I want to examine here Rothbard’s assertion that the legal status of fractional reserve banking demand deposits was only firmly established as a mutuum in a “first fateful case … decided in 1811”:
“Thus, in England, the goldsmiths, and the deposit banks which developed subsequently, boldly printed counterfeit warehouse receipts, confident that the law would not deal harshly with them. Oddly enough, no one tested the matter in the courts during the late seventeenth or eighteenth centuries. The first fateful case was decided in 1811, in Carr v. Carr. The court had to decide whether the term ‘debts’ mentioned in a will included a cash balance in a bank deposit account. Unfortunately, Master of the Rolls Sir William Grant ruled that it did. Grant maintained that since the money had been paid generally into the bank, and was not earmarked in a sealed bag, it had become a loan rather than a bailment. Five years later, in the key follow-up case of Devaynes v. Noble, one of the counsel argued, correctly, that ‘a banker is rather a bailee of his customer’s funds than his debtor . . . because the money in . . . [his] hands is rather a deposit than a debt, and may therefore be instantly demanded and taken up.’ But the same Judge Grant again insisted—in contrast to what would be happening later in grain warehouse law—that ‘money paid into a banker’s becomes immediately a part of his general assets; and he is merely a debtor for the amount.’”The belief that Carr v. Carr was the “first fateful case” establishing such an idea is utterly false.
If we turn to the work of Arthur Browne (c. 1756–1805), the Irish jurist and Regius Professor of Civil and Canon Law at Trinity College (Cambridge), we see that the mutuum contract with respect to money was already English legal practise before Carr v. Carr and is described by Browne in an 1802 treatise:
“Mutuum.]—Was the loan of consumable goods, of money, wine, corn, and other things that might be valued by number, weight and measure, and were to be restored only in equal value and quantity, and not the same specific and identical things. The absolute property was transferred to the borrower, i. e. they were lent for consumption, but he was answerable for their value, and therefore must bear the loss if they were destroyed by wreck, pillage, fire, of other inevitable misfortune. Though the specific thing was not to be restored, yet something must be restored of the same nature, as well as of the same quantity and value; wine could not be returned for oil, or corn for wine: if it was, it was not a mutuum, but an exchange—not a nominate, but an innominate contract. To illustrate this contract still further, living animals could not be the object of a mutuum, because equal numbers might be of different value. The mutuum is a contract of borrowing; it is intrinsic in its nature, that it should be gratuitous without price or reward; if they followed, it would be changed into another contract, that of hiring; yet by special agreement there might be interest on it, but that was foreign to its nature, and did not spring from it.” (Browne 1802: 349–350).English law and banking practice in fact distinguished bailments from mutuum loans certainly from Elizabethan times, but probably since the 1066 Norman conquest (Selgin 2011: 14). The earliest goldsmith notes from demand deposits, which were the forerunners of private bank notes, were negotiable credit/debt instruments that could be presented for commodity money on demand (and bearing the clause “I promise to repay upon demand ...”), not certificates of bailment (Selgin 2011: 11).
Moreover, English and indeed general European civil laws in various nations were based on Roman law, where the mutuum was also understood as a loan where ownership of the money passed to the bank, and it is clear that what we would now call demand deposit fractional reserve banking was conducted in the Roman Republic and Empire under the law of mutuum contracts (Gamauf 2006; Zulueta 1953: 149).
BIBLIOGRAPHY
Browne, Arthur. 1802. A Compendious View of the Civil Law, and of the Law of the Admiralty, Being the Substance of a Course of Lectures Read on the University of Dublin (2nd edn.; vol. 1), J. Butterworth, London.
Gamauf, R. 2006. “Mutuum,” in H. Cancik and H. Schneider (eds), Brill’s New Pauly: Encyclopaedia of the Ancient World (Vol. 9), Brill, Leiden. 382–383.
Melton, Frank T. 1978. “Goldsmiths’ Notes, 1654–1655,” Journal of the Society of Archivists 6.1: 30–31.
Rothbard, M. N. 2008. The Mystery of Banking (2nd edn), Ludwig von Mises Institute, Auburn, Alabama.
Selgin, G. “Those Dishonest Goldsmiths,” revised January 20, 2011
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1589709
Zulueta, Francis de. 1953. The Institutes of Gaius Part 2, Clarendon Press, Oxford.
Hey genius,
ReplyDeleteTo really show that Rothbard was indeed mangling history, what you need to show is a case prior to Carr vs Carr where the issue to be resolved was whether a demand deposit at a bank should be treated as a mutuum or a bailment. What you have done by citing Arthur Browne is to show that the difference between a bailment and a mutuum was recognised before Carr vs Carr. That, however, does not tell us that Carr vs Carr was not 'the first fateful case' because it does not address the key issue of whether a demand deposit is to be treated as a bailment or a mutuum.
So, your post is utter hogwash, unless of course you address my objection. So far, it is Rothbard 1, LK 0.
"That, however, does not tell us that Carr vs Carr was not 'the first fateful case' because it does not address the key issue of whether a demand deposit is to be treated as a bailment or a mutuum"
ReplyDeleteThe traditional method, going back not just to medieval Europe but even to Roman days, by which money brought to a bank was determined to be a bailment was whether it was sealed in a box/bag:
when one deposits money with a money-changer who has constant and immediate use and need of money in his business, it is presumed that the bailor has deposited such money with the express intention of permitting the bailee to make use of the same whenever he would so desire, and then the latter becomes liable in any case in the capacity of debtor. When, however, the money so deposited is contained in a sealed or privately knotted bag, this indicates the intention of the bailor that he has not consented to the money-changer‟s making use of the same
Hyman E. Goldin, Mishnah; a digest of the basic principles of the early Jewish jurisprudence, Baba Meziah (Middle Gate), order IV, treatise II, New York & London, 1913. p. 68.
This principle, as described above, was recognised in Talmudic law, as it was from the Jewish community from which many medieval bankers came.
However, it goes back to Roman times, entered European civil law, and it was still cited by American judges in the 19th century in Dawson et al vs. the Real Estate Bank before the Supreme Court of Arkansas in 1845:
From a careful consideration of the authorities on this subject, we understand the general rule to be, that where money, not in a sealed packet, or closed box, bag or chest, is deposited with a bank or banking corporation, the law presumes it to be a general deposit, until the contrary appears; because such deposit is esteemed the most advantageous to the depositary, and most consistent with the general objects, usages, and course of business of such companies or corporations. But if the deposit be made of any thing sealed or locked up or otherwise covered or secured in a package, cask, box, bag or chest, or any thing of the like kind of or belonging to the depositor, the law regards it as a pure or special deposit, and the depositary as having the custody thereof only for safe keeping, and the accommodation of the depositor.” (Pike 1845: 296–297).
The question whether the mutuum was a demand deposit (callable loan) or time deposit would depend on the type of verbal or written contract.
