Karl Theodor von Inama-Sternegg · 1880
Inama-Sternegg’s 1880 review assesses the concluding installment of Carl Knies’s Geld und Credit, published in 1879. Its governing judgment is strongly affirmative:
Mit der vorliegenden zweiten Hälfte der Untersuchungen über den Credit ist das grosse Werk von Knies über Geld und Credit zum Abschlusse gebracht und eine erschöpfende Darstellung des ganzen für die Volkswirthschaftslehre hochwichtigen Gebietes geboten.
English translation: With the present second half of the investigations on credit, Knies's great work on money and credit is brought to a conclusion and an exhaustive presentation is offered of this whole field, which is of the highest importance for economics.
The review treats this achievement as consequential beyond monetary economics, particularly for jurisprudence. Knies’s clarification of economic concepts provides foundations for distinguishing legal institutions by their practical functions. Drawing also on the preceding installment, Inama-Sternegg traces the implications of credit theory through payment instruments, interest legislation, public lending, and mortgage security. His eventual reservation concerns whether Knies’s definition of credit adequately expresses the economic significance disclosed by these analyses.
The discussion of payment instruments makes the connection between economic function and legal form explicit:
Der Verfasser zeigt hier unter Anderem die ganz verschiedenartige Rolle auf, welche dem Wechsel und dem Check in diesem Betrachte zukommt, und entwickelt daraus die verschiedenartigen Postulate, welche an das Wechselrecht und an das Checkrecht zu stellen sind.
English translation: The author here shows, among other things, the wholly different role which belongs to the bill of exchange and to the cheque in this respect, and from this develops the differing requirements which are to be made of the law of bills of exchange and of the law of cheques.
A cheque mediates immediate cash payment through a bank; it should not simply be treated as another circulating credit instrument. This function supports short presentation periods and a framework centered on banks and their customers. It does not require that the drawer already possess sufficient funds: subsequent cover and authorized overdrafts belong to ordinary banking practice. Nor does the cheque’s payment function dictate a single permissible designation of its recipient:
Andererseits folgt aber daraus keineswegs, dass der Check nicht auf Ordre oder auf Inhaber gestellt werden dürfe.
English translation: On the other hand, however, it by no means follows from this that the cheque may not be made out to order or to bearer.
Legislation should therefore express functional necessities without turning particular commercial arrangements into universal requirements.
The treatment of interest extends this approach historically. Commercial borrowing challenged the assumption that every interest-bearing loan exploited distress, since merchants also borrowed to expand profitable activity. The transition from prohibiting interest to permitting it within statutory limits changed the legal meaning of usury rather than merely narrowing an otherwise constant category.
Inama-Sternegg emphasizes the distinction between culpable conduct and the economic determination of interest. Fraud and extortion warrant punishment in their own right, whereas exceeding a fixed rate cannot adequately identify criminal wrongdoing. Because lending conditions differ, a uniform compulsory rate may conflict with substantive justice. Standard judicial interest nevertheless remains defensible where the parties have made no agreement, and failures of competition may justify exceptional intervention.
For borrowers in distress, a statutory ceiling cannot ensure that anyone will lend at the prescribed rate. Public credit institutions offer a more practical remedy by lending at necessary cost, securing favorable funding, and, when justified by public purposes, distributing losses through public finances. Municipal pawn institutions and agricultural improvement lending illustrate this institutional response. If the state requires improvements to land, it must also address their economic prerequisites, including accessible credit and sufficiently long repayment periods; otherwise its legislation may prove ineffective.
Improvement loans introduce a conflict between established mortgage rights and the claims of capital that creates additional property value. Knies rejects both automatic priority for the improvement lender and the older creditor’s exclusive priority over the improved estate. Equal-ranking treatment recognizes that existing property and newly created value together constitute the security. For the reviewer, such differentiation demonstrates the legal usefulness of economic analysis.
The concluding criticism qualifies rather than overturns this endorsement. Defining credit as present performance exchanged for future performance captures its temporal structure but insufficiently explains its economic role. Inama-Sternegg proposes greater recognition of credit’s mobilization of immaterial values: personal abilities, qualities, and social relations can channel available capital toward consumption or production otherwise beyond reach. This does not entail accepting Mac Leod’s identification of credit with incorporeal property or treating credit as a replacement for money’s functions. The review thus asks that the definition of credit incorporate the organizational and productive possibilities that Knies’s investigations disclose.
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