations, 245; explicit and implicit inter est of income, 255; gold, vs. currency or coin bonds, 259-261 ; rupee, 266. Bond tables, 10, 260. Borrowing, on part of United States, 305. Borrowing and lending, in form a transfer of capital, in fact a transfer of income, 113; equali zation of preference rates by, 117-118, 231; modification of income-stream by, 120-125; ef fect on capital of modification of income-stream by, 231 ff. ; theory of, exemplified by issue of bonds for public improve ments, 240; influence of un equal foresight on, 285-287; high rate of interest sometimes neutralized by, 289-290. See Loans.

Bortkiewicz, L. von, cited, 58, 68; criticism of Bohm-Bawerk's the ory by, 72. Boston, Franklin fund in, 238. Boucher, P. B., cited, 297, 423. Breckenridge, R. M., cited, 422. Brough, William, quoted, 275 n. 2 • Brown, Mary W., cited, 298 n.2 • Bullock, C. J., cited, 88. Business loans, 236, 240 ff.; con trasted with consumption loans, 246-250. Buying and selling, modification of income-stream by, 125-127, 145, 174-175, 176, 231; effect on capital of modification of in come-stream by, 231 ff. C Calcutta, rates of interest in, in rela tion to price-movemeats, 276, 319; yearly average rates of interest in, 418-421. California, income-stream of, and.. rate of interest, 307. Call loans, 211, 244, 275, 357 n.2• Calvin, right and wrong interest taking according to, 5. Canals as subject of investment, 196-197. Cannan, Edwin, cited, 230, 231. Capital, interest viewed as repre senting productivity of, 3 (see Productivity theory, etc.); rela tion between income and, 14-15, 229; income produces, not vice versa, 15; how productivity of, affects rate of interest, 28 ; waiting forms an increase of, 45; rate of interest not dependent on, but on income, 109-113; modifying income-stream by changing use of, 137 ff.; rate of interest is the ratio between income and, 216 n.; effect on, of modification of income-stream by borrowing and lending or buying and selling, 231 fi.; accumulation of, 290; dissipa tion of, 290; definition of, 337.

Capitalistic method of produc'tion, 191-193, 337; and the rate of interest, 196-197. Capitalists, socialists' view of, as robbers of laborers, 38-40; how laborers might become, 41; not robbers, but labor-brokers, 41 42; entrepreneurs, landlords, and laborers as, 230; process of rise of, traced, 231-235. "Capital seeking investment," the phrase, 126. Capital-value, effect of income-value on, 13; is discounted income, 110; determination of, through rate of interest, 229. Capital-wealth, production of future income-services by present, 14. Carver, T. N., cited, 124 n., 126 n., 159, 181, 184, 214, 357 n.lI• Cassel, cited, 196. Caution, coefficient of, defined, 337, 338.

INDEX 431 Chance, options of, 178; element of, and its effect on rate of interest, 207 fl.; defined, 337-338. Chattel mortgages, 300. China, rates of interest and appre ciation for, 276; effect of charac teristic qualities on rate of interest in, 292; small income stream and high rate of interest in, 300 ; index numbers of prices in, 425-426. See Shang hai. Choice, among optional uses of capi tal, 137 ff.; will fall on income stream which has maximum. desirability, 139, 152, 389, 397; two kinds of, of income, 145; determined for individual by rate of interest, but for society in general rate of interest is influenced by, 146-149; three statements of condition deter mining, between options, 156; effect of range of, on rate of interest, 168-175; practical ef fect of range of, 175-177, 329..... 33l. City lots, mortgages on, 245. Civil War, paper money and rate of interest during, 259, 2S0.

Clare, George, cited, 324, 423. Clark, J. B., cited, 189, 357, 359. Clearing-house certificates, 325. Clothing, effect of rate of interest on price of, 226. Coefficient of caution, 337, 338. Coefficient of probability, 338. Coefficient of risk, 338, 342. Coin bonds, 259-26l. Colorado, interest rates of early, 307. Commercial paper, 243. Commodities, definition of, 338. Commodity interest, 277-280. Commutation, rate of, and rate of interest, 216 n. Composition of income-stream, in fluence of, on timepreference, 98-99. Conant, Charles A., cited, 303. Conrad, J., cited, 424, 427. Consumption loans, so-called, as opposed to "productive loans," 240-241 ; exemplification of, 246-248. Continuous reckoning of interest, 82, 340. Contractual interest. See Explicit interest. Corporations, mortgage bonds of, 245. Cost, interest viewed as representing a, 3-4. Cost-of-production theory of value, 19.

Cost. theory of interest, rate of in terest sought in ratio between income from capital and cost of that capital, 29; labor cost, 33 ff. ; abstinence or waiting theory, 43-51; summary of conclusions regarding, 51-52. Courtois, Alp., fils, cited, 423. Credit cycles, 285. Creditor, position of bondholder as the typical, 288. Crop liens, 242-243, 253-254, 315. Crump, Arthur, cited, 423. Currency, depreciation of, and rate of interest, 259. Currency bonds, 259-261. Cycles of accumulation and distribu tion of wealth, 233. D Day, Clive, cited, 232, 292 n.a. D 'Avenel, Viscomte G., cited, 423. Debentures of corporations, 245. Debtor, position of stockholder as the typical, 288. DeHaas, 270 n.!. Delay, interest-taking justified by, by medireval writers, 5, 54. Del Mar, Alexander, theory of in terest of, 22; marginal rate of return on sacrifice and theory of, 161-163; theory of, that Na ture should be reproductive, does not hold, 186.