Lord Keynes,
ReplyDeleteI just wanted to say how much I've enjoyed watching this battle with the Rothbardians. The sorts of absurd arguments they make when backed into a corner are fascinating, especially when the whole theory is ostensibly founded on logic. And as others have mentioned, your patience is remarkable. Thanks for taking the time to explain all of these ideas in such detail.
I suppose one of the main reasons I find Rothbardians so objectionable is this: They believe that they are literally the only people in the world who understand the truth, and the entire rest of humanity is either ignorant, stupid, or evil.
ReplyDeleteWith that kind of perspective, it must seem like all the efforts that everyone else makes to try to get along, compromise, come to resolutions, make concessions, and everything else that rational mature adults do to make space for different beliefs and ideas, are a waste of time.
So it's no wonder people see them as spoiled whiny babies, because that is actually exactly what they are. It wouldn't even matter if they were right, because sometimes getting along is more important than being right.
I imagine they would come right back with an argument against that, demonstrating the point beautifully.
LK is so desperate to smear Rothbard, he will mangle the English language.
ReplyDeleteRothbard was talking about the first fateful CASE, meaning COURT case. What you pulled up is an intellectual treatise, a book, which is NOT a court case.
Damn, the quality of this blog is collapsing faster than the FRB banking system in 2008.
No doubt a treatise by Browne on English civil law in 1802 has no bearing at all on English court cases that use and rely on ... English civil law?
ReplyDeleteWell done, "Pete".
No doubt a treatise by Browne on English civil law in 1802 has no bearing at all on English court cases that use and rely on ... English civil law?
ReplyDeleteWell done, "Pete".
I am sure that the 1802 treatise played an integral role later on in the first fateful case in 1811 cited by Rothbard, LOLOLOLOLOLOLOL.
The Rothbardians are incredible. I honestly wonder what it is like inside their heads.
ReplyDeleteCahal:
ReplyDeleteThe Rothbardians are incredible. I honestly wonder what it is like inside their heads.
It's sort of like correctly understanding the meaning of "case" in "fateful case", yet it comes with the added bonus of understanding economic principles such as economic calculation, and inter-temporal coordination.
Hey genius,
ReplyDeleteThe very fact that you are repeatedly stopping my posts is proof enough that you are running scared of what I am saying. That's enough for me. Go ahead and keep your echo chamber congenial for yourself.
Yes, clearly I am *running* scared of what you're saying (as I post your latest irrelevant rubbish).
ReplyDeleteGoing back to what I was saying in the earlier thread about special privileges given to "money warehouses", you bring up money being a bailment only when it is marked. Why is wheat or any other fungible good that is stored in a warehouse not a debt?
ReplyDeleteTake it from Rothbard, who said this a mere 2 pages after you wrote your little diatribe:
"Furthermore, if only special bank deposits wherer the identical object must be returned (e.g., in one's safe-deposit box) are to be considered bailments, and general bank deposits are debt, then why doesn't the same reasoning apply to other fungible, general deposits such as wheat? Why aren't wheat warehouse receipts only a debt? Why is this inconsistent law, as the law concedes, "peculiar to the banking business"?
"Mangles?" Really? I thought you had a couple of court cases or some major events Rothbard left out. Instead you cite some books and call it a day. You only reveal your agenda to attack anyone who disagrees with you when you do this.
LK,
ReplyDeleteYou are a coward. An intellectually dishonest coward. In just 2 posts, I showed that you are talking utter rot. I showed that your quoting Arthur Browne does not in any way show Rothbard to be wrong. You refused to post it.
I showed that the definition of mutuum that you cited does not justify your conclusion that demand deposits are a mutuum. You refused to post my final arguments.
You are just a sicko who hides behind the privileges of the owner of the blog to propagate your vile ideas in the name of intellectual discussion.
Furthermore, if only special bank deposits whererthe identical object must be returned (e.g., in one's safe-deposit box) are to be considered bailments, and general bank deposits are debt, then why doesn't the same reasoning apply to other fungible, general deposits such as wheat?
ReplyDeleteFor god's sake, Rothbard is an idiot.
Mutuum contracts do apply to other fungible goods, such as wheat.
If I give my wheat as a mutuum loan to someone owning a silo to store it, then I transfer ownership of the wheat to them. They do what they like with my wheat. I obtain a promise to return to me wheat of the same quantity and quality either at (1) a specified date or (2) merely on demand.
Here is an 1854 discussion of the legal theory involved in juts such a mutuum loan of wheat:
http://books.google.com.au/books?id=eRcOAQAAMAAJ&pg=PA254&dq=mutuum+loans+of+wheat&hl=en&ei=cj6HTuWWIoiYiAfihb29Dw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CE4Q6AEwATgo#v=onepage&q=mutuum%20loans%20of%20wheat&f=false
The application of mutuum legal theory to fungible goods is already described in the legal texts I quoted in the last post.
Bala@October 1, 2011 9:19 AM
ReplyDeleteYou last two posts are just tiresome repetitions of what you have already said repeatedly on the last thread. I'll let people read those comments and judge for themselves the merits of your arguments.
By all means, present some new contribution to the discussion here, if you wish.
Ahh!!! Now that you are back to posting what I said, How about those two posts which you blocked?
ReplyDeleteOr how about this simple one? In response to my first post, you said
"The question whether the mutuum was a demand deposit (callable loan) or time deposit would depend on the type of verbal or written contract."
Genius, before you talk of whether the mutuum was a demand deposit or time deposit, you need to first establish that a demand deposit is a mutuum. You have not done that. As I said in the earlier thread, the definition YOU endorsed and posted includes "at a time agreed upon" as a characteristic of a mutuum. By that yardstick, a demand deposit is not a mutuum. You refused to address this basic argument in the previous comment thread and are still running shit scared of addressing it here.
All your blabbering about Talmudic law and Roman law is just more hand-waving that completely fails to address the pretty much lethal hole I found in your ass-backward post.
Yeah, coward. If strong language is what you will post, that's what you get. Let's see you post this without editing.
"The application of mutuum legal theory to fungible goods is already described in the legal texts I quoted in the last post."
ReplyDeleteYeah!! What you are yet to do (and which is the real issue Rothbard raised) is whether a demand deposit should be treated as a mutuum given that an integral part of the definition of a mutuum is that there is such a concept at repaying "at a time agreed upon".
"By all means, present some new contribution to the discussion here, if you wish."
ReplyDeleteI will not do so unless you address the substantial point I have already made. As you can see, I have pointed out the fatal flaw in your post. I have shown you to be an idiot blabbering about something he just does not understand. Address my point first and then I will "contribute" something more.
Not necessarily related to what anyone has said here, but when I first started reading the arguments against FRB online, there is always a certain switch.
ReplyDeleteIt goes like this:
A: FRB is against property law.
