INTRODUCTION

highly ingenious series ofapproximations, from a discussion of
the valueofmoneyundersimpleconditionsin whichthere is only
onekindofmoneyandnobankingsystem,throughananalysisofthe
phenomena of parallel currency and foreign exchanges, to an
extensive treatment ofthe problems ofmodernbankingand the
effectsofcreditcreationonthe capitalstructure andthe stability
ofbusiness. Incontinentalcirclesit haslong beenregarded asthe
standardtextbookonthesubject. Itis hopedthatitwillfill asimilar
rolein English-speakingcountries. I knowfew workswhichconvey
a moreprofoundimpression ofthe logical unityandthe powerof
moderneconomicanalysis.
Itwouldbeagreatmistakehoweverto supposethat systematiza-tion ofthe subjectconstitutedthe only,orindeed the chief,meritof
thiswork.Somanyofthepropositionswhichitfirstintroducedhave
nowfoundtheirwayintothecommoncurrencyofmodernmonetary
theory that the Englishreader, comingto it for the first time more
than twenty years after its first pul::Hication, maybeinclined to
overlook its meritsas an original contribution to knowledge- a
contributionfromwhichmuchofwhatis mostimportantandvitalin
contemporarydiscussionstakes its rise. Whoin 1912hadheardof
forced saving,ofdisparitiesbetweenthe equilibriumandthemoney
ratesofinterestandofthecycleoffluctuationsintherelationsbetween
the pricesofproducers' goodsandconsumers' goodswhichis the
result ofthe instability ofcredit? Theyareall here, notas obiter
dictaonwhatareessentiallysideissues, asis occasionallythe casein
the earlier literature, butas central parts ofa fully articulated
theoretical system- a system whichthe authorhashadthe some-whatmelancholysatisfaction ofseeing abundantlyverifiedbythe
marchofsubsequent events, first in the great inflations ofthe
immediately post-war periodand later in the events whichgave
rise to the depressionfrom whichthe worldis nowsuffering. Nor
should weoverlookits contributionsto the moreabstractpartsof
the theory ofthe valueofmoney. ProfessorvonMisesshareswith
Marshallandoneortwo othersthe meritofhavingassimilatedthe
treatmentofthis theory to thegeneralcategoriesofthe puretheory
ofvalue:andhisemphasisin the courseofthis assimilationonthe
relation betweenuncertaintyand the size ofthe cashholdingand
the dependence ofcertain monetaryphenomena onthe absence
offoresight, anticipatesmuchthat hasprovedmostfruitful in more