Carl Menger, Die nationalökonomische Lehre vom Kredit (1904)

Menger’s journal book review examines Johann von Komorzynski’s Die nationalökonomische Lehre vom Kredit, published in Innsbruck in 1903. Its organizing problem is the definition of credit: what distinguishes a credit transaction from other transfers of goods, and how should economic theory reconcile that distinction with legal categories and commercial practice? Menger presents Komorzynski’s book as a substantial reconstruction of an unsettled doctrine, while stopping short of endorsing all its theoretical conclusions.

The review first traces the inadequacies of two established explanations. Older accounts emphasized the creditor’s confidence in the debtor’s ability and willingness to repay. Yet confidence has comparatively little importance in economically significant forms of secured credit, particularly lending against pledges and mortgages; in some such transactions it may play no role at all. Knies responded by locating credit’s distinguishing feature in time: one party performs in the present, while the other’s counter-performance belongs to the future. Menger recognizes why this explanation gained acceptance, but argues that its breadth creates another difficulty:

Nach der obigen Definition des Kredites würden nämlich nicht nur das Darlehen, der Kauf auf Borg usw., sondern auch die Sachmiete, das reguläre Depositum und teilweise selbst die Übergabe von Sachgütern zur Verwaltung in den Kreis der Kreditgeschäfte fallen, eine Konsequenz, welche Knies und die Anhänger seiner Lehre denn auch tatsächlich aus dieser letztern gezogen haben.

English translation: According to the above definition of credit, not only loans, purchases on credit, and so forth, but also the hire of goods, regular deposits, and to some extent even the handing over of material goods for management would fall within the category of credit transactions—a consequence that Knies and the adherents of his doctrine have indeed actually drawn from it.

The objection concerns conceptual boundaries, not merely terminology. A definition based on delayed counter-performance includes arrangements that commercial understanding and legal reasoning distinguish from credit. Menger values Komorzynski’s combined economic and legal competence because it enables him to confront this mismatch.

Komorzynski’s alternative makes the transfer of wealth into another person’s economic management for use there the defining operation. Crucially, wealth is distinguished from the particular goods through which it is transferred:

Objekt der Kreditierung und des Kreditanspruches sei nicht ein konkreter Güterbestand, sondern nur ein größenmäßig bestimmtes Vermögen.

English translation: The object of the granting of credit and of the credit claim is said to be not a concrete stock of goods, but only wealth of a specified magnitude.

On this account, the borrower acquires ownership of the concrete goods received, whereas the credited wealth is economically placed under the borrower’s management only for use. It remains legally attributable to the creditor, although in a changed legal form. Entrusting goods for safekeeping or management, and arrangements for hiring or leasing them, therefore fall outside credit. The distinction between particular goods and quantitatively determined wealth supplies the conceptual boundary that the time-based account lacked.

This reconstruction also changes the relationship between wealth and income. Wealth can no longer mean simply the sum of concrete goods belonging to an economic subject:

Für den Verf. ist das Vermögen „die private Macht über Einkommen“ und der Begriff des Einkommens somit der primäre.

English translation: For the author, wealth is “private power over income,” and the concept of income is therefore primary.

Menger draws attention to the theoretical consequences: explaining the origin of income, especially income derived from owning goods, becomes foundational to Komorzynski’s treatment of credit. The proposed definition thus reorganizes connected economic concepts rather than merely substituting one criterion for another.

The review then outlines the book’s second main section, devoted to credit as an economic power. Komorzynski examines Austrian, German, French, and English credit law to clarify the economic functions of important institutions and statutes. Since he treats a contribution to a partnership as an extension of credit, the inquiry also encompasses partnership law. This comparative legal analysis connects the initial conceptual reconstruction with institutional arrangements governing economic activity.

Menger concludes with a favorable but qualified assessment. He praises the work’s sustained research and its author’s theoretical, practical, and legal preparation, anticipates a lasting influence on credit theory, and expects even dissenting readers to benefit. The review’s significance lies in this conjunction of conceptual scrutiny and institutional relevance: a satisfactory theory of credit must explain what is transferred, what remains the creditor’s, and why credit differs from neighboring transactions.