Das Kapital

ONEY, OR THE CIRCULATION OF COMMODITIES

Economic Manuscripts: Capital Vol. I - Chapter Three
Karl Marx. Capital Volume One
Chapter Three: Money, Or the Circulation of Commodities
Contents
Section 1 — The Measure of Values
Section 2 — The Medium of Circulation
A. The Metamorphosis of Commodities
B. The Currency of Money
C. Coin and Symbols of Value
Section 3 — Money
A. Hoarding
B. Means of Payment
C. Universal Money
SECTION 1
THE MEASURE OF VALUES
Throughout this work, I assume, for the sake of simplicity,
gold as the money-commodity.
The first chief function of money is to supply commodities with
the material for the expression of their values, or to represent their
values as magnitudes of the same denomination, qualitatively equal, and
quantitatively comparable. It thus serves as a universal measure of
value. And only by virtue of this function does gold, the equivalent
commodity par excellence, become money.
It is not money that renders commodities commensurable. Just the
contrary. It is because all commodities, as values, are realised human
labour, and therefore commensurable, that their values can be measured
by one and the same special commodity, and the latter be converted into
the common measure of their values, i.e., into money. Money as a
measure of value, is the phenomenal form that must of necessity be assumed
by that measure of value which is immanent in commodities, labour-time.

The expression of the value of a commodity in gold — x
commodity A = y money-commodity — is its money-form or price. A
single equation, such as 1 ton of iron = 2 ounces of gold, now suffices
to express the value of the iron in a socially valid manner. There is no
longer any need for this equation to figure as a link in the chain of equations
that express the values of all other commodities, because the equivalent
commodity, gold, now has the character of money. The general form of relative
value has resumed its original shape of simple or isolated relative value.
On the other hand, the expanded expression of relative value, the endless
series of equations, has now become the form peculiar to the relative value
of the money-commodity. The series itself, too, is now given, and has social
recognition in the prices of actual commodities. We have only to read the
quotations of a price-list backwards, to find the magnitude of the value
of money expressed in all sorts of commodities. But money itself has no
price. In order to put it on an equal footing with all other commodities
in this respect, we should be obliged to equate it to itself as its own
equivalent.
The price or money-form of commodities is, like their form of
value generally, a form quite distinct from their palpable bodily form;
it is, therefore, a purely ideal or mental form. Although invisible, the
value of iron, linen and corn has actual existence in these very articles:
it is ideally made perceptible by their equality with gold, a relation
that, so to say, exists only in their own heads. Their owner must, therefore,
lend them his tongue, or hang a ticket on them, before their prices can
be communicated to the outside world.
Since the expression of the value of commodities in gold is a merely ideal act, we may use for
this purpose imaginary or ideal money. Every trader knows, that he is far
from having turned his goods into money, when he has expressed their value
in a price or in imaginary money, and that it does not require the least
bit of real gold, to estimate in that metal millions of pounds’ worth of
goods. When, therefore, money serves as a measure of value, it is employed
only as imaginary or ideal money. This circumstance has given rise to the
wildest theories. But, although the money that performs
the functions of a measure of value is only ideal money, price depends
entirely upon the actual substance that is money. The value, or in other
words, the quantity of human labour contained in a ton of iron, is expressed
in imagination by such a quantity of the money-commodity as contains the
same amount of labour as the iron. According, therefore, as the measure
of value is gold, silver, or copper, the value of the ton of iron will
be expressed by very different prices, or will be represented by very different
quantities of those metals respectively.
If, therefore, two different commodities, such as gold and silver,
are simultaneously measures of value, all commodities have two prices —
one a gold-price, the other a silver-price. These exist quietly side by
side, so long as the ratio of the value of silver to that of gold remains
unchanged, say, at 15:1. Every change in their ratio disturbs the ratio
which exists between the gold-prices and the silver-prices of commodities,
and thus proves, by facts, that a double standard of value is inconsistent
with the functions of a standard.
Commodities with definite prices present themselves under
the form: a commodity A = x gold; b commodity B = z gold;
c commodity C = y gold, &c., where a, b,
c, represent definite quantities of the commodities A, B, C and
x, z, y, definite quantities of gold. The values of these commodities are,
therefore, changed in imagination into so many different quantities of
gold. Hence, in spite of the confusing variety of the commodities themselves,
their values become magnitudes of the same denomination, gold-magnitudes.
They are now capable of being compared with each other and measured, and
the want becomes technically felt of comparing them with some fixed quantity
of gold as a unit measure. This unit, by subsequent division into aliquot
parts, becomes itself the standard or scale. Before they become money,
gold, silver, and copper already possess such standard measures in their
standards of weight, so that, for example, a pound weight, while serving
as the unit, is, on the one hand, divisible into ounces, and, on the other,
may be combined to make up hundredweights. It is
owing to this that, in all metallic currencies, the names given to the
standards of money or of price were originally taken from the pre-existing
names of the standards of weight.
As measure of Value, and as standard of price, money
has two entirely distinct functions to perform. It is the measure of value
inasmuch as it is the socially recognised incarnation of human labour;
it is the standard of price inasmuch as it is a fixed weight of metal.
As the measure of value it serves to convert the values of all the manifold
commodities into prices, into imaginary quantities of gold; as the standard
of price it measures those quantities of gold. The measure of values measures
commodities considered as values; the standard of price measures, on the
contrary, quantities of gold by a unit quantity of gold, not the value
of one quantity of gold by the weight of another. In order to make gold
a standard of price, a certain weight must be fixed upon as the unit. In
this case, as in all cases of measuring quantities of the same denomination,
the establishment of an unvarying unit of measure is all-important. Hence,
the less the unit is subject to variation, so much the better does the
standard of price fulfil its office. But only in so far as it is
itself a product of labour, and, therefore, potentially variable in value,
can gold serve as a measure of value.
It is, in the first place, quite clear that a change in the value
of gold does not, in any way, affect its function as a standard of price.
No matter how this value varies, the proportions between the values of
different quantities of the metal remain constant. However great the fall
in its value, 12 ounces of gold still have 12 times the value of 1 ounce;
and in prices, the only thing considered is the relation between different
quantities of gold. Since, on the other hand, no rise or fall in the value
of an ounce of gold can alter its weight, no alteration can take place
in the weight of its aliquot parts. Thus gold always renders the same service
as an invariable standard of price, however much its value may vary.
In the second place, a change in the value of gold does not interfere
with its functions as a measure of value. The change affects all commodities
simultaneously, and, therefore, caeteris paribus, leaves their relative
values inter se, unaltered, although those values are now expressed
in higher or lower gold-prices.
Just as when we estimate the value of any commodity by a definite
quantity of the use-value of some other commodity, so in estimating the
value of the former in gold, we assume nothing more than that the production
of a given quantity of gold costs, at the given period, a given amount
of labour. As regards the fluctuations of prices generally, they are subject
to the laws of elementary relative value investigated in a former chapter.
A general rise in the prices of commodities can result only, either
from a rise in their values — the value of money remaining constant —
or from a fall in the value of money, the values of commodities remaining
constant. On the other hand, a general fall in prices can result only,
either from a fall in the values of commodities — the value of money remaining
constant — or from a rise in the value of money, the values of commodities
remaining constant. It therefore by no means follows, that a rise in the
value of money necessarily implies a proportional fall in the prices of
commodities; or that a fall in the value of money implies a proportional
rise in prices. Such change of price holds good only in the case of commodities
whose value remains constant. With those, for example, whose value rises,
simultaneously with, and proportionally to, that of money, there is no
alteration in price. And if their value rise either slower or faster than
that of money, the fall or rise in their prices will be determined
by the difference between the change in their value and that of money;
and so on.
Let us now go back to the consideration of the price-form.
By degrees there arises a discrepancy between the current money-names
of the various weights of the precious metal figuring as money, and the
actual weights which those names originally represented. This discrepancy
is the result of historical causes, among which the chief are: — (1) The
importation of foreign money into an imperfectly developed community. This
happened in Rome in its early days, where gold and silver coins circulated
at first as foreign commodities. The names of these foreign coins never
coincide with those of the indigenous weights. (2) As wealth increases,
the less precious metal is thrust out by the more precious from its place
as a measure of value, copper by silver, silver by gold, however much this
order of sequence may be in contradiction with poetical chronology.
The word pound, for instance, was the money-name given to an actual pound
weight of silver. When gold replaced silver as a measure of value, the
same name was applied according to the ratio between the values of silver
and gold, to perhaps 1-15th of a pound of gold. The word pound, as a money-name,
thus becomes differentiated from the same word as a weight-name.
(3) The debasing of money carried on for centuries by kings and princes
to such an extent that, of the original weights of the coins, nothing in
fact remained but the names.