Depreciation, influence of monetary, on rate of intel;"est, 78 ff.; rela tion between rate of, and rate of interest, illustrated, 80-81; of monetary standard, concept of, 257 ff. Depression, periods of, due to inequality of foresight, 285--287. Desirability, concept of, 88, 338. Discount curve, defined, 338. Discoveries, effect of, on rate of interest, 203-204. Disservice, definition of, 338. Dissipation of capital, 290. Distribution of wealth, application of rate of interest to theory of, 229 fl.; what is meant by the phrase, 230; classical theory of, 432 INDEX abandoned, 230; causes of in equality of, 231-235; effect of habit on, 232-234; cycles of accumulation and, 233. Dorsey, cited, 291. Douglass, William, quoted, 356. Durability of instruments, and the rate of interest, 187-188, 196, 290; changes in regard to, in America, 305-306. Dwellings, effect of rate of interest on price of, 225-226.

E Electricity, enlargement of range of choice by discovery of, 201. Elliott, E. B., statistics by, 283 n., 419 n. England, tendency in, of distribu tion of wealth to remain un changed, 234; effect of indi vidual characteristics on rate of interest in, 291; expenditure on railways in, 291; loans of, in China, and effect on rate of interest, 293; postal savings banks in, 298; income-stream and rates of interest in, 300, 310; cycle of income-stream changes and rates of interest in, 316; index numbers of prices in, 425 426. See London. Entrepreneurs, and cost theory of interest, 42-43; power exerted by, on character of income stream of society, 194-195; as capitalists, 230. Europe, infrequency in, of changes in distribution of wealth, as com pared with United States, 234. Exchange, definition of, 339. Exchange brokerage firms, 253. Expectation, rate of interest is based on, 213. Expectation of life, effect of, on time preference, 105-106. ' Explicit interest (contractual in terest), defined, 5-6, 340; effect of risk on implicit and, 211; shown to differ from implicit, in degree rather than in kind, 255.

Explicit rate of interest. See under Interest, rate of. Exploitation, period of, relative to inventions, 203-204. Exploitation theory of interest, 38-40. Extraction, rate of, in mining, 185. F Falkner, cited, 427. Farmers, fluctuations in income stream of, 315. Farming, intensive, degree of, de termined by rate of interest, 157, 161. Farms, mortgages on, 244-245, 308309, 361-362, 363. Farnam, H. W., cited, 422. Farr, William, cited, 423. Fashion, force of, 333. Fecundity of plants and animals, interest viewed as representing, 3, 22-23; examination of the theory, 23-27. See George, Henry. Feilbogen, translation by, of Bohm Bawerk's Recent Literature on Interest, 3 n. Fetter, F. A., criticism by, of Bohm Bawerk's concept, 58; quoted on Bohm-Bawerk's theory, 73; cited, 88, 128, 184, 194. Fines as a subterfuge for interest taking, 5, 54. Fisher, Irving, The Nature of Capital and Income by, cited, 10,11, 12, 17, 20, 25, 26, 30, 39 n.2, 40, 45, 51, 77, 82 n. l , 83, 88, 90, 91, 96, 127, 138, 141, 142 n.2, 141, 154, 168,189,215,217,225,226,231, 241, 262, 348, 404; articles by, cited, 85, 131, 184, 276, 332, 357, 389, 416.

Flow, defined, 339. Food, price of, not sensibly affected by rate of interest, 226; effect of scarcity or abundance, on rate of interest, 301-302. Foresight, effect of, on rate of time preference, 103 fI.; as applied to falling and rising prices, 257 258, 284; periods of speculation and depression due to inequal ityof, 285-287; effect of, on rate of interest, 291 ff., 334; effect of presence or lack of, in various nations and races, 291-294; partly natural and partly ac quired, 297-299. Forestry policy, European and Amer ican, 27. France, effect of foresight, selfcon trol, and regard for posterity on rate of interest in, 291; effect of income-stream on rate of I Im.plicit interest (natural interest), defined, 6, 340; effect. of r.isk on explicit and, 211; differs in degree rather than in kind from explicit interest, 255. ,Improvements, and the rate of in terest, 190,-191, 195~196; loans for publi'c, 2~0; railroa.d, 245.