B: There are certain court cases which establish that this was not the case.
A: Just because it is legal, doesn't mean it should be.
Certain particular anti-FRBers always club whether FRB is legal or whether FRB should be legal. It has been deeply confusing for a novice like me when some people do that.
And when this is not what happens, it otherwise tends be a form of Argument From Personal Incredulity. "It seems incredible that something so seemingly anti-property could be considered a valid part of property, so it can't be."
But many things can both be incredible and yet true.
you need to first establish that a demand deposit is a mutuum. You have not done that.
ReplyDeleteI see. The fact that demand deposits are universally recognised as mutuum loans today, as they were in the 19th century and earlier obviously means I have not established "that a demand deposit is a mutuum".
"As I said in the earlier thread, the definition YOU endorsed and posted includes "at a time agreed upon" as a characteristic of a mutuum"
That is not the essence of the mutuum loan, as is clear from the section "essence of mutuum loan" quoted in that post.
All your blabbering about Talmudic law and Roman law is just more hand-waving
Since Roman law and in fact Talmudic law were in fact the framework for banks in the Middle ages and mutuum loans, no doubt it must be (as you say) "more hand-waving".
"The fact that demand deposits are universally recognised as mutuum loans today, as they were in the 19th century and earlier obviously means I have not established "that a demand deposit is a mutuum"."
ReplyDeleteYes. Precedent does not establish it. You need to establish it but argument. You need to clearly define what a mutuum is. You then need to demonstrate that a demand deposit has ALL those characteristics and is hence fit to be called a mutuum. You have not done that, coward.
"That is not the essence of the mutuum loan, as is clear from the section "essence of mutuum loan" quoted in that post."
NONSENSE!!! On what basis are you saying that that is not the "essence" of the mutuum loan? And what gives you the intellectual freedom to decide which part of the definition of a concept is "essential" and which is not? Cherry-picking characteristics to suit your pre-determined conclusions is the height of intellectual dishonesty, which you display amply out here.
"Since Roman law and in fact Talmudic law were in fact the framework for banks in the Middle ages and mutuum loans, no doubt it must be (as you say) "more hand-waving"."
Yes, you coward. You are just hiding behind history to refuse to grapple with the complete lack of a substantive argument to my objection to your nonsensical post. That people made an error for 1000's or even 10's of 1000's of years does not mean that I am wrong to point it out. You have just presented one more example of your usual style of argumentation - arguing by appeal to authority.
So, you are just a hand-waving coward hiding behind chronicles to evade logical argumentation.
"You are just hiding behind history to refuse to grapple with the complete lack of a substantive argument to my objection to your nonsensical post. That people made an error for 1000's or even 10's of 1000's of years does not mean that I am wrong to point it out. "
ReplyDeleteGood lord. So in fact you're saying that people, Western law and banking practice have regarded demand deposits as mutuum loans for centuries, but it is all just an error, because you say so?
Man!!! This is downright hilarious!!!!!!
ReplyDelete"So in fact you're saying that people, Western law and banking practice have regarded demand deposits as mutuum loans for centuries, but it is all just an error, because you say so?"
It is not because "I" say so. It is because the very definition YOU provided for a mutuum tells me that it is incorrect to treat a demand deposit as a mutuum.
So, you are still a coward refusing to address my objection through logical argumentation and choosing to hide behind history and argue by appeal to authority.
So, you are still a coward etc. ...
ReplyDeleteLet us some review some important basic data.
(1) In Roman law, the mutuum contract included loans repayable on demand (loans that could be "called", as it were), and the explicit evidence for this can be found in the Institutes of Gaius (161 AD):
The agreement enforceable as mutuum could only be for the restoration of an equal sum of money or of goods equal in quantity and similar in quality to those lent, at a date named or, if no date was named, on demand.
Francis De Zulueta, The Institutes of Gaius, Part 2, p. 149.
Already under Roman civil law, the mutuum of money involves either (1) a time deposit or (2) a demand deposit/callable loan.
(2) In English law, showing the influence of Roman law through the Norman coenquest, certainly from Elizabethan times, and probably from the Norman conquest, law and banking practice distinguished the bailment (depositum) deposit of money from the mutuum loan of money.
(3) The way to ensure that the money you gave a banker was held as a bailment was by handing it over sealed in a box/bag, a state of affairs record in the medieval Talmudic law (itself influenced by Roman law) and relevent to medieval bankers in England:
when one deposits money with a money-changer who has constant and immediate use and need of money in his business, it is presumed that the bailor has deposited such money with the express intention of permitting the bailee to make use of the same whenever he would so desire, and then the latter becomes liable in any case in the capacity of debtor. When, however, the money so deposited is contained in a sealed or privately knotted bag, this indicates the intention of the bailor that he has not consented to the money-changer‟s making use of the same
Hyman E. Goldin, Mishnah; a digest of the basic principles of the early Jewish jurisprudence, Baba Meziah (Middle Gate), order IV, treatise II, New York & London, 1913. p. 68.
Money not given over in this way was understood to be mutuum, although verbal and written contacts were increasingly used.
American judges even in the 19th century (as can be seen in Dawson et al vs. the Real Estate Bank before the Supreme Court of Arkansas in 1845) continued that tradition of distinguising the mutuum from the bailment:
From a careful consideration of the authorities on this subject, we understand the general rule to be, that where money, not in a sealed packet, or closed box, bag or chest, is deposited with a bank or banking corporation, the law presumes it to be a general deposit [the technical term these judges used for the mutuum, LK], until the contrary appears; because such deposit is esteemed the most advantageous to the depositary, and most consistent with the general objects, usages, and course of business of such companies or corporations. But if the deposit be made of any thing sealed or locked up or otherwise covered or secured in a package, cask, box, bag or chest, or any thing of the like kind of or belonging to the depositor, the law regards it as a pure or special deposit, and the depositary as having the custody thereof only for safe keeping, and the accommodation of the depositor.” (Pike 1845: 296–297).
"For god's sake, Rothbard is an idiot.
ReplyDeleteMutuum contracts do apply to other fungible goods, such as wheat.
If I give my wheat as a mutuum loan to someone owning a silo to store it, then I transfer ownership of the wheat to them. They do what they like with my wheat. I obtain a promise to return to me wheat of the same quantity and quality either at (1) a specified date or (2) merely on demand.
Here is an 1854 discussion of the legal theory involved in juts such a mutuum loan of wheat: "
Actual loans to wheat warehouses are not fraudulent receipts, but deposits in wheat warehouses are not debts.
"In the history of the U.S grain market, grain elevators several times fell pretty to this temptation, spurred by a lack of clarity in bailment law. Grain elevators issued fake warehouse receipts in rain during the 1860s, lent them to speculators in the Chicago what market, and caused dislocations in wheat prices and bankruptcies in the wheat market. Only a tightening of bailment law, ensuring that any issue of fake warehouse receipts is treated as fraudulent and illegal, finally put an end to this clearly impermissible practice.
