[...]... invested and not available for other productive purposes" 9 ; yet the authors of the term "capital disposal" did intend it to include these already invested 9 Carl Menger, Grundsatze der Volkswirtschaftslehre, Vienna 1871, p 134 C IT STOCKMARKET, CREDIT AND CAPITAL FORMATION the sul of crt : d1?X the latter affect s the demand for credi funds They may point to the fact that from the standpoint of the. .. junctures, to the elements of credit theory It is, moreover, of the nature of credit theory that it links up with the theory of capital formation on the one side, and the theory of money on the other In dealing with these topics we shall be dealing with crucial problems of tradecycle theory CHAPTEE II CONCEPTS USED AND PROBLEMS DISCUSSED 4 Our main task in discussing the question of stock exchange... examine the assertion that "the It is ,i aid that stock exchange absorbs capital/ ' This contention is the stock the chief indictment in the case against stock exchange exchange absorbs credit This is evident from the fact that Cassel, capital the leading defender of stock exchange credit, used the same words in the title of two of his articles on the subject One of these is entitled "Does the Security... sells to another, the replacement funds realized at each stage have to be regarded as liquid money capital The case is similar for so-called working capital or 13 STOCKMARKET, CREDIT AND CAPITAL FORMATION andbyturnovei of working capital, — and may also come from credit creation and dishoarding circulating capital From the point of view of the economy as a whole the liquidated working capital cannot...FROM THE PREFACE TO THE GERMAN EDITION Current affairs have prompted this study of the relationships between the stock market, credit, and capital formation The growth of stock- exchange credits during the prosperity period evoked the interest, and in some part the serious concern, of those in charge of economic and monetary policy Lending to the stock exchange was officially... which the supply side : the one offers money capital in exchange for rights over real capital, and the other offers rights over real capital in exchange for money capital The didactical value of the concept of capital disposal is apparent in the theory of saving and capital formation For a long time there was much diversity Saving and of opinion as to what was the real nature of saving fo^na\ion 5 G von... readers faced with the phrase "the supply of capital" cannot always be sure whether it refers to the supply of capital goods or to the supply of money capital This is particularly awkward in discussions of the situation on the capital market, the function of which is to facilitate the exchange of money capital against titles 4 The concept of capital disposal is closely allied to Carl Menger's capital concept... free capital disposal; the working capital of the producers in the intermediate stages is only "turned over/' and is made free to the individual firm to the extent that the producers in the next succeeding stage of production tie up their working capital It is only when the whole production process has been profitably completed, and the finished product has been sold to the consumer that the capital. .. money capital Thus what takes place on the capital market On the capital is an exchange of rights in or over capital in the Resent Bohm-Bawerkian sense (i.e., capital goods) against purchasing capital in the Menger-Cassel sense (i.e., money capital exchanged or capital disposal) It is of course immaterial which of the two parties is regarded as constituting the demand side and which the supply side : the. .. STOCKMARKET, CREDIT AND CAPITAL FORMATION This, however, does not exhaust the numerous objections which have been raised against speculation in securities and lending to the stock exchange We shall have to examine the further contentions that stock exchange speculation causes malinvestment and overinvestment, and that it is responsible for credit inflation on the one hand and dearer money on the other . alt="" THE STOCK MARKET, CREDIT AND CAPITAL FORMATION