Credit and State Theories of Money

Credit and State Theories of Money

The Contributions of A. Mitchell Innes

Edited by L. Randall Wray

In 1913 and 1914, A. Mitchell Innes published a pair of articles that stand as two of the best pieces written in the twentieth century on the nature of money. Only recently rediscovered, these articles are reprinted and analyzed here for the first time.

Chapter 1: Introduction

L. Randall Wray and Stephanie Bell

Subjects: economics and finance, economic psychology, history of economic thought


L. Randall Wray and Stephanie Bell W HY WOULD a rather obscure functionary in Her Majesty’s Foreign Service deserve a volume devoted to his dabblings in monetary history and theory? A. Mitchell Innes seems to have contributed only two articles on money, both to the Banking Law Journal, the first in 1913 and the second in 1914. He also wrote an article Love and the Law, published in January 1913 in The Hibbert Journal, as well as a couple of book reviews in The Economic Journal. Much later, he published two articles on incarceration and criminal justice, which were collected in a short book entitled Martyrdom in Our Times and which are tangentially related to themes in his earlier articles. (In the intervening years he authored a couple of reports for Her Majesty.) Admittedly, this does not amount to much of a career as a monetary theorist. Still, the authors collected here are convinced that Innes does have something interesting, unique and relevant to say nearly a century later. In 1914, John Maynard Keynes reviewed the original 1913 article by Innes (Keynes 1914). Keynes began by noting that Innes’s theory of money followed that of Henry Dunning Macleod (called McLeod by Keynes), a prolific writer who contributed books on currency, credit, banking, political economy, philosophy and economic history. In the review, Keynes immediately rejected as a fallacy the ‘theory of the effect of credit’ that Macleod and Innes supposedly shared. This cryptic comment, however, was followed by a favourable summary...