Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Attempts to Legally Justify Fractional-Reserve Banking 135legal motive (related to the so-called cause 16 of contracts)which is closely connected with the parties’ distinct subjectivereason 17 for deciding to enter into one contract or another.Therefore a perfect symbiosis exists between the subjectivist conceptionon which modern economic theory is based 18 and the legal pointof view that mainly takes into account the different subjective goalsof the parties in entering into one type of contract or another.In chapter 1 we studied the essential, irreconcilable differencesbetween the monetary irregular-deposit contract andthe monetary loan or mutuum contract. All of those differencescould ultimately be traced to the distinct cause or purposeof each contract. On one hand, the loan contract alwaysimplies an exchange of present goods, the availability ofwhich is lost to the lender, for future goods, which the borrowermust return along with an added amount in the form ofinterest, in payment for the inexorable loss of availability ofthe present goods when they are transferred from lender toborrower. On the other hand, in the monetary irregular16 See, for example, the legal treatment Jean Dabin gives the cause ofcontracts in La teoría de la causa.17 For Antonio Gullón,the equating of the irregular deposit with the mutuum is still anartifice that conflicts with the true will of the parties. The depositorof money, for example, does not intend to grant a loan tothe depositary. Just as in the regular deposit, he desires thesafekeeping of the good and to always have it available. Hehappens to achieve these objectives more easily with theirregular deposit than with the regular deposit, since with thelatter he risks the loss of his deposit in the event of anunavoidable accident, and he would bear the loss instead ofthe depositary. Meanwhile, in the irregular deposit, thedepositary is the debtor of a type of good, which as such isnever lost. (Italics added)Cited by José Luis Lacruz Berdejo, Elementos de derecho civil, 3rd ed.(Barcelona: José María Bosch, 1995), vol. 2, p. 270.18 This subjectivist conception is the basis of the logic of action on whichall economic theory is constructed, according to the Austrian School ofeconomics, founded by Carl Menger. On this topic, see our article,“Génesis, esencia y evolución de la Escuela Austriaca de Economía,”published in Huerta de Soto, Estudios de economía política, pp. 17–55.