Rothbard "The Case Against the Fed p38"
A quick look shows that there are grain bailments:
"Farmer position. A farmer who has grain in storage with an elevator that files
bankruptcy is not a creditor of the elevator. Instead, grain in storage remains the property of the farmer who stored the grain, with ownership of the grain evidenced by warehouse receipts and scale tickets. The storing of the grain establishes a bailee-bailor relationship.3 The relationship is
unaffected by the fact that the bailee will return to the bailor grain of like quality rather than the identical grain.4 While it is easier to prove ownership with a warehouse receipt, both warehouse receipts and scale tickets are prima facie evidence of ownership of the stored grain."
A key passage in this is: "The relationship is
unaffected by the fact that the bailee will return to the bailor grain of like quality rather than the identical grain"
http://www.econ.iastate.edu/~harl/RightsOfFarmersInFailedGrainElevators.pdf
"11-11-114.� Stored grain to constitute bailment; amount in storage to equal issued storage certificates; exceptions; conversion; seizure.
(a)� The storage of grain with a warehouse and the movement of grain by a warehouseman constitutes a bailment and not a sale.� Upon return of the scale ticket bearing the name of the bailee or warehouse receipt properly endorsed and payment or tender of all advances and charges, the owner of the scale ticket or warehouse receipt is entitled to, and the warehouseman or person operating a warehouse shall deliver the identical grade and amount of grain placed in storage or transported.� Every person operating a warehouse shall maintain at all times in storage, in the state of Wyoming, grain equal in amount and grade to all scale tickets and warehouse receipts issued, unless authorized in writing by holders of scale tickets or warehouse receipts or by the department to move to other storage, and failure to do so is a conversion thereof."
http://www.google.com/#sclient=psy-ab&hl=en&source=hp&q=grain+warehouse+debt+bailment&pbx=1&oq=grain+warehouse+debt+bailment&aq=f&aqi=&aql=&gs_sm=e&gs_upl=601l3562l0l3704l29l19l0l0l0l0l299l2909l2.13.4l19l0&bav=on.2,or.r_gc.r_pw.,cf.osb&fp=a271f0478f23d1e9&biw=1280&bih=636
(4) When London goldsmiths began engaging in fractional reserve banking on a significant scale, there is not one shred of evidence that this was illegal under English law. On the contray, law and banking practice had long recognised the mutuum as different from the bailment, and demand deposits were a mutuum loan. That can be seen in goldsmith notes from demand deposits which were negotiable credit/debt instruments that could be presented for specie on demand (bearing the clause “I promise to repay upon demand ...”); they were not certificates of bailment.
ReplyDeleteSelgin, G. “Those Dishonest Goldsmiths,” revised January 20, 2011
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1589709
(5) In the first years of the 19th cnetury before Carr v. Carr, Arthur Browne gives us an explicit description of the mutuum contract (even in money loans) in which the "absolute property was transferred to the borrower".
"A quick look shows that there are grain bailments:"
ReplyDeleteThe existence of grain bailment does not disprove the existence of mutuum loans of grain.
You already have that estalished by the link I posted.
"The existence of grain bailment does not disprove the existence of mutuum loans of grain."
ReplyDeleteNo, because you said this earlier in the thread:
"The traditional method, going back not just to medieval Europe but even to Roman days, by which money brought to a bank was determined to be a bailment was whether it was sealed in a box/bag:"
Implying that if it wasn't in a sealed/marked box, then its not a bailment. Then thats where I say banks get special privilege,because a grain warehouse with fungible wheat does not turn their receipts from bailments to debts. From the links I posted, the grain warehouses have a bailment relationship with their customer. And all they have to is return not that identical piece of wheat, but only the same amount in quantity and quality.
Hence, the quote: "The relationship is
unaffected by the fact that the bailee will return to the bailor grain of like quality rather than the identical grain"
Why do banks get that special privilege of turning fungible bailments into debts while grain warehouses do not?
In cases before the courts, American jurists are concerned without any doubt whatsoever with the question whether a commodity like grain etc. is given as a mutuum or as bailment:
ReplyDeleteSecond.—Because the Court charged the jury as follows: " Where a warehouseman receives grain on deposit, with an understanding that he may, if he choose, dispose of it—that he will, when demanded, return other grain or pay for it, in case of such a disposition he is bound to do one or the other. A subsequent purchase of grain by the warehouseman, for the purpose of meeting the demand for grain thus received, would not be sufficient to vest the property in the plaintiff."
Third.—Because the Court refused to charge the jury that the custom at Milan, as proved by defendant, if known to plaintiff, was a part of the contract between the parties.
Osburn and Taylor, attorneys for plaintiff.
Worcester and Pennewell, attorneys for defendant.
Bartley, C. J.—To determine which of the parties in this case shall sustain the loss of the property in question occasioned by the accident, it becomes necessary to ascertain the true nature and character of the transaction between the parties, and the rights created and duties imposed thereby. It was either a contract of sale, a mutuum, or a deposit. If a contract of sale, the right of property passed to the purchaser on delivery, and the article was thereafter held by him at his own risk. If a mutuum, the absolute property passed to the mutuary, it being a delivery to him for consumption or appropriation to his own use, he being bound to restore not the same thing, but other things of the same kind. Thus it is held, that if corn, wine, money, or any other thing which is not intended to be delivered back, but only an equivalent in kind, be lost or destroyed by accident, it is the loss of the borrower or mutuary; for it is his property, inasmuch as he received it for his own consumption or use, on condition that he restore the equivalent in kind. And in this class of cases the general rule is, " Ejus est periculum eujus est dominium." (Story on Bail, sec. 283; Jones on Bail, 64; 2 Raym. 916.) But if the transaction here was a deposit, the property remained in the bailor, and was held by the bailee at the risk of the bailor, so long as he observed the terms of the contract in so doing. But if the bailee shipped the wheat, and appropriated the same to his own use, in violation of the terms of the bailment, before the burning of his warehouse, he became liable to the bailor for the value of the property.
http://books.google.com.au/books?id=EWRKAAAAYAAJ&pg=PA490&dq=grain++mutuum+contract&hl=en&ei=DFOHTu-hJMOziQeDt9WYDw&sa=X&oi=book_result&ct=result&resnum=6&ved=0CEwQ6AEwBQ#v=onepage&q=grain%20%20mutuum%20contract&f=false
"Why do banks get that special privilege of turning fungible bailments into debts while grain warehouses do not? "
ReplyDeleteThere is no "special privilege" at all.
There is no doubt whatsoever that mutuum loans in commodities like grain, wheat etc. have existed from the Roman Republic to modern times.
I will not do so unless you address the substantial point I have already made.
