The Theory of Money and Credit
6. The Two English Schools of Banking Theory
A writer identifies the metallistic theory with the currency principle and calls the chartal theory “a variety of the old banking principle.”37 Again, another writer is of the opinion that there is “a certain justification for giving the name of economic nominalism to the doctrine of the Currency School, so far as it is based upon a like treatment of both metallic and paper money.”38 Both would appear to be mistaken. The opposition between the two famous schools of the theory of credit lies in quite another sphere.39 Knapp and his disciples have never so much as perceived the problems with which they were concerned, much less attempted to solve them.
Bendixen’s doctrine of the creation of money, which is connected only accidentally and loosely with Knapp’s nominalism, is admittedly nothing but an exaggerated and extremely naive version of the Banking principle. It is a particularly characteristic sign of the low state of German economic theory that for many years Bendixen’s doctrine could have been regarded as something new without it being remarked that it was at most only in the way in which it was expounded that it differed from the doctrine that had been predominant in Germany for decades.
