ABSTRACT
The theory of interest arrived at the so-called "agio" or discount theory, already familiar to Mr. Fisher's readers and substantially in accord with the like theory spoken for by Bohm-Bawerk. Mr. Fisher takes issue with Bohm-Bawerk on the one grave and far-famed point of doctrine concerning the "Roundabout Process". Interest and the rate of interest is a matter of value, and to be explained in terms of valuation, and so in terms of marginal utility. Interest, as demanding the attention of the modern economist, is eminently a pecuniary phenomenon, and its rate is a question of business adjustments. Interest is a phenomenon of credit transactions alone. But a money economy and the consequent credit transactions which give rise to the phenomena of interest can emerge only on the basis afforded by the mature development of the institution of property. Interest is a business proposition and is to be explained only in terms of business, as Mr. Fisher aims to do.