These historical causes convert the separation of the money-name
from the weight-name into an established habit with the community. Since
the standard of money is on the one hand purely conventional, and must
on the other hand find general acceptance, it is in the end regulated by
law. A given weight of one of the precious metals, an ounce of gold, for
instance, becomes officially divided into aliquot parts, with legally bestowed
names, such as pound, dollar, &c. These aliquot parts, which thenceforth
serve as units of money, are then subdivided into other aliquot parts with
legal names, such as shilling, penny, &c. But, both
before and after these divisions are made, a definite weight of metal is
the standard of metallic money. The sole alteration consists in the subdivision
and denomination.
The prices, or quantities of gold, into which the values of commodities
are ideally changed, are therefore now expressed in the names of coins,
or in the legally valid names of the subdivisions of the gold standard.
Hence, instead of saying: A quarter of wheat is worth an ounce of gold;
we say, it is worth £3 17s. 10 1/2d. In this way commodities express
by their prices how much they are worth, and money serves as money of
account whenever it is a question of fixing the value of an article
in its money-form.
The name of a thing is something distinct from the qualities of
that thing. I know nothing of a man, by knowing that his name is Jacob.
In the same way with regard to money, every trace of a value-relation disappears
in the names pound, dollar, franc, ducat, &c. The confusion caused
by attributing a hidden meaning to these cabalistic signs is all the greater,
because these money-names express both the values of commodities, and,
at the same time, aliquot parts of the weight of the metal that is the
standard of money. On the other hand, it is absolutely
necessary that value, in order that it may be distinguished from the varied
bodily forms of commodities, should assume this material and unmeaning,
but, at the same time, purely social form.
Price is the money-name of the labour realised in a commodity.
Hence the expression of the equivalence of a commodity with the sum of
money constituting its price, is a tautology,
just as in general the expression of the relative value of a commodity
is a statement of the equivalence of two commodities. But although price,
being the exponent of the magnitude of a commodity’s value, is the exponent
of its exchange-ratio with money, it does not follow that the exponent
of this exchange-ratio is necessarily the exponent of the magnitude of
the commodity’s value. Suppose two equal quantities of socially necessary
labour to be respectively represented by 1 quarter of wheat and £2
(nearly 1/2 oz. of gold), £2 is the expression in money of the magnitude
of the value of the quarter of wheat, or is its price. If now circumstances
allow of this price being raised to £3, or compel it to be reduced
to £1, then although £1 and £3 may be too small or too
great properly to express the magnitude of the wheat’s value; nevertheless
they are its prices, for they are, in the first place, the form under which
its value appears, i.e., money; and in the second place, the exponents
of its exchange-ratio with money. If the conditions of production, in other
words, if the productive power of labour remain constant, the same amount
of social labour-time must, both before and after the change in price,
be expended in the reproduction of a quarter of wheat. This circumstance
depends, neither on the will of the wheat producer, nor on that of the
owners of other commodities.
Magnitude of value expresses a relation of social production,
it expresses the connexion that necessarily exists between a certain article
and the portion of the total labour-time of society required to produce
it. As soon as magnitude of value is converted into price, the above necessary
relation takes the shape of a more or less accidental exchange-ratio between
a single commodity and another, the money-commodity. But this exchange-ratio
may express either the real magnitude of that commodity’s value, or the
quantity of gold deviating from that value, for which, according to circumstances,
it may be parted with. The possibility, therefore, of quantitative incongruity
between price and magnitude of value, or the deviation of the former from
the latter, is inherent in the price-form itself. This is no defect, but,
on the contrary, admirably adapts the price-form to a mode of production
whose inherent laws impose themselves only as the mean of apparently lawless
irregularities that compensate one another.
The price-form, however, is not only compatible with the possibility
of a quantitative incongruity between magnitude of value and price, i.e.,
between the former and its expression in money, but it may also conceal
a qualitative inconsistency, so much so, that, although money is nothing
but the value-form of commodities, price ceases altogether to express value.
Objects that in themselves are no commodities, such as conscience, honour,
&c., are capable of being offered for sale by their holders, and of
thus acquiring, through their price, the form of commodities. Hence an
object may have a price without having value. The price in that case is
imaginary, like certain quantities in mathematics. On the other hand, the
imaginary price-form may sometimes conceal either a direct or indirect
real value-relation; for instance, the price of uncultivated land, which
is without value, because no human labour has been incorporated in it.
Price, like relative value in general, expresses the value of
a commodity (e.g., a ton of iron), by stating that a given quantity
of the equivalent (e.g., an ounce of gold), is directly exchangeable
for iron. But it by no means states the converse, that iron is directly
exchangeable for gold. In order, therefore, that a commodity may in practice
act effectively as exchange-value, it must quit its bodily shape, must
transform itself from mere imaginary into real gold, although to the commodity
such transubstantiation may be more difficult than to the Hegelian “concept,”
the transition from “necessity” to “freedom,” or to a lobster the casting
of his shell, or to Saint Jerome the putting off of the old Adam.
Though a commodity may, side by side with its actual form (iron, for instance),
take in our imagination the form of gold, yet it cannot at one and the
same time actually be both iron and gold. To fix its price, it suffices
to equate it to gold in imagination. But to enable it to render to its
owner the service of a universal equivalent, it must be actually replaced
by gold. If the owner of the iron were to go to the owner of some other
commodity offered for exchange, and were to refer him to the price of the
iron as proof that it was already money, he would get the same answer as
St. Peter gave in heaven to Dante, when the latter recited the creed —
“Assai bene è trascorsa
d’esta moneta già la lega e ’l peso,
ma dimmi se tu l’hai ne la tua borsa.”
A price therefore implies both that a commodity is exchangeable for money,
and also that it must be so exchanged. On the other hand, gold serves as
an ideal measure of value, only because it has already, in the process
of exchange, established itself as the money-commodity. Under the ideal
measure of values there lurks the hard cash.
SECTION 2
THE MEDIUM OF CIRCULATION
A. The Metamorphosis of Commodities
We saw in a former chapter that the exchange of
commodities implies contradictory and mutually exclusive conditions. The
differentiation of commodities into commodities and money does not sweep
away these inconsistencies, but develops a modus vivendi, a form
in which they can exist side by side. This is generally the way in which
real contradictions are reconciled. For instance, it is a contradiction
to depict one body as constantly falling towards another, and as, at the
same time, constantly flying away from it. The ellipse is a form of motion
which, while allowing this contradiction to go on, at the same time reconciles
it.
In so far as exchange is a process, by which commodities are transferred
from hands in which they are non-use-values, to hands in which they become
use-values, it is a social circulation of matter. The product of one form
of useful labour replaces that of another. When once a commodity has found
a resting-place, where it can serve as a use-value, it falls out of the
sphere of exchange into that of consumption. But the former sphere alone
interests us at present. We have, therefore, now to consider exchange from
a formal point of view; to investigate the change of form or metamorphosis
of commodities which effectuates the social circulation of matter.
The comprehension of this change of form is, as a rule, very imperfect.
The cause of this imperfection is, apart from indistinct notions of value
itself, that every change of form in a commodity results from the exchange
of two commodities, an ordinary one and the money-commodity. If we keep
in view the material fact alone that a commodity has been exchanged for
gold, we overlook the very thing that we ought to observe — namely, what
has happened to the form of the commodity. We overlook the facts that gold,
when a mere commodity, is not money, and that when other commodities express
their prices in gold, this gold is but the money-form of those commodities
themselves.
Commodities, first of all, enter into the process of exchange
just as they are. The process then differentiates them into commodities
and money, and thus produces an external opposition corresponding to the
internal opposition inherent in them, as being at once use-values and values.
Commodities as use-values now stand opposed to money as exchange-value.
On the other hand, both opposing sides are commodities, unities of
use-value and value. But this unity of differences manifests itself at
two opposite poles, and at each pole in an opposite way. Being poles they
are as necessarily opposite as they are connected. On the one side of the
equation we have an ordinary commodity, which is in reality a use-value.
Its value is expressed only ideally in its price, by which it is equated
to its opponent, the gold, as to the real embodiment of its value. On the
other hand, the gold, in its metallic reality, ranks as the embodiment
of value, as money. Gold, as gold, is exchange-value itself. As to its
use-value, that has only an ideal existence, represented by the series
of expressions of relative value in which it stands face to face with all
other commodities, the sum of whose uses makes up the sum of the various
uses of gold. These antagonistic forms of commodities are the real forms
in which the process of their exchange moves and takes place.
Let us now accompany the owner of some commodity — say, our old
friend the weaver of linen — to the scene of action, the market. His 20
yards of linen has a definite price, £2. He exchanges it for the
£2, and then, like a man of the good old stamp that he is, he parts
with the £2 for a family Bible of the same price. The linen, which
in his eyes is a mere commodity, a depository of value, he alienates in
exchange for gold, which is the linen’s value-form, and this form he again
parts with for another commodity, the Bible, which is destined to enter
his house as an object of utility and of edification to its inmates. The
exchange becomes an accomplished fact by two metamorphoses of opposite
yet supplementary character — the conversion of the commodity into money,
and the re-conversion of the money into a commodity.