Improvidence, loans to· offset, 236, 237, 246-248. :Impure rate of interest, 212.....213, 218-219,. In.come, relation of, to capital,. 14 15;. produces capital, not capital income, 15; waiting is not, 45 48; timepreference the prefer ence for early over late, 89 ff.; definition of, 90-91, 339-240; de pendence of timepreference for ea.ch individual on his, 109; rate of timepreference and-conse quently rate of interes·t depend ent en, 109, if.; relation be tween timepreference and,repre ~en.ted by ,schedule" 113-115; imineQiate and remote" consti ttlte$ di~erence between spend jng and investing, 125-126; enjoyable following on inter mediate, 141; net, is difference between total gross inco:rne and outgo, elements of both. of which are dependent on rate of in terest, 168 fi., 241, 339; effect of, invention and discovery on, 198 206; rate of interest is the ratio betweenea.pital and, 216 u.; G: H interest in, 300,; index numbers' 'Holmes, George K., ou productive of prices in, 425-426. See Paria. and consumption indebtedness Franklin funds, 238. in United States, 240....241 ; Fund, definition-of, 339. cited relative to mor:tg.age staFurniture; effect of rate of. interest tistics, 244; cited· in relation to.: on price of,. 22th statistics of D.~groand. Russian, 294.

:Holt, Byron W., editor of The Gold Supply, and Prosperity, 288, George, Henry" theory of interest of,' 358 n. l ; cited) 301, 335, 357. 22-23; marginal rate of return Horace, philosophy of, 106. on sacrifice and theory of; 161-Horner, method of obtaining average 163; theory ot, that Nature rate of interest, 262 n. 2" 372. should· be reproductive, does not House, price of a, the discounted hold, 186. value of its future income,,91. Germany, maintenance of rate of Howell, Price, cited, 291 interest .in, 313-314; index Burne, David, 8. J!l,l1I11bel's of prices in, 425-426. g·urlbert; H. B.,. quoted, 302",,:,,303. Bee aerlin. Gibbs" H .. II., 271. Giffen, Robert, 271; cited, 310; 311, 422. Gold, appreciation and depreciation of, 258-261, 335; ra-te of in terest on,. compared with rate on silver, 265-270. Gonner, E.C. X., cited, 235. Goodbody, Robert, cited, 301,. 351. Go:th$· Mutual Insurance Company, rates <d interest made by" 313 314.

Graziani, cited, 358. Greenback Bill, 264. Gr"nbacks.. 8ee Pape:r money. Gre.lle, David I., 357 n.:'. Haas, J~\l Ge, cited, 357. Habit,efI'ect· ,of, Qn rate of time preference,. 105; effect of, in dietributio;D. of wealth, 232-234. Hadley, A. T.;, cited, 216. Har8r, lcbi,. compilatiQU by, 419 n., 427. :Hedge, W. B,., cited, 422. HeiJiz,.statisti. by, 31tl D..1, 427. Heredity, elTor in laying .tress on importanee .of, as compared with environment, 298. Hertzka, Theodor, cited, 424. Highways, American, 305-306. Hitomi" compilation by, 419 D." 427. HoJ.la;nd, qualities of foresight, selfcontrol, and regard for posterity, and the rate of interest in" 291 ; effect of income-str.eam on rate of interest in, 300. 21' 434 INDEX loans made to offset fluctuations in, 236, 237-238; public loans to offset fluctuations in, of governments, 239-240. Income-concept, 88. Income-services, production of fu ture, by present capital-wealth, 14.

Income-stream (or Income), defini tion of, 90-91, 339, 340; de pendence of timepreference on future, 92; elements which constitute, 93-94; modification of, by borrowing and lending, 120-125, 231; graphic repre sentation of, by curves, 121 124; modifying by method of sale, 125-127, 145, 174, 176,231; modifying by changing the use to which capital is put, 137 fi.; the total final, 141; capitalistic m.ethod of production requires an ascending, 191-193; effect on, of invention, 198 ff.; regu lation of, by loans, 236 ft.; loans for regulating fluctuations in private, 237; in public, 238 240; effect on rate of interest of character of (size, shape, composition, and probability), 299 fi. Income-streams, option among, and choice\>f one having maximum de sirability, 139 fl., 389, 397; choice among different optional, shown to depend on rate of interest, 145 149; practical effect of existence of large num.ber of, on rate of interest, as balance wheel, 175 177; different cases of optional, 178 ff.; rate of interest high with increasing, low with decreasing, 304-306.

Income-value, effect of, on capital value, 13. India, rates of interest on loans of, in gold and in silver, 265-270; rates of interest and appreciation for, 276; effect of lack of fore sight and negligence on rate of interest in, 292; low income stream and high rate of interest in, 300; index numbers of prices in, 425-426. Indians, effect of characteristics of, on rate of interest, 292, 294. Indirect productivity theories, 13 n. Indorsement, ris~ reduced by, 218. Industrials, mortgages on, 245. Inequalities of distribution of wealth, causes of, 231-235. Inostranietz, cited, 292. IMtrument, definition of, 340. Instruments, durability of, 290. Insurance, effect of, on value of capital subject to risks, 217. IIU!urance company investments, 308 309,313; references for, 421-422. Intensive farming, degree of, de pendent on rate of interest, 156 157, 161. Interactions (intermediate services), 30, 90, 141, 168, 340; not the cause but the result of value, 39 n.2 ; value of, derived from succeeding future services, 91-92, 226; how rate of interest affects, 226-227; real object of business operations obscured by, 241.

