Irving Fisher was praised by Schumpeter in his obituary as America’s “greatest scientific economist” (Schumpeter 1948 [1951]: 223).

Fisher was born on 27 February 1867 in Saugerties-on-Hudson, New York, as the son of a clergyman. His mother Ella Wescott descended from an old New England family. Thus Fisher grew up in a religious environ­ment which probably contributed to the missionary zeal that characterized his personal life.

Fisher remained at Yale for graduate studies mainly in mathematics and economics but also in philosophy and the sciences. His mentor was the physicist and mathemati­cian Josiah Willard Gibbs. In economics he got stimulus from the industrial economist and later president of Yale University, Arthur Twining Hadley, who induced him to read the works of Francis Amasa Walker, the founding president of the American Economic Association. His main influence, however, was William Graham Sumner, with whose free market and Social Darwinist views he did not agree, but who suggested that he engage more in mathematical economics and study the newly published work Investigations on the Theory of Price by the two Austrians Auspitz and Lieben (1889). In April 1891 Fisher earned a PhD from Yale as the first doctoral candidate in pure eco­nomics with his meanwhile classical Mathematical Investigations in the Theory of Value and Prices (1892) which, according to Samuelson (1967: 22), was the “greatest Ph.D. dis­sertation ever written in economics”. Shortly afterwards the mathematical department appointed Fisher as assistant professor.

In June 1893 Fisher married Margaret Hazard (1867-1940) with whom he had two daughters and one son who became his biographer (Fisher 1956).

Back in New Haven, Fisher resumed his teaching activity with a course on the theory of numbers in September 1894. In the following year he transferred from the math­ematics department to the political economy department where he was appointed full professor in 1898. Shortly afterwards he fell ill with tuberculosis and spent the next three years in a sanitorium. After recovery Fisher, who had already been a vegetarian refusing alcohol and tobacco before his disease, started a lifelong crusade for a healthier nutrition and a more hygienic lifestyle. Thus most American soldiers in World War I

had Fisher’s pamphlet on “The effect of diet on endurance” (1907b) in their knapsack. Moreover Fisher was an ardent eugenicist who in 1913, together with Harold A. Ley, co-founded the Life Extension Institute. With its acting manager, Eugene Lyman Fisk, he wrote How to Live. Rules for Healthful Living Based on Modern Science (1915) which soon became the standard textbook on hygiene for high schools and colleges, and went into 21 editions until 1945 (Allen 1993: 139-40).

After Fisher had resumed teaching at Yale, there followed a period of extremely high scientific productivity. Before his disease, he had already published some articles on capital and the monograph “Appreciation and interest” (1896), in which he aimed at showing that changing interest rates tend to compensate for rising and falling prices.

Furthermore, he wrote a textbook Introduction to Economic Science (1910), which in its revised version Elementary Principles of Economics (1911b) went into three further editions. “Copious use is made of diagrams, perhaps making it the first Marshallian text in America” (Samuelson 1967: 21). In 1918 he was elected President of the American Economic Association, and later, as a co-founder, he became the first President of the Econometric Society in 1930. He was also President of the American Statistical Association in 1932.

Fisher’s lifelong crusade for good causes also included his fight for peace. At the end of World War I he became a strong advocate of American participation in the League of Nations. Fisher was also a restless inventor, best known for his patented visible card index. With his own firm, the Index Visible company, founded in 1913, sold to its greatest competitor Kardex Rand in 1925 and in another merger to Remington Rand in 1927, Fisher became a successful businessman. However, his acquired wealth did not last for long. In the stock market crash of 1929 and the subsequent Great Depression, Fisher not only lost all his private wealth but as an enthusiastic speculator even after the crash became heavily indebted for the rest of his life. Yale University had to buy his house to prevent Fisher and his family from being evicted. What was worse for Fisher was the fact that his optimism that recovery was just around the corner, which he con­tinued for some months even after the crash, impaired his academic reputation. “Until the 1950s the name Irving Fisher was without honour in his own university. Except for economic theorists and econometricians, few members of the community appreciated the genius of a man who lived among them for 63 years” (Tobin 1987: 371).

The economist Irving Fisher, however, reacted to the stock market crash and the subsequent events, analysed Booms and Depressions (1932) and developed “The debt­deflation theory of great depressions” (1933) which attributed the deep crisis to over­indebtedness and the bursting of a credit bubble. Over-investment and over-speculation are often essential features of a boom, but if they are conducted mainly with borrowed money, then the consequences of a recession are much more dangerous. The bursting of the credit bubble unleashes a series of negative effects which in an interaction between an excessive real burden of debt and deflation seriously aggravates the crisis which evolves into a depression. According to Fisher, reflation, and not deflation was the remedy. Fisher’s remarkable debt-deflation analysis of the depression remained largely unno­ticed among contemporary economists due to his loss of reputation at the beginning of the depression. However, it was revitalized by Tobin (1980) against the historical background of the high costs of disinflation, and gained further ground after the world­wide Great Recession burst out in 2008-09. Tobin argued convincingly that this “Fisher effect”, triggered by too great a fall in asset prices and business profits, dominates the Pigou or real balance effect which is related to outside money. The increased real burden of debt due to deflation or much higher real rates of interest in a period of unexpected disinflation imposed on firms, farmers or home-owners make the number of bankrupt­cies and defaults much greater in size. It was the consequential negative downward spiral of the real economy with the collapse of economic activity and mass unemployment which worried Fisher.

Fisher was also an economic policy crusader, as comes out best in his (unsuccess­ful) proposal to require that banks should keep 100 per cent reserves against checkable deposits instead of lending out these funds (1935). In the same year he retired from Yale. After the death of his wife he continued to stay active as in his last book Constructive Income Taxation (1942), jointly written with his brother Herbert, in which Fisher made a strong plea for a radical tax reform advocating an expenditure tax rather than an income tax. Fisher died of cancer in New York City on 29 April 1947.