The two phases of this metamorphosis are both of them distinct transactions
of the weaver — selling, or the exchange of the commodity for money; buying,
or the exchange of the money for a commodity; and, the unity of the two
acts, selling in order to buy.
The result of the whole transaction, as regards the weaver, is
this, that instead of being in possession of the linen, he now has the
Bible; instead of his original commodity, he now possesses another of the
same value but of different utility. In like manner he procures his other
means of subsistence and means of production. From his point of view, the
whole process effectuates nothing more than the exchange of the product
of his labour for the product of some one else’s, nothing more than an
exchange of products.
The exchange of commodities is therefore accompanied by
the following changes in their form:
Commodity — Money — Commodity.
C——— M ———C.
The result of the whole process is, so far as concerns the objects themselves,
C — C, the exchange of one commodity for another, the circulation of materialised
social labour. When this result is attained, the process is at an end.
C — M. First metamorphosis, or sale
The leap taken by value from the body of the commodity, into the body
of the gold, is, as I have elsewhere called it, the salto mortale of the
commodity. If it falls short, then, although the commodity itself is not
harmed, its owner decidedly is. The social division of labour causes his
labour to be as one-sided as his wants are many-sided. This is precisely
the reason why the product of his labour serves him solely as exchange-value.
But it cannot acquire the properties of a socially recognised universal
equivalent, except by being converted into money. That money, however,
is in some one else’s pocket. In order to entice the money out of that
pocket, our friend’s commodity must, above all things, be a use-value to
the owner of the money. For this, it is necessary that the labour expended
upon it, be of a kind that is socially useful, of a kind that constitutes
a branch of the social division of labour. But division of labour is a
system of production which has grown up spontaneously and continues to
grow behind the backs of the producers. The commodity to be exchanged may
possibly be the product of some new kind of labour, that pretends to satisfy
newly arisen requirements, or even to give rise itself to new requirements.
A particular operation, though yesterday, perhaps, forming one out of the
many operations conducted by one producer in creating a given commodity,
may to-day separate itself from this connexion, may establish itself as
an independent branch of labour and send its incomplete product to market
as an independent commodity. The circumstances may or may not be ripe for
such a separation. To-day the product satisfies a social want. Tomorrow
the article may, either altogether or partially, be superseded by some
other appropriate product. Moreover, although our weaver’s labour may be
a recognised branch of the social division of labour, yet that fact is
by no means sufficient to guarantee the utility of his 20 yards of linen.
If the community’s want of linen, and such a want has a limit like every
other want, should already be saturated by the products of rival weavers,
our friend’s product is superfluous, redundant, and consequently
useless. Although people do not look a gift-horse in the mouth, our friend
does not frequent the market for the purpose of making presents. But suppose
his product turn out a real use-value, and thereby attracts money? The
question arises, how much will it attract? No doubt the answer is already
anticipated in the price of the article, in the exponent of the magnitude
of its value. We leave out of consideration here any accidental miscalculation
of value by our friend, a mistake that is soon rectified in the market.
We suppose him to have spent on his product only that amount of labour-time
that is on an average socially necessary. The price then, is merely the
money-name of the quantity of social labour realised in his commodity. But
without the leave, and behind the back, of our weaver, the old-fashioned
mode of weaving undergoes a change. The labour-time that yesterday was
without doubt socially necessary to the production of a yard of linen,
ceases to be so to-day, a fact which the owner of the money is only too
eager to prove from the prices quoted by our friend’s competitors. Unluckily
for him, weavers are not few and far between. Lastly, suppose that every
piece of linen in the market contains no more labour-time than is socially
necessary. In spite of this, all these pieces taken as a whole, may have
had superfluous labour-time spent upon them. If the market cannot stomach
the whole quantity at the normal price of 2 shillings a yard, this proves
that too great a portion of the total labour of the community has been
expended in the form of weaving. The effect is the same as if each individual
weaver had expended more labour-time upon his particular product than is
socially necessary. Here we may say, with the German proverb: caught together,
hung together. All the linen in the market counts but as one article of
commerce, of which each piece is only an aliquot part. And as a matter
of fact, the value also of each single yard is but the materialised form
of the same definite and socially fixed quantity of homogeneous human labour.

We see then, commodities are in love with money, but “the course
of true love never did run smooth.” The quantitative division of labour
is brought about in exactly the same spontaneous and accidental manner
as its qualitative division. The owners of commodities therefore find out,
that the same division of labour that turns them into independent private
producers, also frees the social process of production and the relations
of the individual producers to each other within that process, from all
dependence on the will of those producers, and that the seeming mutual
independence of the individuals is supplemented by a system of general
and mutual dependence through or by means of the products.
The division of labour converts the product of labour into a commodity,
and thereby makes necessary its further conversion into money. At the same
time it also makes the accomplishment of this transubstantiation quite
accidental. Here, however, we are only concerned with the phenomenon in
its integrity, and we therefore assume its progress to be normal. Moreover,
if the conversion take place at all, that is, if the commodity be not absolutely
unsaleable, its metamorphosis does take place although the price realised
may be abnormally above or below the value.
The seller has his commodity replaced by gold, the buyer has his
gold replaced by a commodity. The fact which here stares us in the face
is, that a commodity and gold, 20 yards of linen and £2, have changed
hands and places, in other words, that they have been exchanged. But for
what is the commodity exchanged? For the shape assumed by its own value,
for the universal equivalent. And for what is the gold exchanged? For a
particular form of its own use-value. Why does gold take the form of money
face to face with the linen? Because the linen’s price of £2, its
denomination in money, has already equated the linen to gold in its character
of money. A commodity strips off its original commodity-form on being alienated,
i.e., on the instant its use-value actually attracts the gold, that
before existed only ideally in its price. The realisation of a commodity’s
price, or of its ideal value-form, is therefore at the same time the realisation
of the ideal use-value of money; the conversion of a commodity into money,
is the simultaneous conversion of money into a commodity. The apparently
single process is in reality a double one. From the pole of the commodity-owner
it is a sale, from the opposite pole of the money-owner, it is a purchase.
In other words, a sale is a purchase, C—M is also M—C.
Up to this point we have considered men in only one economic capacity,
that of owners of commodities, a capacity in which they appropriate the
produce of the labour of others, by alienating that of their own labour.
Hence, for one commodity-owner to meet with another who has money, it is
necessary, either, that the product of the labour of the latter person,
the buyer, should be in itself money, should be gold, the material of which
money consists, or that his product should already have changed its skin
and have stripped off its original form of a useful object. In order that
it may play the part of money, gold must of course enter the market at
some point or other. This point is to be found at the source of production
of the metal, at which place gold is bartered, as the immediate product
of labour, for some other product of equal value. From that moment it always
represents the realised price of some commodity.
Apart from its exchange for other commodities at the source of its production,
gold, in whose-so-ever hands it may be, is the transformed shape of some
commodity alienated by its owner; it is the product of a sale or of the
first metamorphosis C—M. Gold, as we saw, became
ideal money, or a measure of values, in consequence of all commodities
measuring their values by it, and thus contrasting it ideally with their
natural shape as useful objects, and making it the shape of their value.
It became real money, by the general alienation of commodities, by actually
changing places with their natural forms as useful objects, and thus becoming
in reality the embodiment of their values. When they assume this money-shape,
commodities strip off every trace of their natural use-value, and of the
particular kind of labour to which they owe their creation, in order to
transform themselves into the uniform, socially recognised incarnation
of homogeneous human labour. We cannot tell from the mere look of a piece
of money, for what particular commodity it has been exchanged. Under their
money-form all commodities look alike. Hence, money may be dirt, although
dirt is not money. We will assume that the two gold pieces, in consideration
of which our weaver has parted with his linen, are the metamorphosed shape
of a quarter of wheat. The sale of the linen, C—M, is at the same time
its purchase, M—C. But the sale is the first act of a process that ends
with a transaction of an opposite nature, namely, the purchase of a Bible;
the purchase of the linen, on the other hand, ends a movement that began
with a transaction of an opposite nature, namely, with the sale of the
wheat. C—M (linen—money), which is the first phase of C—M—C (linen—money—Bible),
is also M—C (money—linen), the last phase of another movement C—M—C
(wheat—money—linen). The first metamorphosis of one commodity, its
transformation from a commodity into money, is therefore also invariably
the second metamorphosis of some other commodity, the retransformation
of the latter from money into a commodity.
M—C, or purchase.
