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

18 Money, Bank Credit, and Economic Cyclesimagine a monetary loan contract without a fixed term (duringwhich not only is ownership transferred, but availability is lostto the lender as well), at the end of which it is necessary toreturn the tantundem of money originally loaned plus interest,in the irregular deposit contract there is no term whatsoever, butrather there is continuous availability in favor of the depositor,who may withdraw his tantundem at any time. 19 The secondessential legal difference refers to the obligations of the two parties:in the irregular deposit contract the legal obligationimplied by the nature of the contract consists, as we know, ofthe conscientious custody or safekeeping (as would be expected ofa good parent) of the tantundem, which is kept continually availableto the depositor. 20 In the loan contract this obligation doesnot exist, and the borrower may use the loaned amount withtotal freedom. Indeed, when we speak of the legal “transfer ofownership” in the two contracts, we allude to two very dissimilarconcepts. Whereas the “transfer” of ownership in the19 Civil law experts unanimously agree that a term is essential to a loancontract, unlike an irregular deposit contract, which has no term. ManuelAlbaladejo emphasizes that the mutuum contract concludes and theloan must be given back at the end of the term (for example, see article1125 of the Spanish Civil Code). He even indicates that if a term has notbeen explicitly designated, then the intention to set one for the debtormust always be assumed, since a term is required by the essential nature ofthe loan contract. In this case a third party (the courts) must be allowedto stipulate the corresponding term (this is the solution adopted in article1128 of the Spanish Civil Code). See Albaladejo, Derecho civil II, Derechode obligaciones, vol. 2, p. 317.20 Clearly, it is the tantundem which is kept continually available to thedepositor, and not the same specific units deposited. In other words,even though ownership of the concrete physical units deposited istransferred and they may be used, the depositary does not gain any realavailability, since what he gains with respect to the specific unitsreceived is exactly compensated by the necessary loss of the equivalentavailability regarding other specific units already in his power, and thisnecessity stems from the obligation to keep the tantundem constantlyavailable to the depositor. In the monetary deposit contract, this constantavailability to the depositor is usually referred to by the expression“on demand,” which illustrates the essential, unmistakable purpose ofthe checking account or “demand” deposit contract: to keep the tantundemcontinually available to the depositor.