INTEREST AND PRICES - A STUDY OF THE CAUSES REGULATING THE VALUE OF MONEY by KNUT WiCKSELL. Originally published in 1936 .Contents include: INTRODUCTION BY PROFESSOR BERTH, OHLIN . . vii AUTHORS PREFACE ...... xxiii CHAPTER 1 INTRODUCTORY ....... 1 CHAPTER 2 PURCHASING POWER or MONEY AND AVERAGE PRICES . 7 CHAPTER 3 RELATIVE PRICES AND MONEY PRICES . . .18 CHAPTER 4 THE SO-CALLED COST OF PRODUCTION THEORY OF MONEY 29 CHAPTER 5 THE QUANTITY THEORY AND ITS OPPONENTS . .38 v vi INTEREST AND PRICES PAQM CHAPTER 6 THE VELOCITY OF CIRCULATION OF MONEY A. A Pure Cash Economy . . . . .51 B. Simple Credit ...... 59 C. An Organised Credit Economy . . . .62 CHAPTER 7 THE RATE OF INTEREST AS REGULATOR OF COMMODITY PRICES A. The Classical Theory and the School of TooJce . . 81 B. Simplest Hypothesis. Variations of the Rate of Interest when the Market Situation Remains otherwise Unaltered 87 CHAPTER 8 THE NATURAL RATE OF INTEREST ON CAPITAL AND THE RATE OF INTEREST ON LOANS . . . .102 CHAPTER 9 SYSTEMATIC EXPOSITION OF THE THEORY . A. The Causes which Determine the Natural Rate of Interest on Capital ....... 122 B. The Use of Money . . . . . .134 CHAPTER 10 INTERNATIONAL PRICE RELATIONSHIPS . . .157 CHAPTER 11 ACTUAL PRICE MOVEMENTS IN THE LIGHT OF THE PRECED ING THEORY . . . . . .165 CHAPTER 12 PRACTICAL PROPOSALS FOR THE STABILISATION OF THE VALUE OF MONEY . . . . . .178 APPENDIX THE MONETARY PROBLEM OF THE SCANDINAVIAN COUN TRIES ........ 197. INTRODUCTION: To judge the character and importance of Knut Wicksells monetary doctrines, it is necessary to view them against the background of the monetary controversy of the late nineties. For some decades the organisation of an inter national 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 bimetallism 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 un doubtedly held the 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 re quirements of the market. There was no discussion in that connection of the level of bank rate. Two things seem to have 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 Ricardo. To Wicksells mathematical mind the quantity theory of money, as presented by Ricardo, made a much stronger appeal than the vague generalisations of the current bank ing 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...