The Theory of Interest
By Irving Fisher
THE tremendous expansion of credit during and since the World War to finance military operations as well as post-war reparations, reconstruction, and the rebuilding of industry and trade has brought the problems of capitalism and the nature and origin of interest home afresh to the minds of business men as well as to economists. This book is addressed, therefore, to financial and industrial leaders, as well as to professors and students of economics.Inflation during and since the War caused prices to soar and real interest rates to sag in Germany and other nations far below zero thus impoverishing millions of investors. In all countries gilt-edge securities with fixed return became highly speculative, because of the effect of monetary fluctuations on real interest rates. After the War the impatience of whole peoples to anticipate future income by borrowing to spend, coupled with the opportunity to get large returns from investments, raised interest rates and kept them high. Increased national income has made the United States a lender nation. At home, real incomes have grown amazingly because of the new scientific, industrial, and agricultural revolutions. Interest rates have declined somewhat since 1920, but are still high because the returns upon investments remain high. Impatience to spend has been exemplified by the organization of consumers’ credit in the form of finance companies specially organized to accommodate and stimulate installment selling and to standardize and stabilize consumption…. [From the Preface]
First Pub. Date
1930
Publisher
New York: The Macmillan Co.
Pub. Date
1930
Comments
1st edition.
Copyright
The text of this edition is in the public domain.
- Dedication
- Errata
- Preface
- Suggestions to Readers
- Part I, Chapter 1
- Part I, Chapter 2
- Part I, Chapter 3
- Part II, Chapter 4
- Part II, Chapter 5
- Part II, Chapter 6
- Part II, Chapter 7
- Part II, Chapter 8
- Part II, Chapter 9
- Part III, Chapter 10
- Part III, Chapter 11
- Part III, Chapter 12
- Part III, Chapter 13
- Part III, Chapter 14
- Part IV, Chapter 15
- Part IV, Chapter 16
- Part IV, Chapter 17
- Part IV, Chapter 18
- Part IV, Chapter 19
- Part IV, Chapter 20
- Part IV, Chapter 21
- Appendix to Chapter I
- Appendix to Chapter X
- Appendix to Chapter XII
- Appendix to Chapter XIII
- Appendix to Chapter XIX
- Appendix to Chapter XX
- Appendix to Chapter XX
ERRATA
Page xxvi, chart title 45: for ”
” read ”
P‘ “; chart title 46, third line: for ”
‘s” read ”
P”s.”
Page 182, line 5: for “effect” read “affect.”
Page 305, line 1: for ”
i” read ”
i‘.”
Page 418, line 5: for “+” read “-.”
Page 423, sixth line from bottom: for “6.7” read “7.3.”
Page 424, in chart title: for ”
P,P‘,
P‘ ” read ”
P,P‘,
.”
Page 426, line 2: for ”
P‘ and
P‘ ” read ”
P‘ and
“; line 4: for ”
P‘ ” read ”
“; line 7: for ”
P‘ ” read ”
.”
Page 442, line 6: for “leaves” read “leaving”; line 10, for “leaves” read “leaving.”
r employed in this book. The full expression for
r is the rate of return over cost, and both cost and return are differences between two optional income streams. So far as I know, no other writer on interest has made use of income streams and their differences, or rates of return over cost per annum. The nearest approximation to this usage seems to be in the writings of Professor Herbert J. Davenport, particularly his
Economics of Enterprise, (Macmillan, New York, 1913) pages 368, 379, 381, 394, 395, 396, 410, 411. [Original text reads
Economics of Entreprise—Econlib Ed.]
Part I, Chapter 1