38 BANKING THEORIES IN UNITED STATES
relation between depreciation of the currency and the rate of
interest!

1 Irving Fisher, Appreciation and Interest (1896), p. 4, and Rate of Interest (1907),
p. 356. Fisher bases his opinion that Douglass was the first to observe the influence
of depreciation on the rate of interest upon a passage in the Discourse of 1740
(Bullock’s edition, p. 336). He evidently had not seen the better and earlier statement,
 which I have just quoted, in the “Essay” of 1738. Had he done so, he would
have found that Douglass suggests that the matter had already been commented
upon with reference to the depreciation of Rhode Island’s paper money. The only
other contemporary reference to the principle that I have found, is in a “Communication
 to the Author of the Weekly Rehearsal,” in the issue of March 3,1734. Here
mention is made of the exorbitant interest rate allowed by Rhode Island law,
“which nothing can give Colour for, but their Consciousness of the ill Foundation
their Bills are upon, and the Expectation of a Discount necessarily following, which
this excessive Interest gives some Relief against.” Reprinis, iii, 62.
For later explanations of the influence of depreciation of the currency upon the
rate of interest, see Rantoul, Speech in the Massachusetts House of Representatives
(March 22, 1836), p. 8; and the United States M agazine and Democratic Review
(December, 1843), xiii, 661.
In regard to the doctrine that the interest rate varies with the quantity of
money, it is to be noted that Barbon confuted it in 1690 (Discourse of Trade); as
did Massie and Hume in 1750 and 1752 respectively. See note to Professor Bullock’s
edition of Douglass’s Discourse, p. 330.