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

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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
14 Money, Bank Credit, and Economic Cyclesrights are transferred in the irregular deposit, unlike the loancontract, where complete availability of the loaned good istransferred for the duration of the contract’s term. Therefore,even given the one feasible “similarity” between the irregulardeposit and the monetary loan (the supposed “transfer” ofownership), it is important to understand that this transfer ofownership has a very different economic and legal meaning ineach contract. Perhaps, as we explained in footnote numberfive, it would even be wisest to hold that in the irregulardeposit there is no transfer of ownership, but rather that thedepositor at all times maintains ownership over the tantundemin an abstract sense.FUNDAMENTAL ECONOMIC DIFFERENCESBETWEEN THE TWO CONTRACTSThis variation in legal content stems from the essential differencebetween the two contracts, which in turn derives fromthe distinct economic foundation on which each is based. Thus,Ludwig von Mises, with his habitual clarity, points out that ifthe loanin the economic sense means the exchange of a present goodor a present service against a future good or a future service,then it is hardly possible to include the transactions in question[irregular deposits] under the conception of credit. Adepositor of a sum of money who acquires in exchange for ita claim convertible into money at any time which will performexactly the same service for him as the sum it refers to,has exchanged no present good for a future good. The claimthat he has acquired by his deposit is also a present good forhim. The depositing of the money in no way means that hehas renounced immediate disposal over the utility that itcommands.He concludes that the deposit “is not a credit transaction,because the essential element, the exchange of present goodsfor future goods, is absent.” 1414 Ludwig von Mises, The Theory of Money and Credit (Indianapolis, Ind.:Liberty Classics, 1980), pp. 300–01. This is the best English edition of H.E.Batson’s translation of the second German edition (published in 1924) of
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MONEY,BANK CREDIT,ANDECONOMIC CYCLE
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CONTENTSPREFACE TO THE THIRD ENGLIS
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xiiMoney, Bank Credit, and Economic
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xivMoney, Bank Credit, and Economic
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Page 22 and 23: PREFACE TO THESECOND ENGLISH EDITIO
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4THE CREDITEXPANSION PROCESSThis ch
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6ADDITIONALCONSIDERATIONSON THE THE
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7A CRITIQUE OFMONETARIST ANDKEYNESI
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8CENTRAL AND FREEBANKING THEORYThis
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9A PROPOSAL FOR BANKINGREFORM: THE
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BIBLIOGRAPHYAbrams, M.A., Money in
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Bibliography 815Bajo Fernández, M.
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Bibliography 817Borch, K.H., Econom
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Bibliography 819Coronel de Palma, L
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Bibliography 821N. Durlauf and Lawr
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Bibliography 823Galiani, F., Della
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Bibliography 825Graham, F.D., “Pa
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Bibliography 827——, Prices and
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Bibliography 829translation by N. K
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Bibliography 831——, “Keynes
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Bibliography 833Russian edition by
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Bibliography 835Keeler, J., “Empi
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Bibliography 837——, “On Crisi
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Bibliography 839——, “Professo
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Bibliography 841Miller, H.E., Banki
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Bibliography 843Neira, Alonzo, M.A.
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Bibliography 845Raguet, C., “Repo
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Bibliography 847——, “The Myth
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Bibliography 849——, “Banking
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Bibliography 851M.C. Marcuzzo (Chel
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Bibliography 853——, “A Critiq
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Bibliography 855Walker, A., The Sci
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INDEX OF SUBJECTSAccelerator princi
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Index of Subjects 859Banking reform
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Index of Subjects 861objection to t
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Index of Subjects 863Goal, concept
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Index of Subjects 865See also Fract
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Index of Subjects 867Plan, definiti
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Index of Subjects 869Tragedy of the
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