Interest: definition of, 3, 340; vari ous theories of, 3-4; early his tory of practice of taking, 4-6; explicit and implicit, defined, 5-6, 236, 340; explicit, depend ent upon im.plicit, 9; question of what determ.ines implicit, 9; processes of nature and, 22-28; theories of, based on cost, 29 fi. ; labor-saving theory of, 35-36; socialists' view of, as extortion, 38-39, 41, 52; abstinence or waiting theory of, 43-51; agio theory, 43; Bohm-Bawerk's agio theory of, 53 ff.; Bohzn-Ba. werk's theory of, discussed, 53 74 ; relation between apprecia tion or depreciation and, 77 ff.; distinction between interest in terms of money and intereet in terms of goods, 84; futility of laws against, 127-128; existence of, because of "slowness of Nature," 185-186; shown to be, not a part, but the whole, of income, 229; rent, profits, and wages included in, 229-230; theory of, as applied to loans, 236 ff.; application of theory to crop liens, 242-243; commercial paper, 243; accommodation pa per, 244; explicit and implicit, differ in degree rather than in kind, 255; virtual, 277-280; commodity, 277-280; history of theory of appreciation and, 356-358.

INDEX 435 Interest, rate of: view of, as an index in a given community of preference for a dollar of present over a dollar of future income, 3, 88; It supply and demand" explanation of, 6-7; "use of money" explanation of, 7-9; theory that quantity of money in circulation governs, 8; em phasis to be placed on distinc tion between implicit and explicit, 10-11; existence of im plicit in bonds, notes, land, etc., in all. instruments of wealth, and in the value of every capital good, 1(}-11; cannot be deduced from ratio of income from capital to value of that capital, 14-15; futility of raising, by raising productivity of capital, 15-16; the same objections apply in the "use" theories, 16 fl. ; Henry George's theories about, 22-23; viewed as consisting in the average rate of growth of animals and plants, 23; conclu l5ions concerning productivity theory and, 28; how productiv i ty of capital does affect, 28; cost theory of, defined, 29; viewed as a wage for the labor of producing capital (exploita tion theory), 38-40; relation be tween, and monetary standard in which it is expressed, 77 ff.; relation between rate of appre ciation or depreciation and, illustrated, 80-81; the number expressing, depends on stand ard of value in which present and· future goods are expressed, 82 ft.; always relative to stand ard in which expressed, 84; no absolute standard of value for reckoning, 84-86; determining the, 87 ff.; basis of, on time preference, 88 (see Tilne-prefer ence); consideration of relation between rates of preferences and, 117 fl.; four conditions which determine, 132-133 ; choice among optional income-streams governed by, 145; change in, results in change of choice of income~streams, 146, 168 ff.; determines choice of individual among optional income-streams, but for society at large is influenced by the existence of options, 146-149; six _conditions which determine, 150; choice of option whose marginal rate of return on sacrifice is equal. to, 158, 159; effect on, of range of choice be tween. options, 168-175; effect of, on wages of labor, 169-170; change in, will affect all income streams flowing from given instrument~ of capital, 171 ; practical effect on, of range of choice, 175-177; effect of, on speculation, 179-180; arising from U slowness of Nature, "

185; waterworks,·· canals, irri gation systems, improvement of railways, etc., and, 196-197 ; effect of invention on, 198 fr.; temporary nature of effect of invention on, 203-204; ele ment of uncertainty in income and, :Z07 ff.; based on expecta tion, 213; and rate of commuta. tion, 216 n.; r~le played by, in the theory of prices, 225 ff.; influence on, of changes in the monetary standard, 257-288, 356 ff.; tables showing com parative rates realized on gold and currency bonds, 260, 262; comparison of rates on gold and on silver, 265-270; periods of rising and falling prices and, 270-285; relatively high when prices are· rising, low when fall ing, ·277; loans as an offset to high, 289,.,..290; manner in which nature of the individual influ ences, 290-299; effect of fore sight, selfcontrol, and regard for posterity on, 291 ff.; effect on, of character of income-stream (size, shape, composition, and probability), 299 ff.; inductive refutation of money theory of, 317-326; table of, in relation to high and low prices, 319; quantity of money and, 320 322; bank reserves and, 322 324; definition of, in various senses, 340-341; formula con necting rates in two diverging standards, 358-360; yearlyaver age rates in London,. Berlin, Paris, etc., 418-421.

Interest-taking, early laws andprac tices concerning, 4-6; not pre436 INDEX vented by prrihibiting loan con-' 'tracts, 127. Interm.ediate services. See Inter actions. Invention, economic effect of, 198 ff.; temporary nature of effect of, on rate of interest, 203-204; the basis of progress in civiliza tion, 205; conditions 'for most rapid multiplication of, 205 206; speculation following, 212 213; effect of, on time-shape of income-streams, 313; progress of, and its 'bearing 'on rate of in terest, 334. Inventors, tribute to, 206. Investing, defined as purchase of right to remote enjoyable in come, 125-126, 341. Investment, period of, in connection with inventions, 203-204; effect of risk on rate of interest in cases of unsafe, 212-213; in cases of safe, 213-215. Investments of insurance companies, 308-309, 313-314, 421-422. Ireland, .small income-stream and high rate of interest in, 300-301.