The second and concluding metamorphosis of a commodity
Because money is the metamorphosed shape of all other commodities, the
result of their general alienation, for this reason it is alienable itself
without restriction or condition. It reads all prices backwards, and thus,
so to say, depicts itself in the bodies of all other commodities, which
offer to it the material for the realisation of its own use-value. At the
same time the prices, wooing glances cast at money by commodities, define
the limits of its convertibility, by pointing to its quantity. Since every
commodity, on becoming money, disappears as a commodity, it is impossible
to tell from the money itself, how it got into the hands of its possessor,
or what article has been changed into it. Non olet, from whatever source
it may come. Representing on the one hand a sold commodity, it represents
on the other a commodity to be bought.
M—C, a purchase, is, at the same time, C—M, a sale; the concluding
metamorphosis of one commodity is the first metamorphosis of another. With
regard to our weaver, the life of his commodity ends with the Bible, into
which he has reconverted his £2. But suppose the seller of the Bible
turns the £2 set free by the weaver into brandy M—C, the concluding
phase of C—M—C (linen—money—Bible), is also C—M, the first phase
of C—M—C (Bible—money—brandy). The producer of a particular commodity
has that one article alone to offer; this he sells very often in large
quantities, but his many and various wants compel him to split up the price
realised, the sum of money set free, into numerous purchases. Hence a sale
leads to many purchases of various articles. The concluding metamorphosis
of a commodity thus constitutes an aggregation of first metamorphoses of
various other commodities.
If we now consider the completed metamorphosis of a commodity,
as a whole, it appears in the first place, that it is made up of two opposite
and complementary movements, C—M and M—C. These two antithetical transmutations
of a commodity are brought about by two antithetical social acts on the
part of the owner, and these acts in their turn stamp the character of
the economic parts played by him. As the person who makes a sale, he is
a seller; as the person who makes a purchase, he is a buyer. But just as,
upon every such transmutation of a commodity, its two forms, commodity-form
and money-form, exist simultaneously but at opposite poles, so every seller
has a buyer opposed to him, and every buyer a seller. While one particular
commodity is going through its two transmutations in succession, from a
commodity into money and from money into another commodity,
the owner of the commodity changes in succession his part from that of
seller to that of buyer. These characters of seller and buyer are therefore
not permanent, but attach themselves in turns to the various persons engaged
in the circulation of commodities.
The complete metamorphosis of a commodity, in its simplest form,
implies four extremes, and three dramatic personae. First, a commodity
comes face to face with money; the latter is the form taken by the value
of the former, and exists in all its hard reality, in the pocket of the
buyer. A commodity-owner is thus brought into contact with a possessor
of money. So soon, now, as the commodity has been changed into money, the
money becomes its transient equivalent-form, the use-value of which equivalent-form
is to be found in the bodies of other commodities. Money, the final term
of the first transmutation, is at the same time the starting-point for
the second. The person who is a seller in the first transaction thus becomes
a buyer in the second, in which a third commodity-owner appears on the
scene as a seller.
The two phases, each inverse to the other, that make up the metamorphosis
of a commodity constitute together a circular movement, a circuit: commodity-form,
stripping off of this form, and return to the commodity-form. No doubt,
the commodity appears here under two different aspects. At the starting-point
it is not a use-value to its owner; at the finishing point it is. So, too,
the money appears in the first phase as a solid crystal of value, a crystal
into which the commodity eagerly solidifies, and in the second, dissolves
into the mere transient equivalent-form destined to be replaced by a use-value.
The two metamorphoses constituting the circuit are at the same
time two inverse partial metamorphoses of two other commodities. One and
the same commodity, the linen, opens the series of its own metamorphoses,
and completes the metamorphosis of another (the wheat). In the first phase
or sale, the linen plays these two parts in its own person. But, then,
changed into gold, it completes its own second and final metamorphosis,
and helps at the same time to accomplish the first metamorphosis of a third
commodity. Hence the circuit made by one commodity in the course of its
metamorphoses is inextricably mixed up with the circuits of other commodities.
The total of all the different circuits constitutes the circulation
of commodities.
The circulation of commodities differs from the direct exchange
of products (barter), not only in form, but in substance. Only consider
the course of events. The weaver has, as a matter of fact, exchanged his
linen for a Bible, his own commodity for that of some one else. But this
is true only so far as he himself is concerned. The seller of the Bible,
who prefers something to warm his inside, no more thought of exchanging
his Bible for linen than our weaver knew that wheat had been exchanged
for his linen. B’s commodity replaces that of A, but A and B do not mutually
exchange those commodities. It may, of course, happen that A and B make
simultaneous purchases, the one from the other; but such exceptional transactions
are by no means the necessary result of the general conditions of the circulation
of commodities. We see here, on the one hand, how the exchange of commodities
breaks through all local and personal bounds inseparable from direct barter,
and develops the circulation of the products of social labour; and on the
other hand, how it develops a whole network of social relations spontaneous
in their growth and entirely beyond the control of the actors. It is only
because the farmer has sold his wheat that the weaver is enabled to sell
his linen, only because the weaver has sold his linen that our Hotspur
is enabled to sell his Bible, and only because the latter has sold the
water of everlasting life that the distiller is enabled to sell his eau-de-vie,
and so on.
The process of circulation, therefore, does not, like direct barter
of products, become extinguished upon the use-values changing places and
hands. The money does not vanish on dropping out of the circuit of the
metamorphosis of a given commodity. It is constantly being precipitated
into new places in the arena of circulation vacated by other commodities.
In the complete metamorphosis of the linen, for example, linen — money
— Bible, the linen first falls out of circulation, and money steps into
its place. Then the Bible falls out of circulation, and again money takes
its place. When one commodity replaces another, the money-commodity always
sticks to the hands of some third person. Circulation sweats money from every pore.
Nothing can be more childish than the dogma, that because every
sale is a purchase, and every purchase a sale, therefore the circulation
of commodities necessarily implies an equilibrium of sales and purchases.
If this means that the number of actual sales is equal to the number of
purchases, it is mere tautology. But its real purport is to prove that
every seller brings his buyer to market with him. Nothing of the kind.
The sale and the purchase constitute one identical act, an exchange between
a commodity-owner and an owner of money, between two persons as opposed
to each other as the two poles of a magnet. They form two distinct acts,
of polar and opposite characters, when performed by one single
person. Hence the identity of sale and purchase implies that the commodity
is useless, if, on being thrown into the alchemistical retort of circulation,
it does not come out again in the shape of money; if, in other words, it
cannot be sold by its owner, and therefore be bought by the owner of the
money. That identity further implies that the exchange, if it does take place,
constitutes a period of rest, an interval, long or short, in the life of
the commodity. Since the first metamorphosis of a commodity is at once
a sale and a purchase, it is also an independent process in itself. The
purchaser has the commodity, the seller has the money, i.e., a commodity
ready to go into circulation at any time. No one can sell unless some one
else purchases. But no one is forthwith bound to purchase, because he has
just sold. Circulation bursts through all restrictions as to time, place,
and individuals, imposed by direct barter, and this it effects by splitting
up, into the antithesis of a sale and a purchase, the direct identity that
in barter does exist between the alienation of one’s own and the acquisition
of some other man’s product. To say that these two independent and antithetical
acts have an intrinsic unity, are essentially one, is the same as to say
that this intrinsic oneness expresses itself in an external antithesis.
If the interval in time between the two complementary phases of the complete
metamorphosis of a commodity become too great, if the split between the
sale and the purchase become too pronounced, the intimate connexion between
them, their oneness, asserts itself by producing — a crisis. The antithesis,
use-value and value; the contradictions that private labour is bound to
manifest itself as direct social labour, that a particularised concrete
kind of labour has to pass for abstract human labour; the contradiction
between the personification of objects and the representation of persons
by things; all these antitheses and contradictions, which are immanent
in commodities, assert themselves, and develop their modes of motion, in
the antithetical phases of the metamorphosis of a commodity. These modes
therefore imply the possibility, and no more than the possibility, of crises.
The conversion of this mere possibility into a reality is the result of
a long series of relations, that, from our present standpoint of simple
circulation, have as yet no existence.
B. The currency of money
The change of form, C—M—C, by which the circulation of the material
products of labour is brought about, requires that a given value in the
shape of a commodity shall begin the process, and shall, also in the shape
of a commodity, end it. The movement of the commodity is therefore a circuit.
On the other hand, the form of this movement precludes a circuit from being
made by the money. The result is not the return of the money, but its continued
removal further and further away from its starting-point. So long as the
seller sticks fast to his money, which is the transformed shape of his
commodity, that commodity is still in the first phase of its metamorphosis,
and has completed only half its course. But so soon as he completes the
process, so soon as he supplements his sale by a purchase, the money again
leaves the hands of its possessor. It is true that if the weaver, after
buying the Bible, sell more linen, money comes back into his hands. But
this return is not owing to the circulation of the first 20 yards of linen;
that circulation resulted in the money getting into the hands of the seller
of the Bible. The return of money into the hands of the weaver is brought
about only by the renewal or repetition of the process of circulation with
a fresh commodity, which renewed process ends with the same result as its
predecessor did. Hence the movement directly imparted to money by the circulation
of commodities takes the form of a constant motion away from its starting-point,
of a course from the hands of one commodity-owner into those of another.
