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Frank A. Fetter [March

that his colleague, Dr. H. G. Brown, publishes an elaborate defense
 of an eclectie productivity theory, is most disappointing to
the group of true psychological interest theorists in America who a
few years ago welcomed Professor Fisher as an accession to their
ranks, and who still cherish the hope that, after he has fed for a
time on the husks of the produetivity theory, they may greet him
again as a returning prodigal.
I. Origin of the capitalization theory.
As a basis for further discussion, a brief review must be given
>f the origin and main features of “the capitalization theory” of
interest as I had developed it several years before the publication
of Professor Fisher’s theory of interest in 1907. My attention
was drawn to the subject repeatedly between the years 1895 and
1900 while I was studying the theory of distribution; and in an
article on the capital concept, in 1900, I said:
I would not exaggerate the significance of the change here proposed
in the capital concept, yet it would be folly to ignore the consequences
its acceptance would involve for economic theory . .. The current
theories of land value, of rent, of interest, to a greater or less extent
rest on the unsound ideas which have been criticised throughout this
paper. On another occasion the writer will attempt to state the outlines
 of an economic system of thought in harmony with the capital
soncept here presented.??

Again, in a paper presented the same year at a meeting of the
American Economic Association, it was said among other statements
 pointing in the same direction:
With this change [of the capital concept] must go a change in the
whole conception of interest, which likewise is connected in the still
gurrent treatment with a factor that has been produced by labor. The
multitudinous and naive inconsistencies of the older treatment became
apparent when viewed in the light of the later value theory.
The doctrines of rent and interest as currently taught are hopelessly
entangled in these old and illogical distinetions. The two forms of
seturn for material goods must be considered as differing in modes of
zalculation, not as to kinds of agents and as kinds of return. The object
 of this paper may now be restated , . . to show the necessity of
rewriting the theory of distribution along radically new lines... and
‘he acceptance of doctrines, the readjustment of which is shown to be
inevitable.23

#3 “Recent Discussion of the Capital Concept,” Quarterly Journal of Ecowomics,
 vol. XV (Nov., 1900), p. 45.
% Proceedings of the Thirteenth Annual Meeting, Dec., 1900, “The Next
Decade of Economic Theory,” Publications of the American Economic A280-eiation,
 3d series, vol. 2, DD. 240, 246.