Irrigation works, as subject of in vestment, 197. J Jameson, consular report of, 427. Japan, rates of interest and apprecia tion for, 276; peace loan for, 313 ; yearly average rates of interest in, 418-420; index numbers of prices in,425-426. Java, debt servitude in, 232; rate of interest in, as affected by lack of foresight and negligence, 292. Jevons, W. Stanley, agio theory in work of, 54, 74; Bohm-Bawerk on, 73; cited, 252, 301-302, 330, 422, 427; De Haas' criticism of, 270 n.2 ; tables of, 277, 319 n.l ; quoted,28l. Jews, interest-taking between, for bidden by Mosaic laws, 4; effect of characteristic quali ties on rate of interest among, 291; low preference rate among, 295 ; natural and traditional tenden cies of,' 298. Johnson, Joseph F., cited, 358. Jones, Senator, 357 n~J. Juglar, cited, 286 n. l . K Ka.hn, J., cited, 424. Kellogg, Dr. J. ,H., 298 n.l • Kellogg, Mrs. J. H., 298 n.l .

Kemmerer, E. W., cited, 801. Kiaer, A. N., cited, 425. Kinley, David, cited, 239. Klondike,high interestra-tes in the, 307. Korea, effect of risk-element on rate of interest in, 302--803. L Labor, cost of, an important ele ment in income-accounts, 169 170; bearing of, on choice be tween uses of capital affording immediate and those affording remote returns, 193-195; wages of, as affected by rate of interest, 228-229 ; defined as outgo in the form of human exertion, 341. Labor cost, in cost theories of in terest, 33 ff. Laborers, rate of intere!t and wages of, 169-170, 228; may be small capitalists, 230. Labor-saving theory of interest, 35 36. Land, as an instrument of wealth, implies a rate of interest, 11; in Turgot's explanation of im plicit interest, 11-12; view of, as source of all human revenue, 12; degree of intensiveness of cultivation of, governed ,by rate of interest, 157, 161 ; .speculation in, and effect of rate of interest on, 180; effect of ra.te of interest on price of, 225; mortgages on, 244-245, 308..;..309; defined as wealth which is part of the 'earth's surface, 341.

'Landlords as capitalists, 230. Land mortgages, 244-245, 308-309, 363 ; reference· for information on, 421. La.ndry, Adolphe, cost theory of interest of, 37-38, 161; criticism of Bohm-Bawerk's theory by, 72; cited, 84, 92 n., 159, 18I. Lanin, E. B., cited, 292. Laspeyres, E., cited, 424. Launhardt, agio theory in work of, '54,74; B8hm-llawerk on views of, 73.

INDEX 431 N Natural interest. Bee Implicit in.. terest. Nature, slowness of,and .effect on .xistenceofinterest, :1.85-186; productivity ol,'andinterest, 186-187. Law of decrea.sing returns foraddi ,tional sacrifice, 33, 151. 'Laws ,aga.inst interest~taking, futility Managing,cost ,of, -42-43, :51. of, 127-128. Manufacturers, fluctuations in inLe Bon, cited, 333. come ..stream of, 815. Lending, limitation of, due to risk, Marginal desirability, defined, 388. 117; difference of risk indicated Marshall, cited and quoted, 84, by, 216. See Borrowing :alld 28.7 n.,'8S8, 359, 411. lending ,and Loans. ~ Menger, Karl, cited, 212. Levy,B. R. :G., eited,'3"22. Metchnikoff, -cite<l, 106. Lexis,cited, 58. Michigan, lumbering and rateso'f Liegeois,J.,cited, ·423. 'interest in, 308. Life, expecta.tion of, and ·tim&-:Mititary purposes, loans for, 238preference, 105-107. '239, 312-313. Life insurance, 108. ' Mill,J. S., cited, 324, 357.

Life insurance companies, Western' ,Mining, rate of extraction in, 185. 'investments of, 308-309. Mining ,communities, rates of ~nterest LQans (loan contracts), a means of-~ in, 306-308. ,:equalizing rate of -time-..prefer- 'Misfortune,loa.ns to "offset, '236, 237, ence and rate of interest, 118-' 248-251; > public 10ans ,to offset 125; ·interest,.;takingnot 'pre- (war loans), 238-239, 312-313. vented "by ';prohibiting, 127;, Mixter, C. W., editor of Rae's Soeffect of risk ,on, 211-212 j : ciological Theory of Capital, classification of, '236 ; ,private" 37 ,n.l ,54 n.:!,74. 237-238 jpublie, '238-240 jpub-' Monetary standard, appreciation and 'iuc"tooffsetiluctuations in; 'depreciation of,257 if. 'I"evenue:and expenses, 239-240 ; :Money, theory that quantity of, in ·for public 'improvements, 240 j:' .circulation, governs rate of inbusiness, 240 <ft'. ; 'productive and; terest,8, 14, 19, '320-:82'2; the .consumption,240-241;:short ,or istandardof value usuaHychosen periodie, 242....;,244; long-time', -to ,express _rate of interest, 77 ; or permanent, 244....245; con- ~ill:ftuencedf appreciation or "sumption,246-248; ;productive,i depreciation of, on .rate of inter246--"248; brokerageconcerns~ est, 78ft. ;r'epresen:tscapitalfor handling (ban.ks,trustcom-:' ized income, 122; "the most ,salapanies, etc.), 253; sale of, 254;: bleaf properties, 212 i inductive high interest rate neutralized, by,:' refutation of money theory of 289-290; :English, in China, and'rate,of interest, '317 ~326.