This course constitutes its currency (cours de la monnaie).
The currency of money is the constant and monotonous repetition
of the same process. The commodity is always in the hands of the seller;
the money, as a means of purchase, always in the hands of the buyer. And
money serves as a means of purchase by realising the price of the commodity.
This realisation transfers the commodity from the seller to the buyer and
removes the money from the hands of the buyer into those of the seller,
where it again goes through the same process with another commodity. That
this one-sided character of the money’s motion arises out of the two-sided
character of the commodity’s motion, is a circumstance that is veiled over.
The very nature of the circulation of commodities begets the
opposite appearance. The first metamorphosis of a commodity is visibly,
not only the money’s movement, but also that of the commodity itself; in
the second metamorphosis, on the contrary, the movement appears to us as
the movement of the money alone. In the first phase of its circulation
the commodity changes place with the money. Thereupon the commodity, under
its aspect of a useful object, falls out of circulation into consumption.
In its stead we have its value-shape — the money.
It then goes through the second phase of its circulation, not under its
own natural shape, but under the shape of money. The continuity of the
movement is therefore kept up by the money alone, and the same movement
that as regards the commodity consists of two processes of an antithetical
character, is, when considered as the movement of the money, always one
and the same process, a continued change of places with ever fresh commodities.
Hence the result brought about by the circulation of commodities, namely,
the replacing of one commodity by another, takes the appearance of having
been effected not by means of the change of form of the commodities but
rather by the money acting as a medium of circulation, by an action that
circulates commodities, to all appearance motionless in themselves, and
transfers them from hands in which they are non-use-values, to hands in
which they are use-values; and that in a direction constantly opposed to
the direction of the money. The latter is continually withdrawing commodities
from circulation and stepping into their places, and in thus way continually
moving further and further from its starting-point. Hence although the movement
of the money is merely the expression of the circulation of commodities,
yet the contrary appears to be the actual fact, and the circulation of
commodities seems to be the result of the movement of the money.
Again, money functions as a means of circulation only because
in it the values of commodities have independent reality. Hence its movement,
as the medium of circulation, is, in fact, merely the movement of commodities
while changing their forms. This fact must therefore make itself plainly
visible in the currency of money. Thus the linen for instance, first of
all changes its commodity-form into its money-form. The second term of its
first metamorphosis, C—M, the money form, then becomes the
first term of its final metamorphosis, M—C, its re-conversion into the
Bible. But each of these two changes of form is accomplished by an exchange
between commodity and money, by their reciprocal displacement. The
same pieces of coin come into the seller’s hand as the alienated
form of the commodity and leave it as the absolutely alienable form
of the commodity. They are displaced twice. The first metamorphosis
of the linen puts these coins into the weaver’s pocket, the second draws
them out of it. The two inverse changes undergone by the same commodity
are reflected in the displacement, twice repeated, but in opposite directions,
of the same pieces of coin.
If, on the contrary, only one phase of the metamorphosis is gone
through, if there are only sales or only purchases, then a given piece
of money changes its place only once. Its second change of place always
expresses the second metamorphosis of the commodity, its re-conversion
from money. The frequent repetition of the displacement of the same coins
reflects not only the series of metamorphoses that a single commodity has
gone through, but also the intertwining of the innumerable metamorphoses
in the world of commodities in general. It is a matter of course, that
all this is applicable to the simple circulation of commodities alone,
the only form that we are now considering.
Every commodity, when it first steps into circulation, and undergoes
its first change of form, does so only to fall out of circulation again
and to be replaced by other commodities. Money, on the contrary, as the
medium of circulation, keeps continually within the sphere of circulation,
and moves about in it. The question therefore arises, how much money this
sphere constantly absorbs?
In a given country there take place every day at the same time,
but in different localities, numerous one-sided metamorphoses of commodities,
or, in other words, numerous sales and numerous purchases. The commodities
are equated beforehand in imagination, by their prices, to definite quantities
of money. And since, in the form of circulation now under consideration,
money and commodities always come bodily face to face, one at the positive
pole of purchase, the other at the negative pole of sale, it is clear that
the amount of the means of circulation required, is determined beforehand
by the sum of the prices of all these commodities. As a matter of fact,
the money in reality represents the quantity or sum of gold ideally expressed
beforehand by the sum of the prices of the commodities. The equality of
these two sums is therefore self-evident. We know, however, that, the values
of commodities remaining constant, their prices vary with the value of
gold (the material of money), rising in proportion as it falls, and falling
in proportion as it rises. Now if, in consequence of such a rise or fall
in the value of gold, the sum of the prices of commodities fall or rise,
the quantity of money in currency must fall or rise to the same
extent. The change in the quantity of the circulating medium is, in this
case, it is true, caused by the money itself, yet not in virtue of its
function as a medium of circulation, but of its function as a measure of
value. First, the price of the commodities varies inversely as the value
of the money, and then the quantity of the medium of circulation varies
directly as the price of the commodities. Exactly the same thing would
happen if, for instance, instead of the value of gold falling, gold were
replaced by silver as the measure of value, or if, instead of the value
of silver rising, gold were to thrust silver out from being the measure
of value. In the one case, more silver would be current than gold was before;
in the other case, less gold would be current than silver was before. In
each case the value of the material of money, i.e., the value of
the commodity that serves as the measure of value, would have undergone
a change, and therefore so, too, would the prices of commodities which
express their values in money, and so, too, would the quantity of money
current whose function it is to realise those prices. We have already seen,
that the sphere of circulation has an opening through which gold (or the
material of money generally) enters into it as a commodity with a given
value. Hence, when money enters on its functions as a measure of value,
when it expresses prices, its value is already determined. If now its value
fall, this fact is first evidenced by a change in the prices of those commodities
that are directly bartered for the precious metals at the sources of their
production. The greater part of all other commodities, especially in the
imperfectly developed stages of civil society, will continue for a long
time to be estimated by the former antiquated and illusory value of the
measure of value. Nevertheless, one commodity infects another through their
common value-relation, so that their prices, expressed in gold or in silver,
gradually settle down into the proportions determined by their comparative
values, until finally the values of all commodities are estimated in terms
of the new value of the metal that constitutes money. This process is accompanied
by the continued increase in the quantity of the precious metals, an increase
caused by their streaming in to replace the articles directly bartered
for them at their sources of production. In proportion therefore as commodities
in general acquire their true prices, in proportion as their values become
estimated according to the fallen value of the precious metal, in the same
proportion the quantity of that metal necessary for realising those new
prices is provided beforehand. A one-sided observation of the results that
followed upon the discovery of fresh supplies of gold and silver, led some
economists in the 17th, and particularly in the 18th century, to the false
conclusion, that the prices of commodities had gone up in consequence of
the increased quantity of gold and silver serving as means of circulation.
Henceforth we shall consider the value of gold to be given, as, in fact,
it is momentarily, whenever we estimate the price of a commodity.
On this supposition then, the quantity of the medium of circulation is
determined by the sum of the prices that have to be realised. If now we
further suppose the price of each commodity to be given, the sum of the
prices clearly depends on the mass of commodities in circulation. It requires
but little racking of brains to comprehend that if one quarter of wheat
costs £2,100 quarters will cost £200, 200 quarters £400,
and so on, that consequently the quantity of money that changes place with
the wheat, when sold, must increase with the quantity of that wheat.
If the mass of commodities remain constant, the quantity of circulating
money varies with the fluctuations in the prices of those commodities.
It increases and diminishes because the sum of the prices increases or
diminishes in consequence of the change of price. To produce this effect,
it is by no means requisite that the prices of all commodities should rise
or fall simultaneously. A rise or a fall in the prices of a number of leading
articles, is sufficient in the one case to increase, in the other to diminish,
the sum of the prices of all commodities, and, therefore, to put more or
less money in circulation. Whether the change in the price correspond to
an actual change of value in the commodities, or whether it be the result
of mere fluctuations in market-prices, the effect on the quantity of the
medium of circulation remains the same. Suppose the following articles
to be sold or partially metamorphosed simultaneously in different localities:
say, one quarter of wheat, 20 yards of linen, one Bible, and 4 gallons
of brandy. If the price of each article be £2, and the sum of the
prices to be realised be consequently £8, it follows that £8
in money must go into circulation. If, on the other hand, these same articles
are links in the following chain of
metamorphoses: 1 quarter of wheat — £2 — 20 yards of linen — £2
— 1 Bible — £2 — 4 gallons of brandy — £2, a chain that
is already well known to us, in that case the £2 cause the different
commodities to circulate one after the other, and after realising their
prices successively, and therefore the sum of those prices, £8, they
come to rest at last in the pocket of the distiller. The £2 thus
make four moves. This repeated change of place of the same pieces of money
corresponds to the double change in form of the commodities, to their motion
in opposite directions through two stages of circulation. and to the interlacing
of the metamorphoses of different commodities.
