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PREFACE

This book, The Theory of Interest, was begun as arevision of The Rate of Interest, which was published in1907, and has long since been out of print. Requests foranother edition of that work have been made from timeto time; but I have postponed it year by year for overtwo decades, because I wished to revise the presentation,and to rewrite those portions which, if I may judge fromcriticisms, have not been understood.

I have considered the criticisms of the former bookwhich have come to my notice, and have, as a conse-quence, modified the form of presentation materially.

| Though, in substance, my theory of interest has beenaltered scarcely at all, its exposition has been so amplifiedand recast that it will, I anticipate, seem, to those whomisunderstoodmy first book, more changed than it seemsto me. The result has been a new book, The Theory ofInterest, a complete rewriting of the former book, withadditions of new material.

I was encouraged to write this new exposition of thetheory of interest by various economists and leadingbusiness men and especially by Mr. Oswald T. Falk, oneof the representatives of Great Britain at the VersaillesPeace Conference, who was kind enough to say that hehad gained more insight into economic theory from TheRate of Interest than from any other book.

Years after The Rate of Interest was published, I sug-gested the more popular term “impatience” in place of“agio” or “time preference.” This catchword has beenwidely adopted, and, to my surprise, has led to a wide-spread but false impression that I had overlooked orneglected the productivity ("or investment opportunity^side entirely. It also led many to think that, by usingthe new word impatience, I meant to claim a new idea.Thus I found myself credited with being the author of