effect ,on rate of interest"293 ; MQra (delay), interest-.takingjustihigh rate of interest on risky,'. fied;by, 5,54. '302 ; low rate on safe, 303; , MormoDS'as laborerswho:hecame rates ,on, in new Western farm- . capitalists, 41. ing countries,308-309';caused;~Mortgagecompanies,,253. 'by misfortune, 311.,..;312; 'war, i Mortgages, on real estate, '2:4'4-245, 312-313; panic, 324--326. 308....309, 363,; chattel, 300 i Locke, attempted e:x:planationof ' reference ,for information con.. interest by, 6. ,eerning land mortgages, 421. London, -rates of ,interest in, 'rela-Moses, Bernard, cited, '259. ,tive'to rising and falling prices, Mullhall, ,M.IG., ,cited, -423. 271-273, 282, 3,19; 'yearly: average rates of interest in, ,418-421. Longfield, cited, 301. Lowry, DwightM."cited, 22 :n. Lucam,W. von, cited, 424. Lumbering. communities, ~'Yc1;e of 'interes.t -rates in, '308. Luxury,:habit.of, '233.

438 INDEX Negroes, effect of characteristics of, on rate of interest, 292, 294; reversal of characteristics by training, 298. Net income, defined, 168 ff., 241, 339. Neva.da, cycle of rates of interest in, 308. New England Mutual Life Insurance Compa.ny, report of, cited, 421. Newma.nn, M., cited, 424. Newmarch, cited, 284 n., 423. N ew York, rates of interest in, rela tive to rising and falling prices, 275, 283, 319; yearly average rates of interest in, 418-421. Norton, John P., cited, 335, 358, 425. Notes, explicit and implicit rates of interest on, 10. See Bonds and Mortgages. o Off~pring. Se6 Rega.rd for posterity. Ophelimity, 88 n. ' . Options, among various income streams, 139 fI., 341; rate of interest determines, for indi vidual, but for society at large existence of options influences rate of interest, 146-149; eligible and ineligible, 150, 397 ; condition determining choice between, 156 ; choice among, where indefinite in number, 156-158; three chief kinds of, 178 ; of versa tility, 178; of chance, 178-179; special case of trade, the ordinary use of the word " option, " 179; consideration of, among em ployments of capital which differ in size and time-shape, 179 ff.; special cases of, applying to durable instruments of wealth, 180 fT.; when quantity of in come is defini tely fixed, 180 184; when income is fixed, but comes slowly, 185-186; of mak ing renewals and repairs, 188 190; of betterments, 190-191; different methods of production and, 191-193; involving human capital, labor, 193-195; certain untouched, beyond the margin of choice (waterworks, canals, railways, etc.), 196-197; intro duction of new, by invention and diecoverias, 19B fI.

Orchard, as an example of capital value, 13. Outgo, waiting is not, 45-48; defined as negative income, 341. p Palgrave, R. H. I., cited, 316, 422. Panics, financial, 324-326. Paper money, and rate of interest, 259; rates on, compared with rates on coin, 260-265. Paraguay, lack of foresight among Indians of, 294. Pareto, curves of distribution of income of, 231. Paris, rates of intere3t in, relative to rising and falling prices, 274, 319 ; yearly average rates of interest in, 418-421. Pa.rtial payments, considered in rela tion to appreciation and in terest, 361-363. Patents, 198, 206. Pawn shops, 209-210, 300. Peasantry, process of decline of individuals into a, 232; personal characteristics of, and effect on rate of interest, 292, 294. Perisha.bility of instruments, 290. Per80nal equation, influence of, on timepreference, 103 ff. Philadelphia, Franklin fund in, 238. Philippines, small income-streams and high rate of interest in, 300 301.

Physiocrats, 12. Pigou, A. C., cited, 84 n.'. Plehn, Carl C., quoted, 307; cited, 422. Poor, debtor-class not composed of the, 288; borrowing among the, 299-300, 311-312. Population, effect of increase of, on timepreference, 108. Postal savings banks, English, 298. Posterity, influence of regard for, on timepreference, 107-109; bear ing of regard for, on rate of interest, 296-299, 334. Poverty, effect of, on timeprefer ence, 94-95; high rate of inter est due to, 294-295. Powerf5, H. H., 357 n. s• Preference rate, equalization of, by borrowing and lending, or buying and selling, 117-118, 125-127, 231; definition of, 342.

INDEX 439 Preferred stock, implicit 1:'8. explicit interest of, 255. Premium concept of interest, 53, 340. See Agio theory. Preparatory service, 90. Price, Bonamy, quoted, 281-282. Prices, r~le played by rate of interest in theory of, 225 ff.; rising and falling, and theory of apprecia tion, 270 ff.; market rates of interest in relation to high and low, 318-320; index numbers of, in seven countries, 425-426. Price sense of rate of interest, 340, 341. Primogeniture, law of, and effect on distribution of wealth, 234. Probability, element of, in time preference, 94, 99.....102; coefficientof, 338. Productive loans, so-called, 240ff., 246-248. Productivity, physical and value, defined, 341. Productivity theory of interest, 3; Turgot's theory a .particular species of, 12; confusion by, of physical-productivity and value return, 12-14; fact overlooked by, that income produces capi tal, not capital income, 14-15; futility of, shown by observing effect of change of productivity on capital-value, 15-16; "use theory II a special and improved form. of, 16; Henry George's statement of the organic, 22-23; examination and refutation of the organic, 23-27; rate of interest sought in ratio between income from capital and value of that capital, 29; mathemati cally ~onsidered, 347~350.