ReplyDeleteThe spirit of free and open exchange of ideas is strong with this one.
You are just a sicko who hides behind the privileges of the owner of the blog to propagate your vile ideas in the name of intellectual discussion.
Rothbardians don't believe in intellectual property, so you're misusing the concept of ownership.
I suppose your response will be that ownership is absolutely anything you want it to be, like another Rothbardian poster who set a new distance record for goal post movement on Ed Feser's blog. The argument was that destroying your neighbor's flower bed makes you an 'owner' of the property but not a 'legitimate owner'. So, now the ownership concept suits their argumentative needs, and only at the cost of making it intellectually vacuous. Win!
Seems reminiscent of the truly epic "one thing can't be in two places at the same time, because I'm redefining place to mean everywhere at once, and the entire world of science is trying to suppress the truth."
I'm also sure that calling 99.999% of the Earth's population 'sickos' because we believe in the legitimacy of some concept of the state will only help your argument.
"If a mutuum, the absolute property passed to the mutuary, it being a delivery to him for consumption or appropriation to his own use, he being bound to restore not the same thing, but other things of the same kind. Thus it is held, that if corn, wine, money, or any other thing which is not intended to be delivered back, but only an equivalent in kind, be lost or destroyed by accident, it is the loss of the borrower or mutuary; for it is his property, inasmuch as he received it for his own consumption or use, on condition that he restore the equivalent in kind. "
ReplyDeleteJust because it is fungible does not turn it into a debt. I'm not denying the existence of loan contracts, I'm just saying that a bailment for a fungible good does not make it a loan. Clearly, there are others besides the kooky Austrians who agree with me in the case of grain contracts.
""Farmer position. A farmer who has grain in storage with an elevator that files
bankruptcy is not a creditor of the elevator. Instead, grain in storage remains the property of the farmer who stored the grain, with ownership of the grain evidenced by warehouse receipts and scale tickets. The storing of the grain establishes a bailee-bailor relationship.3 The relationship is
unaffected by the fact that the bailee will return to the bailor grain of like quality rather than the identical grain.4 While it is easier to prove ownership with a warehouse receipt, both warehouse receipts and scale tickets are prima facie evidence of ownership of the stored grain.""
""11-11-114.� Stored grain to constitute bailment; amount in storage to equal issued storage certificates; exceptions; conversion; seizure.
(a)� The storage of grain with a warehouse and the movement of grain by a warehouseman constitutes a bailment and not a sale.� Upon return of the scale ticket bearing the name of the bailee or warehouse receipt properly endorsed and payment or tender of all advances and charges, the owner of the scale ticket or warehouse receipt is entitled to, and the warehouseman or person operating a warehouse shall deliver the identical grade and amount of grain placed in storage or transported.�"
You have identifed a peculiarity of American
ReplyDeletelaw with respect to grain deposits in warehouses:
One exception to the rule that a mutuum constitutes a sale has been recognized with respect to grain deposits in warehouses. Prior to the decision of Rice v. Nixon, the courts were divided on this question, one line of decisions holding that a redelivery of grain of like kind and quality created a bailment, the other line adhering strictly to the doctrine that a mutuum constituted a sale.
http://books.google.com.au/books?id=BmWzAAAAIAAJ&q=%22the+other+line+adhering+strictly+to+%22&dq=%22the+other+line+adhering+strictly+to+%22&hl=en&ei=nFuHTu6WOa-SiAfot7GTDw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CDUQ6AEwAQ
This does not change the fact that mutuum contracts in fungible goods are well known.
They are a fundamental part of American law on mutuum contracts:
1089. Mutuum, or loan for consumption, is a contract by which the owner of a personal chattel, of the kind called fungibles,(c) delivers it to another by which it is agreed that the latter shall consume the chattel, and return at the time agreed upon, another chattel of the same kind, number, measure or weight, to the former, either gratuitously or for a consideration; as if Peter lends to Paul one bushel of wheat, to be used by the latter, so that it shall not be returned to Peter, but instead of which Paul will return to Peter another bushel of wheat of the same quality, at a time agreed upon.
By fungible, in this definition is meant any personal chattel whatever, which consists in quantity, and is regulated by number, weight and measure, such as corn, wheat, oil, wine and money ...
http://socialdemocracy21stcentury.blogspot.com/2011/09/mutuum-contract-in-american-law.html
Rothbardians don't believe in intellectual property, so you're misusing the concept of ownership.
ReplyDeleteThis is actually quite controversial. AFAIK, Rothbard himself was only against patents, but was pretty okay with copyrights.
"You have identifed a peculiarity of American
ReplyDeletelaw with respect to grain deposits in warehouses:
One exception to the rule that a mutuum constitutes a sale has been recognized with respect to grain deposits in warehouses. Prior to the decision of Rice v. Nixon, the courts were divided on this question, one line of decisions holding that a redelivery of grain of like kind and quality created a bailment, the other line adhering strictly to the doctrine that a mutuum constituted a sale."
A "peculiarity" that does not extend to banking for some reason, is the point I'm trying to make. Clearly the trouble in FRB/bailments/debts etc all lies in the legal theory. Now, it appears that there are courts who would, extending the same logic applied to grain warehouses and using only that and not prior precedent for banking, would apply it to money, while there are other courts that would not. Again, the trouble lies in the evolution of law, not some crazy Austrians trying to concoct a bailment law from the ground up.
"This does not change the fact that mutuum contracts in fungible goods are well known."
And I never ever said that it didn't, or that loan contracts could not exist in grain warehouses. But you repeatedly bring it up as though it does. Its a straw man.
"as if Peter lends to Paul one bushel of wheat, to be used by the latter, so that it shall not be returned to Peter, but instead of which Paul will return to Peter another bushel of wheat of the same quality, at a time agreed upon."
Hmmm.
And Rice V. Nixon was in the 1800s, whereas the quotes I've used come from modern day.
ReplyDelete"Now, it appears that there are courts who would, extending the same logic applied to grain warehouses and using only that and not prior precedent for banking, would apply it to money, while there are other courts that would not. "
ReplyDeleteIt could easily go the other way. Why not apply the mutuum legal contract to grain warehouses?
And at any rate, if people freely contracted together to engage in FRB or a grain warehouse on mutuum demand terms, the Rothbardian needs a moral argument against it that is entirely lacking.
ReplyDeleteIf the people giving the money/grain to another party agree to transfer ownership in exchange for a debt/credit instrument, that is no business of Rothbardians, who would stop it by violent, aggressive attacks on private freedom through private protection agencies.
"It could easily go the other way. Why not apply the mutuum legal contract to grain warehouses?
ReplyDeleteAnd at any rate, if people freely contracted together to engage in FRB or a grain warehouse on mutuum demand terms, the Rothbardian needs a moral argument against it that is entirely lacking."