These antithetic and complementary phases, of which the process
of metamorphosis consists, are gone through, not simultaneously, but successively.
Time is therefore required for the completion of the series. Hence the
velocity of the currency of money is measured by the number of moves made
by a given piece of money in a given time. Suppose the circulation of the
4 articles takes a day. The sum of the prices to be realised in the day
is £8, the number of moves of the two pieces of money is four, and
the quantity of money circulating is £2. Hence, for a given interval
of time during the process of circulation, we have the following relation:
the quantity of money functioning as the circulating medium is equal to
the sum of the prices of the commodities divided by the number of moves
made by coins of the same denomination. This law holds generally.
The total circulation of commodities in a given country during
a given period is made up on the one hand of numerous isolated and simultaneous
partial metamorphoses, sales which are at the same time purchases, in which
each coin changes its place only once, or makes only one move; on the other
hand, of numerous distinct series of metamorphoses partly running side
by side, and partly coalescing with each other, in each of which series
each coin makes a number of moves, the number being greater or less according
to circumstances. The total number of moves made by all the circulating
coins of one denomination being given, we can arrive at the average number
of moves made by a single coin of that denomination, or at the average
velocity of the currency of money. The quantity of money thrown into the
circulation at the beginning of each day is of course determined by the
sum of the prices of all the commodities circulating simultaneously side
by side. But once in circulation, coins are, so to say, made responsible
for one another. If the one increase its velocity, the other either retards
its own, or altogether falls out of circulation; for the circulation can
absorb only such a quantity of gold as when multiplied by the mean number
of moves made by one single coin or element, is equal to the sum of the
prices to be realised. Hence if the number of moves made by the separate
pieces increase, the total number of those pieces in circulation diminishes.
If the number of the moves diminish, the total number of pieces increases.
Since the quantity of money capable of being absorbed by the circulation
is given for a given mean velocity of currency, all that is necessary in
order to abstract a given number of sovereigns from the circulation is
to throw the same number of one-pound notes into it, a trick well known
to all bankers.
Just as the currency of money, generally considered, is but a
reflex of the circulation of commodities, or of the antithetical metamorphoses
they undergo, so, too, the velocity of that currency reflects the rapidity
with which commodities change their forms, the continued interlacing of
one series of metamorphoses with another, the hurried social interchange
of matter, the rapid disappearance of commodities from the sphere of circulation,
and the equally rapid substitution of fresh ones in their places. Hence,
in the velocity of the currency we have the fluent unity of the antithetical
and complementary phases, the unity of the conversion of the useful aspect
of commodities into their value-aspect, and their re-conversion from the
latter aspect to the former, or the unity of the two processes of sale
and purchase. On the other hand, the retardation of the currency reflects
the separation of these two processes into isolated antithetical phases,
reflects the stagnation in the change of form, and therefore, in the social
interchange of matter. The circulation itself, of course, gives no clue
to the origin of this stagnation; it merely puts in evidence the phenomenon
itself. The general public, who, simultaneously with the retardation of
the currency, see money appear and disappear less frequently at the periphery
of circulation, naturally attribute this retardation to a quantitative
deficiency in the circulating medium.
The total quantity of money functioning during a given period
as the circulating medium, is determined, on the one hand, by the sum of
the prices of the circulating commodities, and on the other hand, by the
rapidity with which the antithetical phases of the metamorphoses follow
one another. On this rapidity depends what proportion of the sum
of the prices can, on the average, be realised by each single coin. But
the sum of the prices of the circulating commodities depends on the quantity,
as well as on the prices, of the commodities. These three factors, however,
state of prices, quantity of circulating commodities, and velocity of money-currency,
are all variable. Hence, the sum of the prices to be realised, and consequently
the quantity of the circulating medium depending on that sum, will vary
with the numerous variations of these three factors in combination. Of
these variations we shall consider those alone that have been the most
important in the history of prices.
While prices remain constant, the quantity of the circulating
medium may increase owing to the number of circulating commodities increasing,
or to the velocity of currency decreasing, or to a combination of the two.
On the other hand the quantity of the circulating medium may decrease with
a decreasing number of commodities, or with an increasing rapidity of their
circulation.
With a general rise in the prices of commodities, the quantity
of the circulating medium will remain constant, provided the number of
commodities in circulation decrease proportionally to the increase in their
prices, or provided the velocity of currency increase at the same rate
as prices rise, the number of commodities in circulation remaining constant.
The quantity of the circulating medium may decrease, owing to the number
of commodities decreasing more rapidly; or to the velocity of currency increasing more rapidly, than prices rise.
With a general fall in the prices of commodities, the quantity
of the circulating medium will remain constant, provided the number of
commodities increase proportionally to their fall in price, or provided
the velocity of currency decrease in the same proportion. The quantity
of the circulating medium will increase, provided the number of commodities
increase quicker, or the rapidity of circulation decrease quicker, than
the prices fall.
The variations of the different factors may mutually compensate
each other, so that notwithstanding their continued instability, the sum
of the prices to be realised and the quantity of money in circulation remain
constant; consequently, we find, especially if we take long periods into
consideration, that the deviations from the average level, of the quantity
of money current in any country, are much smaller than we should at first
sight expect, apart of course from excessive perturbations periodically
arising from industrial and commercial crises, or less frequently, from
fluctuations in the value of money.
The law, that the quantity of the circulating medium is determined
by the sum of the prices of the commodities circulating, and the average
velocity of currency
may also be stated as follows: given the sum of the values of commodities,
and the average rapidity of their metamorphoses, the quantity of precious
metal current as money depends on the value of that precious metal. The
erroneous opinion that it is, on the contrary, prices that are determined
by the quantity of the circulating medium, and that the latter depends
on the quantity of the precious metals in a country;
this opinion was based by those who first held it, on the absurd hypothesis
that commodities are without a price, and money without a value, when they
first enter into circulation, and that, once in the circulation,
an aliquot part of the medley of commodities is exchanged for an aliquot
part of the heap of precious metals.
C. Coin and symbols of value
That money takes the shape of coin, springs from its function as the
circulating medium. The weight of gold represented in imagination by the
prices or money-names of commodities, must confront those commodities,
within the circulation, in the shape of coins or pieces of gold of a given
denomination. Coining, like the establishment of a standard of prices,
is the business of the State. The different national uniforms worn at home
by gold and silver as coins, and doffed again in the market of the world,
indicate the separation between the internal or national spheres of the
circulation of commodities, and their universal sphere.
The only difference, therefore, between coin and bullion,
is one of shape, and gold can at any time pass from one form to the other.
But no sooner does coin leave the mint, than it
immediately finds itself on the high-road to the melting pot. During their
currency, coins wear away, some more, others less. Name and substance,
nominal weight and real weight, begin their process of separation. Coins
of the same denomination become different in value, because they are different
in weight. The weight of gold fixed upon as the standard of prices, deviates
from the weight that serves as the circulating medium, and the latter thereby
ceases any longer to be a real equivalent of the commodities whose prices
it realises. The history of coinage during the middle ages and down into
the 18th century, records the ever renewed confusion arising from this
cause. The natural tendency of circulation to convert coins into a mere
semblance of what they profess to be, into a symbol of the weight of metal
they are officially supposed to contain, is recognised by modern legislation,
which fixes the loss of weight sufficient to demonetise a gold coin, or
to make it no longer legal tender.
The fact that the currency of coins itself effects a separation
between their nominal and their real weight, creating a distinction between
them as mere pieces of metal on the one hand, and as coins with a definite
function on the other — this fact implies the latent possibility of replacing
metallic coins by tokens of some other material, by symbols serving the
same purposes as coins. The practical difficulties in the way of coining
extremely minute quantities of gold or silver, and the circumstance that
at first the less precious metal is used as a measure of value instead
of the-more precious, copper instead of silver, silver instead of gold,
and that the less precious circulates as money until dethroned by the more
precious — all these facts explain the parts historically played by silver
and copper tokens as substitutes for gold coins. Silver and copper tokens
take the place of gold in those regions of the circulation where
coins pass from hand to hand most rapidly, and are subject to the maximum
amount of wear and tear. This occurs where sales and purchases on a very
small scale are continually happening. In order to prevent these satellites
from establishing themselves permanently in the place of gold, positive
enactments determine the extent to which they must be compulsorily received
as payment instead of gold. The particular tracks pursued by the different
species of coin in currency, run naturally into each other. The tokens
keep company with gold, to pay fractional parts of the smallest gold coin;
gold is, on the one hand, constantly pouring into retail circulation, and
on the other hand is as constantly being thrown out again by being changed
into tokens.