Profits, included in "interest," 229 230. Property, 89, 341. Property-right, valuation of every; involves interest, 127; complete and partial, defined, 341. Prosperity~ periods· of so-called, 288. PseUdo-rate of. interest, 212-213, 218-219. Public improvements, loans for, 236, 240. Q Quantity of money and rates of in~ terest, 8, 14, 19, 317, 320-:-322. R Rae, John, cost theory of interest of, 37-38, 74, 159; Bohm-Bawerk's comments on, 54 n.l ; quoted re garding foresight, 104; quoted relative to expectation of life and timepreference, 106-107; de fect in analysis of interest of, 112 n.; on timepreferences of individuals and relation to rate of interest, 117; treatment by, of. subject of economic· efiect of invention, 203; contribution of, to lSubject of philosophical the ory of distribution, 231; quoted concerning the Dutch, 291--292; on the Chinese, 292-293; on disregard for posterity of ancient Romans of aegenerate days, 296-297; on lack of durable in..

etruments in America, 305-306; cited, 88, 103, 106, 108, 302, 332, 333. Raguet, .Currency and Banking· by, quoted, 259. Railways, improvement of, 197 ; inventions which led to, and effect on income-stream of 80 ciety, 201; mortgage bonds and debentures of, 245; expenditure on, in England, 291; charac teristics· of American, 306. Railway securities, reference for data concerning, 421. Range of choice, 168 fi., 329-331. Rate of commutation,216 n. Rate of extraction in mining, 185. Rate of· interest. .. See Interest, rate of. Rate of preference. See Preference rate. Rate of return on sacrifice, 153 ft., 342; marginal, 158, 159, 342. Real estate mortgages, 244-245, 308 309, 363 j" reference for informa tion on, 421. Reese, Michael, 307. Regard for posterity, and timepref erence, 107-109; bearing of, on rate of interest, 296-299, 334. Rent, dependence of, on rate of interest, 227; included in "in_ terest," 229-230.

Rent purchase, device of, 128. Repairs and renewals, options of making, 188, 190; and the rate of interest, 195-196.

440 rNDEX Return on sacrifice, rate of, 153 ff., 342; marginal rate of, 158, 159. Ricardo, and the fallacy that value of the product equals its cost, 39. Risk, influence of, on timepreference, 99-102; limitation of lending due to, 117; effect of element of, on rate of interest, 207 fI., 302 304; the greater the, the higher the basis on which security will sell, 210-211; effect of, on im pure rate of interest (i.e. rate on unsafe investments), 212 213; effect on safe investments, 213-215; assumption of, by stockholders in corporations, 215,. 256; insurance and its effect on capital subject to, 217 ; effect of speculation in reducing, 217; summary of disturbances caused by introduction of ele ment of, 217 ff.; influence of, on difference between. explicit and implicit interest, 255-256; con stitutes real difference between stocks and bonds; 256; coeffi cient of, 338, 342. Robbins, G. P., compilation by, 283n., 419 n.

Rodbertm, 40; cited, 424. Romans, interest-taking between, prohibited by Roman law, 4; disregard for posteri ty among ancient, of degenerate da.ys, 107-108, 296-297. Roscher, illustration borrowed from, 33. "Roundabout process," BOhm-Ba werk's, 55, 66, 71-73, 163-164. Rupee paper, 266. Russia, rate of interest among peas antry of, 232, 292, 294. s Sacrifice, rate of return on, 153 fI.; law of decreasin.g returns for additional, 157; marginal rate of return on, 158, 159; definition of, 342. Sailors, influence or risk on time preference of, 102. Sakata, translation by, 419 n., 427. Sale, method of. See Buying and selling. Salmasius, attempted explanation of interest by, 6. San Francisco, mortgage rates in, 307; earthquake in, and loans arising from, 312. Sauerbeck, tables of, 319 n.l , 418 n., 427. Saugrain, Gaston, cited, 423. Saving, phenomenon of, 126. Savings banks, function of, 252253; postal, in England, 298.

II Saving capital out of income, " the phrase, defined, 126. Sax, agio theory in work of, 54, 74. Schmoller, Gustav, cited, 424. Scotch, natural and acquired tendencies of, 298. Scotland, foresight, selfcontrol, and regard for posterity, and the rate of interest in, 291. Scott, translation by, of Bohm Bawerk's Recent Literature on Interest, 3 n. Seaman, J. F., 419 n. Seasons, changes in income ..stream due to succession of, 314-315. Securities, investments in. See Stocks and Bonds. Selfcontrol, effect of, on rate of timepreference, 105 fI.; partly natural and partly acquired, 297-299; influence of, on rate of interest, 334. Seligman, E. R. A., cited, 297; quoted, 424. Selling. See Buying and selling. Senior, abstinence theory of, 54. Services, 89; two kinds of, intermediate and final,. 226; effect of rise or fall of rate of interest on, 226--227; enj.oyable objec tive, defined, 342; intermediate, 8ee Interactions.