And now we complete the circle by going to the last thread. How the warehouse receipts are contractually stated, function, and circulate in the economy. A banker and a depositor can certainly make a FRB contract, just as a grain warehouse can do the same. But how they are contractually listed (Pay to the bearer on demand XXX, or The Owner of this Receipt May or May not Receive XXX when they present this to a Lord Keynes' Bank) and how they function (the public perceives them as liquid, not a varying degree where they may or may not receive money).
And you didn't answer my question from the last thread, what are you basing this "moral" argument of Rothbard's on? Are you saying that something is immoral because it is illegal, or what?
"If the people giving the money/grain to another party agree to transfer ownership in exchange for a debt/credit instrument, that is no business of Rothbardians, who would stop it by violent, aggressive attacks on private freedom through private protection agencies. "
Since you apparently ignore select portions of what I write, I'll post them again:
This does not change the fact that mutuum contracts in fungible goods are well known."
And I never ever said that it didn't, or that loan contracts could not exist in grain warehouses. But you repeatedly bring it up as though it does. Its a straw man.
This is actually quite controversial. AFAIK, Rothbard himself was only against patents, but was pretty okay with copyrights.
ReplyDeleteRothbard frequently contradicts himself; but to play along, in one place he writes:
"In the purely free market, the inventor could mark his machine copyright, and then anyone who buys the machine buys it on the condition that he will not reproduce and sell such a machine for profit. Any violation of this contract would constitute implicit theft and be prosecuted accordingly on the free market."
Of course, this total freedom of contract leads to contradictions, as pointed out in this blog and in many other places. If a Rothbardian did accept that LK owns this blog, though, how is it legitimate to criticize its legal use?
And for some reason, the Rothbardians only accept contracts that suit their immediate purposes. Like the bank deposit contracts, which have been pointed out repeatedly here. If it's universally okay to limit the way a purchaser may use his or her own property, as Rothbard defends above, why does that not apply to bank deposits?
In the interest of not confusing the anarcho-capitalists with history, law, philosophy, or any terminology which means something very specific for everyone but them, let's try a fiat money contract from scratch:
"I, the depositor, agree that the bank will take full possession of my deposit of gold, which is now the bank's property, which the bank owns, all present and future property interests in said gold being transferred to the bank, in exchange for an arbitrary denomination of bank notes which may or may not be accepted by anyone, including the bank of issue, in exchange for anything of value. By accepting these bank notes, I agree to abide by the terms of this contract, which also requires that these bank notes be presented only to individuals, merchants, or banks with full awareness and complete understanding of this contract, maintaining full personal liability for any issues of fraud arising from accidental, intentional, or other use of these notes for any purpose."
Obviously, nowhere in the United States is this an enforceble contract. What about in Rothbardia, though? Is it an enforceable contract if all parties voluntarily agree to it? If these bank notes are circulated in the open by individuals who agreed to the contract, is the bank liable for fraud? If an employer pays you with this fiat currency, is the bank liable for fraud? If you voluntarily accepted the employment contract, is the employer liable for fraud? What if the fiat money contract is a matter of public record?
"It could easily go the other way. Why not apply the mutuum legal contract to grain warehouses?
ReplyDeleteAnd at any rate, if people freely contracted together to engage in FRB or a grain warehouse on mutuum demand terms, the Rothbardian needs a moral argument against it that is entirely lacking."
And now we complete the circle by going to the last thread. How the warehouse receipts are contractually stated, function, and circulate in the economy. A banker and a depositor can certainly make a FRB contract, just as a grain warehouse can do the same. But how they are contractually listed (Pay to the bearer on demand XXX, or The Owner of this Receipt May or May not Receive XXX when they present this to a Lord Keynes' Bank) and how they function (the public perceives them as liquid, not a varying degree where they may or may not receive money).
And you didn't answer my question from the last thread, what are you basing this "moral" argument of Rothbard's on? Are you saying that something is immoral because it is illegal, or what?
"If the people giving the money/grain to another party agree to transfer ownership in exchange for a debt/credit instrument, that is no business of Rothbardians, who would stop it by violent, aggressive attacks on private freedom through private protection agencies. "
Since you apparently ignore select portions of what I write, I'll post them again:
""This does not change the fact that mutuum contracts in fungible goods are well known."
And I never ever said that it didn't, or that loan contracts could not exist in grain warehouses. But you repeatedly bring it up as though it does. Its a straw man. "
Its a straw man.
Bear in mind Rothbard is not against all "paper money". In "Rothbardia", or whatever you guys want to call it, people are free to print their own pieces of paper with their name on it and try and exchange them for goods and services. He just thought, like most people, that no one would accept them because they are not worth anything. He was against fiat money because people were forced to use it, by fiat (decree).
ReplyDeleteBala said,
ReplyDelete"So far, it is Rothbard 1, LK 0."
I'd say the score is waaaaaaay higher than that, and LK is clearly ahead.
See also David Friedman on Rothbard's scholarship: http://daviddfriedman.blogspot.com/2006/06/old-news-friedman-contra-rothbard.html (That said, however, Rothbard's book on the history of economics is an interesting read)
Hey genius,
ReplyDeleteAs anonymous OCTOBER 1, 2011 11:46 AM pointed out, your previous post had this under the basic illustration of a mutuum.
"as if Peter lends to Paul one bushel of wheat, to be used by the latter, so that it shall not be returned to Peter, but instead of which Paul will return to Peter another bushel of wheat of the same quality, at a time agreed upon."
The key point that I have been making (and which you are still not addressing) is that your post has an INTERNAL CONTRADICTION. That you now quote an ADDITIONAL reference that stateS "at a date named or, if no date was named, on demand" does NOT make up for your error in your argument. So, citing it has no bearing on the discussion.
That apart, as the same anonymous has been pointing out, what you need to do is to not just define a mutuum and DECLARE that demand deposits are a mutuum but to DEMONSTRATE through ARGUMENT that they are indeed a mutuum.
So, when anonymous points out (as does Rothbard) that wheat in silos does not constitute a bailment while such a special status is accorded to money, you actually need to demonstrate that deposits of money are different and constitute a mutuum and not a bailment.
To state that mutuum loans in fungible commodities existed is not an answer to anonymous' (or my) question. You need to SPECIFICALLY demonstrate that deposits of money are indeed a mutuum. You need to explain why treating deposits of wheat as a bailment and simultaneously treating deposits of money as a mutuum is not contradictory.
And to the other anonymous who said this
"The spirit of free and open exchange of ideas is strong with this one."
Would you care to explain how LK's post does not contain a contradiction as I have pointed out? Would you care to show that LK was not evading this answer till I left him no option but to do so? Do you know that LK has been blocking my (extremely civil but persistent) posts till I started using strong language?
Since you cannot answer the last part and only LK can but still you insist on ridiculing me without knowing that LK has been trying to block a discussion, I'll just have to tell you "go stuff it".
