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 8: Conclusion: The Credit Money and State Money Approaches

L. Randall Wray

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


L. Randall Wray D OES A. Mitchell Innes offer any insights for modern monetary theorists on the nature of money? It should be obvious from the preceding chapters that we believe he does. There are two remarkable things about his two articles. First, there is the clarity of his analysis, much of it based on little more than hunches about the history of money – a history that largely remained to be discovered, developed and written over the century that followed publication of his articles. We certainly would not wish to defend all of these hunches, but the general interpretation is sound. Second, it is amazing that the path laid down by Innes was ignored by almost all subsequent monetary theory. Of course, Innes was anything but a well-known monetary theorist and his articles were published in a banking law journal. However, as the journal’s editor remarked in 1914, ‘the article attracted world-wide attention, and evoked much comment and criticism, from economists, college professors and bankers, as well as from the daily and financial press, because he differed so widely from the doctrine of Adam Smith and the present theories of political economy.’ Still, it is true that Innes was rarely (if ever) cited, thus, the editor may well have exaggerated the extent of the debate around his article. On the other hand, one would have thought that if a Counsellor of the British Embassy in Washington could have produced such an analysis, surely some well-trained economist might have reproduced the...

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