The weight of metal in the silver and copper tokens is arbitrarily
fixed by law. When in currency, they wear away even more rapidly than gold
coins. Hence their functions are totally independent of their weight, and
consequently of all value. The function of gold as coin becomes completely
independent of the metallic value of that gold. Therefore things that are
relatively without value, such as paper notes, can serve as coins in its
place. This purely symbolic character is to a certain extent masked in
metal tokens. In paper money it stands out plainly. In fact, ce n’est que
le premier pas qui coûte.
We allude here only to inconvertible paper money issued by the
State and having compulsory circulation. It has its immediate origin in
the metallic currency. Money based upon credit implies on the other hand
conditions, which, from our standpoint of the simple circulation of commodities,
are as yet totally unknown to us. But we may affirm this much, that just
as true paper money takes its rise in the function of money as the circulating
medium, so money based upon credit takes root spontaneously in the function
of money as the means of payment.
The State puts in circulation bits of paper on which their
various denominations, say £1, £5, &c., are printed. In
so far as they actually take the place of gold to the same amount, their
movement is subject to the laws that regulate the currency of money itself.
A law peculiar to the circulation of paper money can spring up only from
the proportion in which that paper money represents gold. Such a law exists;
stated simply, it is as follows: the issue of paper money must not exceed
in amount the gold (or silver as the case may be) which would actually
circulate if not replaced by symbols. Now the quantity of gold which the
circulation can absorb, constantly fluctuates about a given level. Still,
the mass of the circulating medium in a given country never sinks below
a certain minimum easily ascertained by actual experience. The fact that
this minimum mass continually undergoes changes in its constituent parts,
or that the pieces of gold of which it consists are being constantly replaced
by fresh ones, causes of course no change either in its amount or in the
continuity of its circulation. It can therefore be replaced by paper symbols.
If, on the other hand, all the conduits of circulation were to-day filled
with paper money to the full extent of their capacity for absorbing money,
they might to-morrow be overflowing in consequence of a fluctuation in
the circulation of commodities. There would no longer be any standard.
If the paper money exceed its proper limit, which is the amount in gold
coins of the like denomination that can actually be current, it would,
apart from the danger of falling into general disrepute, represent only
that quantity of gold, which, in accordance with the laws of the circulation
of commodities, is required, and is alone capable of being represented
by paper. If the quantity of paper money issued be double what it ought
to be, then, as a matter of fact, £1 would be the money-name not
of 1/4 of an ounce, but of 1/8 of an ounce of gold. The effect would be
the same as if an alteration had taken place in the function of gold as
a standard of prices. Those values that were previously expressed by the
price of £1 would now be expressed by the price of £2.
Paper money is a token representing gold or money. The relation
between it and the values of commodities is this, that the latter are ideally
expressed in the same quantities of gold that are symbolically represented
by the paper. Only in so far as paper money represents gold, which like
all other commodities has value, is it a symbol of value.
Finally, some one may ask why gold is capable of being replaced
by tokens that have no value? But, as we have already seen, it is capable
of being so replaced only in so far as it functions exclusively as coin,
or as the circulating medium, and as nothing else. Now, money has other
functions besides this one, and the isolated function of serving as the
mere circulating medium is not necessarily the only one attached to gold
coin, although this is the case with those abraded coins that continue
to circulate. Each piece of money is a mere coin, or means of circulation,
only so long as it actually circulates. But this is just the case with
that minimum mass of gold, which is capable of being replaced by paper
money. That mass remains constantly within the sphere of circulation, continually
functions as a circulating medium, and exists exclusively for that purpose.
Its movement therefore represents nothing but the continued alternation
of the inverse phases of the metamorphosis C—M—C, phases in which commodities
confront their value-forms, only to disappear again immediately. The independent
existence of the exchange-value of a commodity is here a transient apparition,
by means of which the commodity is immediately replaced by another commodity.
Hence, in this process which continually makes money pass from hand to
hand, the mere symbolical existence of money suffices. Its functional existence
absorbs, so to say, its material existence. Being a transient and objective
reflex of the prices of commodities, it serves only as a symbol of itself,
and is therefore capable of being replaced by a token.
One thing is, however, requisite; this token must have an objective
social validity of its own, and this the paper symbol acquires by its forced
currency. This compulsory action of the State can take effect only within
that inner sphere of circulation which is coterminous with the territories
of the community, but it is also only within that sphere that money completely
responds to its function of being the circulating medium, or becomes coin.
SECTION 3
MONEY
The commodity that functions as a measure of value,
and, either in its own person or by a representative, as the medium of
circulation, is money. Gold (or silver) is therefore money. It functions
as money, on the one hand, when it has to be present in its own golden
person. It is then the money-commodity, neither merely ideal, as in its
function of a measure of value, nor capable of being represented, as in
its function of circulating medium. On the other hand, it also functions
as money, when by virtue of its function, whether that function be performed
in person or by representative, it congeals into the sole form of value,
the only adequate form of existence of exchange-value, in opposition to
use-value, represented by all other commodities.
A. Hoarding
The continual movement in circuits of the two antithetical metamorphoses
of commodities, or the never ceasing alternation of sale and purchase,
is reflected in the restless currency of money, or in the function that
money performs of a perpetuum mobile of circulation. But so soon
as the series of metamorphoses is interrupted, so soon as sales are not
supplemented by subsequent purchases, money ceases to be mobilised; it
is transformed, as Boisguillebert says, from “meuble” into “immeuble,”
from movable into immovable, from coin into money.
With the very earliest development of the circulation of commodities,
there is also developed the necessity, and the passionate desire, to hold
fast the product of the first metamorphosis. This product is the transformed
shape of the commodity, or its gold-chrysalis.
Commodities are thus sold not for the purpose of buying others, but in
order to replace their commodity-form by their money-form. From being the
mere means of effecting the circulation of commodities, this change of
form becomes the end and aim. The changed form of the commodity is thus
prevented from functioning as its unconditionally alienable form, or as
its merely transient money-form. The money becomes petrified into a hoard,
and the seller becomes a hoarder of money.
In the early stages of the circulation of commodities, it is the
surplus use-values alone that are converted into money. Gold and silver
thus become of themselves social expressions for superfluity or wealth.
This naive form of hoarding becomes perpetuated in those communities in
which the traditional mode of production is carried on for the supply of
a fixed and limited circle of home wants. It is thus with the people of
Asia, and particularly of the East Indies. Vanderlint, who fancies that
the prices of commodities in a country are determined by the quantity of
gold and silver to be found in it, asks himself why Indian commodities
are so cheap. Answer: Because the Hindus bury their money. From 1602 to
1734, he remarks, they buried 150 millions of pounds sterling of silver,
which originally came from America to Europe. In
the 10 years from 1856 to 1866, England exported to India and China £120,000,000
in silver, which had been received in exchange for Australian gold. Most
of the silver exported to China makes its way to India.
As the production of commodities further develops, every producer
of commodities is compelled to make sure of the nexus rerum or the social
pledge. His wants are constantly making themselves
felt, and necessitate the continual purchase of other people’s commodities,
while the production and sale of his own goods require time, and depend
upon circumstances. In order then to be able to buy without selling, he
must have sold previously without buying. This operation, conducted on
a general scale, appears to imply a contradiction. But the precious metals
at the sources of their production are directly exchanged for other commodities.
And here we have sales (by the owners of commodities) without purchases
(by the owners of gold or silver). And subsequent
sales, by other producers, unfollowed by purchases, merely bring about
the distribution of the newly produced precious metals among all the owners
of commodities. In this way, all along the line of exchange, hoards of
gold and silver of varied extent are accumulated. With the possibility
of holding and storing up exchange-value in the shape of a particular commodity,
arises also the greed for gold. Along with the extension of
circulation, increases the power of money, that absolutely social form
of wealth ever ready for use. “Gold is a wonderful thing! Whoever possesses
it is lord of all he wants. By means of gold one can even get souls into
Paradise.” (Columbus in his letter from Jamaica, 1503.) Since gold does
not disclose what has been transformed into it, everything, commodity or
not, is convertible into gold. Everything becomes saleable and buyable.
The circulation becomes the great social retort into which everything is
thrown, to come out again as a gold-crystal. Not even are the bones of
saints, and still less are more delicate res sacrosanctae, extra commercium
hominum able to withstand this alchemy. Just as
every qualitative difference between commodities is extinguished in money,
so money, on its side, like the radical leveller that it is, does away
with all distinctions. [43a] But money itself is a
commodity, an external object, capable of becoming the private property
of any individual. Thus social power becomes the private power of private
persons. The ancients therefore denounced money as subversive of the economic
and moral order of things. [43b] Modern society, which,
soon after its birth, pulled Plutus by the hair of his head from the bowels
of the earth, greets gold as its Holy Grail, as
the glittering incarnation of the very principle of its own life.