LK:
ReplyDeleteI see. The fact that demand deposits are universally recognised as mutuum loans today, as they were in the 19th century and earlier obviously means I have not established "that a demand deposit is a mutuum".
Correct. You must establish it economically using logic, not referring to positive law, which only begs the question.
If the positive law states that randomly walking up to people you have never met or have no idea of their past actions, and violently ending their lives, was not murder, but "doing God's will", then referring to positive law would NOT constitute a foundation for such acts to not be murder.
Rationalism provides us with a knowledge of discerning natural laws that may or may not coincide with positive laws.
The government is not the foundation of all just law. It is the foundation of government laws only.
Bala has it right. You need to:
DEMONSTRATE through ARGUMENT that they are indeed a mutuum.
Your problem is that your epistemology is not rationalist, but arbitrary and subjectivist, and so you cannot help but defer to the state for all things related to law. You have no foundation from which to make an argument from first principles.
"You must establish it economically using logic, not referring to positive law, which only begs the question."
ReplyDeleteI see. Now the goal posts have been shifted.
So now we have established that
(1) You now presumably don't deny that the civil law tradition of Western civilisation (going back to Rome) treats the demand deposit as a mutuum loan where the client has given up ownership of the money?
(2) This being so, the law is clear that the money is owned by the bank and the FR client has no claim to get his original money back at all? Therefore there is no sense under the law in which there are 2 title deeds to the money?
Since you cannot answer the last part and only LK can but still you insist on ridiculing me without knowing that LK has been trying to block a discussion, I'll just have to tell you "go stuff it".
ReplyDeleteSince you somehow failed to ever learn manners, I'll remind you that we're both guests here on LK's blog, which you yourself pointed out was his property. I also don't care which posts have been blocked and which haven't, because that's not my problem.
There's also a big difference between using strong language in argumentation for rhetorical effect and being an angry mean-spirited Rothbardian. You claim to be against violence and coercion, but you're clearly seething under the surface and probably sitting by your door with a shotgun praying for someone to break in.
Every Rothbardian I've met in person also turned out to be a racist and a misogynist in addition to being a gun nut, so you're definitely not helping with the stereotype.
Your problem is that your epistemology is not rationalist, but arbitrary and subjectivist, and so you cannot help but defer to the state for all things related to law. You have no foundation from which to make an argument from first principles.
ReplyDeleteAre you seriously arguing that the law should be derived from first principles? That seems to imply that if everyone is perfectly rational, that they'll all agree on the law. Where have I heard that one before?
In any case, the thread is pretty clear. LK pointed out that the law as it stands says one thing. The token Rothbardian argues that it doesn't. LK provides a citation showing conclusively that it does. Rothbardian now argues that it violates some principle not related to the law as it stands. LK points out that he wasn't arguing that. Rothbardian emits a non sequitur about the evils of the state. LK points out that Rothbardian is not even making a good faith effort to argue. Rothbardian acts like a bitter, angry jerk to drive everyone from the conversation so that "victory" can be declared. LK blocks posts to attempt to maintain an intellectually receptive atmosphere. Rothbardian cries that he is being oppressed. Now we are miles away from the point and I feel like I should send Rothbardian a bill for my time.
I've seen the same thing played out in different forums. On my campus, luckily, the administration can just ask the Rothbardians to leave, or have them reprimanded or expelled for harassment. Then the rest of us can go back to doing something productive.
"LK pointed out that the law as it stands says one thing."
ReplyDeleteYou made a small typo. You should have said the Law. There is a difference between law and The Law, you see. I know statists can't understand the difference.
LK,
ReplyDeleteAs you can see (but do not want to acknowledge), I have decimated your post. I have shown that unless you can explain through logical argument from first principles that a demand deposit is a mutuum, your post is rubbish.
You now have 2 options.
1. provide the argument from first principles
2. accept that your post was rubbish
However, I suspect you will choose option 3 below
3. Block Bala's post as I have blocked so many where he has demolished my nonsense and claim 'victory'.
Coward!!!
"I have shown that unless you can explain through logical argument from first principles that a demand deposit is a mutuum"
ReplyDeleteSo now I have to show "from first principles that a demand deposit is a mutuum".
Whatever meaning is supposed to be attached to those words is not clear to me.
Perhaps I must start my discussion by defining every single word from the word "the" to "a", etc. etc.
I have shown that unless you can explain through logical argument from first principles that a demand deposit is a mutuum, your post is rubbish.
ReplyDeleteOh oh, I want to play too! I demand a proof that the earth is flat, using only the Peano axioms and modus ponens. If you can't do that then obviously all cats are dogs.
I really do love modern rationalists; they think that the more sheltered and naive you are, the better your ideas will be. It's clear that they're working diligently toward that ideal.
"You must establish it economically using logic, not referring to positive law, which only begs the question."
ReplyDeleteI see. Now the goal posts have been shifted.
No, the goal posts have never shifted. You just thought that scoring on the statist laws goal was a goal against your opponents. Your opponents are not statist propagandists. We have a goal that is intellectual and rationalist only, and not status quo, positive law oriented.
(1) You now presumably don't deny that the civil law tradition of Western civilisation (going back to Rome) treats the demand deposit as a mutuum loan where the client has given up ownership of the money?
Again, nobody has denied that for many years, governments, or unscrupulous bankers with government permission and sanction, have engaged in frb and defended it by insisting that demand deposits are really loans, and thus codifying such fraud into positive law.
What the issue here is how one can arrive at the conclusion that demand deposits are mutuum loans by way of first principles and logic. Yes, this requires you to abandon your continual deferments to the authority and status quo fallacies.
(2) This being so, the law is clear that the money is owned by the bank and the FR client has no claim to get his original money back at all? Therefore there is no sense under the law in which there are 2 title deeds to the money?
POSITIVE LAW is not what this argument is about. If slavery were law, and the argument was over the nature of slavery, then it would not be a premise to the justification of slavery that positive law happens to condone it.
So now I have to show "from first principles that a demand deposit is a mutuum".
ReplyDeleteWhatever meaning is supposed to be attached to those words is not clear to me.
You see, this is proof that you're a sophist and a pretender. I know exactly what Bala is talking about because I have also educated myself on rationalist epistemology. You see, you try to refute your intellectual opponents without having the faintest clue as to your opponent's actual knowledge and arguments. You can't possibly claim to be able to refute that which you don't even understand.
Arguing from first principles, in general, is to do two major things. One, to have knowledge of all the relevant major ideas and arguments in question and to never contradict adhere to contradictory premises. Two, to start with the most basic propositions of logic (they don't have to be self-evident axioms), and this includes the logical propositions concerning the topic at hand (for example the nature of a demand deposit) and then, using first order logic and any synthetic propositions as are required if making empirical claims, to then deduce how a subject (demand deposit) can be considered a member in a universal (mutuum loan).
