A note on Juglar, Bonnet and the intuition of the interest parity relation

It is a commonly accepted view that the parity theory of forward exchange based on the law of one price was first formulated by Keynes. In this article we assess the preliminary shapes of the interest parity (IP) relation. After reviewing the early beginnings of the IP relation, we investigate two French economists of the mid-nineteenth century who have hitherto received no adequate attention. We argue that Bonnet and Juglar ought to be considered pioneers in the assessment of IP relation since Goschen's contribution is related to the specificity of 'long' exchange rates at a bimetallic time.