Note 482 — Chapter XXII

See von Mises, "The Foreign Exchange Policy of the Austro-Hungarian Bank," British Economic Journal, 1909, pp. 208-209. An able Boston broker, in Feb. 1917, calls attention to the growing difficulty of placing long-time bonds, without very high yield, in view of the scarcity of real capital, despite the exceedingly low "money-rates." I venture to predict an increasing "spread" between "money-rates" and the yield on long-time investments, the longer the War lasts. The view of Davenport and Schumpeter (Annalist, Feb. 28, 1916, and Theorie der wirtschaftlichen Entwicklung), which would deny the validity of the distinction between money-rates and interest rates, and would make the money-market phenomena the primary cause of all interest phenomena, seems to me indefensible, alike in theory and in fact.