What you are doing is what all irrational statists do. You start with the universal, (e.g. the state) and then try to force specific subjects (e.g. individual humans) into it despite the subjects belonging to other universals and no other. It is absurd to start with a universal and then force subjects into it and commit a contradiction, instead of letting go and realizing that the subjects belong in another universal category.
You are going backwards. You have to start with specific subjects, and then after that understand the similarities and differences so that you can conceive of which universals such specifics belong.
If your universal contains attributes that contradict the subject in which you are attempting to sloppily shove into it, then you're committing a fallacy.
Anonymous:
Your posts contribute nothing except displaying your own ignorance.
Anonymous:
ReplyDeleteIn any case, the thread is pretty clear. LK pointed out that the law as it stands says one thing. The token Rothbardian argues that it doesn't. LK provides a citation showing conclusively that it does. Rothbardian now argues that it violates some principle not related to the law as it stands. LK points out that he wasn't arguing that. Rothbardian emits a non sequitur about the evils of the state. LK points out that Rothbardian is not even making a good faith effort to argue. Rothbardian acts like a bitter, angry jerk to drive everyone from the conversation so that "victory" can be declared. LK blocks posts to attempt to maintain an intellectually receptive atmosphere. Rothbardian cries that he is being oppressed. Now we are miles away from the point and I feel like I should send Rothbardian a bill for my time.
In any case, the thread is pretty clear. Pete and Bala pointed out that the law as it stands was never under discussion. The token statist argues that if the positive law says so, then the token statist is correct. Bala and Pete provide arguments showing conclusively that demand deposits are not loans, despite positive law. Statist now argues that rationalism allegedly violates the positive law terms of the discussion. Bala and Pete point out that they weren't arguing positive law. Statist emits a non sequitur about the benefits of FRB and statism. Bala and Pete point out that statist is not even making a good faith effort to argue. Statist acts like a bitter, angry jerk to drive everyone from the conversation so that "victory" can be declared. Statist blocks posts to attempt to erase being intellectually decimated. Bala rightfully points that he is being censored (which is statist's right as it is his blog). Now we are miles away from the point and I am not at all surprised that the statist would consider it justified to send a bill for "services" he was not asked for.
"Again, nobody has denied that for many years, governments, or unscrupulous bankers with government permission and sanction, have engaged in frb and defended it by insisting that demand deposits are really loans, and thus codifying such fraud into positive law."
ReplyDeleteThis immediately raises the point that if 2 parties freely and voluntarily agree to all the stipulations of present mutuum law, the anti-FRB Rothbardian has no case for his view that fraud has occurred:
(1) the ownership of the client's money pass to the bank;
(2) the bank gives the client a credit instrument, the IOUs redeemable on demand from the bank's reserves, money from sale of financial assets or loans, to receive back other money up to amount in the account
(3) it is understood by all parties that the original money has been loaned out, and only a tantundem from the bank's reserves, money from sale of financial assets, or loans is provided
(4) if the bank becomes insolvent, you as a client can sue to regain from the bank's asset's your debt.
--------
Where is the fraud here?
The essence of fraud is "intentional deception": there isn't any. All parties understand the terms and freely agree.
LK - the unpleasantness of Bala and Pete (despite your own civil tone) is sickening to read. Is it really worth engaging people whose bad faith is manifest (as opposed to the likes of more decent types like George Selgin)?
ReplyDeleteAlso - as a novice here, I'm slightly puzzled by two things.
(1) why are Austrians your main focus on this blog? I didn't think they had widespread support - or are they an 'intellectual' basis for the Tea Party?
(2) isn't FRB a fairly esoteric ground on which to take on Austrians anyway? Isn't it more straightforward to use basic Sector Financial Balances instead?
Anders,
ReplyDeleteI do deal with neoclassical economics, topical issues, and the earlier focus of my blog in the first years was on general free market/neoliberal issues.
But there are fine sites out there already that do a good job of this:
http://bilbo.economicoutlook.net/blog/
http://www.debtdeflation.com/blogs/
http://neweconomicperspectives.blogspot.com/
http://mikenormaneconomics.blogspot.com/
Often I would just be repeating what they say.
I try and fill out things they don't discuss. Issues in Post Keynesian economics, critiques of the Austrians/libertarians, historical issues (Hayek-Sraffa debate), even (I suppose) more esoteric things like economic methodology/epistemology etc.
Thanks LK. I've been an aficionado of most MMT blogs for a while but they can come across as strident and prolix. Your site is clearly and equably written, and most importantly, it shows a useful awareness of where P-K ideas are situated in the overall economics spectrum. Look forward to following you.
ReplyDeleteMore than a year later, but had to chime in anyway, sorry.
ReplyDeleteThe article author wrote:
"The belief that Carr v. Carr was the 'first fateful case' establishing such an idea is utterly false."
What is meant by "establishing such an idea"? It appears to be a straw-man erected from Rothbard's original claim. The author seems to suggest that Rothbard's claim was that the very distinction between mutuum contracts vs. bailments was not established until Carr v. Carr. That would indeed be an extremely low bar, and quite easy to refute. However, that was not Rothbard's claim. Rothbard's claim was that Carr v. Carr was the first case that set that particular precedence--that bailments were to be considered de facto deposits unless explicitly understood to be otherwise. And that is factually and historically correct.
The author's error would be like me claiming that Roe v. Wade was a precedence-setting case for abortion in the U.S., and someone else disingenuously arguing against something that was never claimed (i.e., "No, the issue of abortion was known long before Roe v. Wade").
In the case presented by the author, there wasn't even a question of whether it was a Mutuum contract, to wit: (emphasis mine)
"The absolute property was transferred to the borrower, i. e. they were lent for consumption...,"
For the author to refute Rothbard's claim, he would need to show that this was not the first time a dispute over Mutuum vs. Bailments was at issue, and that precedent over such a dispute was established earlier (either way, since Rothbard claimed it wasn't even tested until 1811).
"For the author to refute Rothbard's claim, he would need to show that this was not the first time a dispute over Mutuum vs. Bailments was at issue, and that precedent over such a dispute was established earlier (either way, since Rothbard claimed it wasn't even tested until 1811). "
ReplyDeleteOr that the case was not "fateful." Carr v. Carr established only that, for purposes of interpreting a will, a bank deposit created a debt. The parties to the deposit already knew that, and no party to a deposit arrangement doubted it. The issue never needed to be litigated by the parties, because the parties always were free to contract, and they knew what they were doing. If it weren't for the probate dispute, the issue would never have arisen, and the case made no new law for bankers and their customers.
Because Carr v. Carr explains the nature of a mutuum for the benefit of the parties to the will contest, its language is eminently quotable. But it was not saying anything new, as evidenced by the Browne Treatise and thousands of years of banking practice.