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

The Legal Nature of the Monetary Irregular-Deposit Contract 133THE ESSENTIAL DIFFERENCES BETWEEN THEIRREGULAR DEPOSIT CONTRACT AND THEMONETARY LOAN CONTRACTIt is now important to review and stress the fundamentaldifferences between the irregular deposit contract and theloan contract, both with respect to money. As we will see laterin different contexts, much of the confusion and many of thelegal and economic errors surrounding our topic derive froma lack of understanding of the essential differences betweenthese two contracts.THE EXTENT TO WHICH PROPERTY RIGHTS ARETRANSFERRED IN EACH CONTRACTTo begin with, it is necessary to point out that the inabilityto clearly distinguish between the irregular deposit and theloan arises from the excessive and undue importance given tothe fact that, as we already know, in the irregular deposit ofmoney or of any other fungible good we may consider that theownership of the deposited good is transferred to the depositary,“just as” in the loan or mutuum contract. This is the onlysimilarity between the two types of contract and it has ledmany scholars to confuse them without reason.We have already seen that in the irregular deposit thetransfer of “ownership” is a secondary requirement arisingfrom the fact that the object of the deposit is a fungible goodwhich cannot be handled individually. We also know there aremany advantages to putting a deposit together with other setsof the same fungible good and treating the individual unitsindistinctly. Indeed, as one may not, in strictly legal terms,demand the return of the specific items deposited, since this isa physical impossibility, it may appear necessary to considerthat a “transfer” of ownership occurs with regard to the individual,specific units deposited, as these are indistinguishable fromone another. So the depositary becomes the “owner,” but onlyin the sense that, for as long as he continues to hold the tantundem,he is free to allocate the particular, indistinguishableunits as he chooses. This is the full extent to which property