Shanghai, rate of interest in, in rela tion to price-movements, 276, 293, 319; yearly average rates of interest in, 418-421. Sherman Act of 1890, 269. "Shirt sleeves to shirt sleeves' , adage, 233. Silver, apprecia.tion and deprecia tion of, 258; rate of interest on, compared with rate on gold, 265-270. Simcox, quoted on rate of interest in China, 293. Single-tax advocates, 4 n.3• Smart, 'Villiam, translation of Bohm Bawerk's Capital and Interest by, 3.

INDEX 441 Socialists, and the vieW of rate of interest as a vvage for labor of producing capital (exploitation theory), 38-'-40, 52; where ttlis take is made by, 235. Soetbeer, Adolf, statistics by, 273, 319 n. l , 423, 427. Sombart, cited, 424. Speculation, effect of rate of interest on, 179-180; following new inventions, 212-213; effect of, in reducing risks, 217; use of loans in, 244; periods of, due to inequality of foresight, 285 287. Spending, defined as purcha.se of right to immediate enjoyable income, 126, 342. Spruce timber, two acres of, for one edition of newspaper, 27. Standard deviation of rates of inter est, 279, 283. Standard of value, no absolute, ex cept for a particular individual, 84-86. Standardizing of income, 17-18. Stockholders, office of, as risk takers, 215-216; as borrowers in cases of loans by corpora tions, 245; are at present time the typical debtors, 288.

Stocks, explicit and implicit rate of interest on, 10; selling value dependent on expected income, 15; risk element and the price of, 216. Streuber, W. J., cited, 424. Sumner, cited, 259, 286 n.l • Supply and demand, explanation of rate of interest by, 6-7; ques tion of what constitutes, 9; in Turgots' explanation of implicit interest, 11-12; dependence of rate of wages on, 228. T Tarde, G., cited, 333. Taussig, F. W., cited, 58. Taylor, F. M., compilation by, 418 n., 422. Technical superiority of present goods, Bohm-Bawerk's theory of, 55, 58-74; business loans set down as due to, 241. Technique of production, Bohm Bawerk's, marginal rate of re turn on sacrifice and, 159. Thrift, habit of,· 233; bearing of, on rate of interest, 334. Timepreference in theory of interest, 3; 88, 342; Rae's and Bohm ... Bawerk's terms approximating to, 88; summed up as a prefer ence for early over late in come, 89 ; four elements on which dependent, 94; depend ence of,on size of income, 94 95; influence on, of distribution of income in time, 96-98; influ ence of composition of income stream on, 98-99; influence of risk on, 99-"""102; dependence of, on income, 103, 109; effect on, of foresight, selfcontrol, habit, expectation of life, and intete8t in the lives of other persons, 103109; relation between, a.nd in come, represented by schedule, 113~115; law of, 331~332.

Time-shape of income-stream, 95 98, 342-343; modification of, by borrowing and lending, 118 124; impress on, of choice among income-streams, 141 ff.; dependence of rate of interest on, 304-306. Tokyo, rates of interest in, in relation to 'price-movements, 276, 319; yearly average rates of interest in, 418-421. Tooke, cited, 282, 284 n., 423. Trade options, 178-179. Training, influence of, on habits of foresight, selfcontrol, etc., 298 299. Trust companies, function of, 253. Tsuboya, Zenshiro, history of Japan by, 419 n. Turgot, attempted explanation of implicit interest by, 11-12, 23. u Uncertainty of income and the rate of interest, 207 ff. See Risk. United States, cyclical movement of accumulation and distribution of wealth in, 233-234 ;increasing in come-streams in, 304-306 ; index numbers of prices in, 425-426. "Use" theory of interest, 3, 4 n.2 , 7-9,16-20. Usury, futility of medireval laws against, 128.

Utility, 88 n.3, 338.

442 INDEX V Wheat, speculation in, 180; price of, and rate of discount, 301Value, defined, 343. 302, 361. Variability, mean, of rates of interest, William.s, F. W., 419 n. 279, 283. Winter, G., cited, 424. Versatility, options of, 178. Wood-pulp, 23-27. Virtual interest, 277-280. w Wages, effect of rate of interest on, 169-170, 228-229; included in "interest," 229-230. Waiting, cost of, 4, 50. "''''aiting theory, 43-51; crude form. of agio theory contained in, 54. War loans, 238-239, 312-313. Waterworks, loans for, 240; as sub ject of investment, 196. Wealth, 89, 343. Weighted arithmetical mean, Bohm Bawerk's, 56-58, 351-352. y Yearly averag~ rates of interest, 418 421. Years' purchase, a rate of interest implied by sale of land on basis of a number of, 11; in Turgot's explanation of implicit interest, 11-12. z Zartman, L. W., Investments of Life Insurance Companies by, cited, 309, 310, 314, 422.