A commodity, in its capacity of a use-value, satisfies a particular
want, and is a particular element of material wealth. But the value of
a commodity measures the degree of its attraction for all other elements
of material wealth, and therefore measures the social wealth of its owner.
To a barbarian owner of commodities, and even to a West-European peasant,
value is the same as value-form, and therefore to him the increase in
his hoard of gold and silver is an increase in value. It is true that the
value of money varies, at one time in consequence of a variation in its
own value, at another, in consequence of a change in the values of commodities.
But this, on the one hand, does not prevent 200 ounces of gold from still
containing more value than 100 ounces, nor, on the other hand, does it
hinder the actual metallic form of this article from continuing to be the
universal equivalent form of all other commodities, and the immediate social
incarnation of all human labour. The desire after hoarding is in its very
nature unsatiable. In its qualitative aspect, or formally considered, money
has no bounds to its efficacy, i.e., it is the universal representative
of material wealth, because it is directly convertible into any other commodity.
But, at the same time, every actual sum of money is limited in amount,
and, therefore, as a means of purchasing, has only a limited efficacy.
This antagonism between the quantitative limits of money and its qualitative
boundlessness, continually acts as a spur to the hoarder in his Sisyphus-like
labour of accumulating. It is with him as it is with a conqueror who sees
in every new country annexed, only a new boundary.
In order that gold may be held as money, and made to form a hoard,
it must be prevented from circulating, or from transforming itself into
a means of enjoyment. The hoarder, therefore, makes a sacrifice of the
lusts of the flesh to his gold fetish. He acts in earnest up to the Gospel
of abstention. On the other hand, he can withdraw from circulation no more
than what he has thrown into it in the shape of commodities. The more he
produces, the more he is able to sell. Hard work, saving, and avarice are,
therefore, his three cardinal virtues, and to sell much and buy little
the sum of his political economy.
By the side of the gross form of a hoard, we find also its aesthetic
form in the possession of gold and silver articles. This grows with the
wealth of civil society. “Soyons riches ou paraissons riches” (Diderot).
In this way there is created, on the one hand, a constantly
extending market for gold and silver, unconnected with their functions
as money, and, on the other hand, a latent source of supply, to which recourse
is had principally in times of crisis and social disturbance.
Hoarding serves various purposes in the economy of the metallic
circulation. Its first function arises out of the conditions to which the
currency of gold and silver coins is subject. We have seen how, along with
the continual fluctuations in the extent and rapidity of the circulation
of commodities and in their prices, the quantity of money current unceasingly
ebbs and flows. This mass must, therefore, be capable of expansion and
contraction. At one time money must be attracted in order to act as circulating
coin, at another, circulating coin must be repelled in order to act again
as more or less stagnant money. In order that the mass of money, actually
current, may constantly saturate the absorbing power of the circulation,
it is necessary that the quantity of gold and silver in a country be greater
than the quantity required to function as coin. This condition is fulfilled
by money taking the form of hoards. These reserves serve as conduits for
the supply or withdrawal of money to or from the circulation, which in
this way never overflows its banks.
B. Means of Payment
In the simple form of the circulation of commodities hitherto considered,
we found a given value always presented to us in a double shape, as a commodity
at one pole, as money at the opposite pole. The owners of commodities came
therefore into contact as the respective representatives of what were already
equivalents. But with the development of circulation, conditions arise
under which the alienation of commodities becomes separated, by an interval
of time, from the realisation of their prices. It will be sufficient
to indicate the most simple of these conditions. One sort of article requires
a longer, another a shorter time for its production. Again, the production
of different commodities depends on different seasons of the year. One
sort of commodity may be born on its own market place, another has to make
a long journey to market. Commodity-owner No. 1, may therefore be ready
to sell, before No. 2 is ready to buy. When the same transactions are continually
repeated between the same persons, the conditions of sale are regulated
in accordance with the conditions of production. On the other hand, the
use of a given commodity, of a house, for instance, is sold (in common
parlance, let) for a definite period. Here, it is only at the end of the
term that the buyer has actually received the use-value of the commodity.
He therefore buys it before he pays for it. The vendor sells an existing
commodity, the purchaser buys as the mere representative of money, or rather
of future money. The vendor becomes a creditor, the purchaser becomes a
debtor. Since the metamorphosis of commodities, or the development of their
value-form, appears here under a new aspect, money also acquires a fresh
function; it becomes the means of payment.
The character of creditor, or of debtor, results here from the
simple circulation. The change in the form of that circulation stamps buyer
and seller with this new die. At first, therefore, these new parts are
just as transient and alternating as those of seller and buyer, and are
in turns played by the same actors. But the opposition is not nearly so
pleasant, and is far more capable of crystallisation.
The same characters can, however, be assumed independently of the circulation
of commodities. The class-struggles of the ancient world took the form
chiefly of a contest between debtors and creditors, which in Rome ended
in the ruin of the plebeian debtors. They were displaced by slaves. In
the middle ages the contest ended with the ruin of the feudal debtors,
who lost their political power together with the economic basis on which
it was established. Nevertheless, the money relation of debtor and creditor
that existed at these two periods reflected only the deeper-lying antagonism
between the general economic conditions of existence of the classes in
question.
Let us return to the circulation of commodities. The appearance
of the two equivalents, commodities and money, at the two poles of the
process of sale, has ceased to be simultaneous. The money functions now,
first as a measure of value in the determination of the price of the commodity
sold; the price fixed by the contract measures the obligation of the debtor,
or the sum of money that he has to pay at a fixed date. Secondly, it serves
as an ideal means of purchase. Although existing only in the promise of
the buyer to pay, it causes the commodity to change hands. It is not before
the day fixed for payment that the means of payment actually steps into
circulation, leaves the hand of the buyer for that of the seller. The circulating
medium was transformed into a hoard, because the process stopped short
after the first phase, because the converted shape of the commodity, viz.,
the money, was withdrawn from circulation. The means of payment enters
the circulation, but only after the commodity has left it. The money is
no longer the means that brings about the process. It only brings it to
a close, by stepping in as the absolute form of existence of exchange-value,
or as the universal commodity. The seller turned his commodity into money,
in order thereby to satisfy some want, the hoarder did the same in order
to keep his commodity in its money-shape, and the debtor in order to be
able to pay; if he do not pay, his goods will be sold by the sheriff. The
value-form of commodities, money, is therefore now the end and aim of a
sale, and that owing to a social necessity springing out of the process
of circulation itself.
The buyer converts money back into commodities before he has turned
commodities into money: in other words, he achieves the second metamorphosis
of commodities before the first. The seller’s commodity circulates, and
realises its price, but only in the shape of a legal claim upon money.
It is converted into a use-value before it has been converted into money.
The completion of its first metamorphosis follows only at a later period.

The obligations falling due within a given period, represent the
sum of the prices of the commodities, the sale of which gave rise to those
obligations. The quantity of gold necessary to realise this sum, depends,
in the first instance, on the rapidity of currency of the means of payment.
That quantity is conditioned by two circumstances: first the relations
between debtors and creditors form a sort of chain, in such a way that
A, when he receives money from his debtor B, straightway hands it over to
C his creditor, and so on; the second circumstance is the length of the
intervals between the different due-days of the obligations. The continuous
chain of payments, or retarded first metamorphoses, is essentially different
from that interlacing of the series of metamorphoses which we considered
on a former page. By the currency of the circulating medium, the connexion
between buyers and sellers, is not merely expressed. This connexion is
originated by, and exists in, the circulation alone. Contrariwise, the
movement of the means of payment expresses a social relation that was in
existence long before.
The fact that a number of sales take place simultaneously, and
side by side, limits the extent to which coin can be replaced by the rapidity
of currency. On the other hand, this fact is a new lever in economising
the means of payment. In proportion as payments are concentrated at one
spot, special institutions and methods are developed for their liquidation.
Such in the middle ages were the virements at Lyons. The debts due
to A from B, to B from C, to C from A, and so on, have only to be confronted
with each other, in order to annul each other to a certain extent like
positive and negative quantities. There thus remains only a single balance
to pay. The greater the amount of the payments concentrated, the less is
this balance relatively to that amount, and the less is the mass of the
means of payment in circulation.
The function of money as the means of payment implies a contradiction
without a terminus medius. In so far as the payments balance one another,
money functions only ideally as money of account, as a measure of value.
In so far as actual payments have to be made, money does not serve as a
circulating medium, as a mere transient agent in the interchange of products,
but as the individual incarnation of social labour, as the independent
form of existence of exchange-value, as the universal commodity. This contradiction
comes to a head in those phases of industrial and commercial crises which
are known as monetary crises. Such a crisis occurs
only where the ever-lengthening chain of payments, and an artificial system
of settling them, has been fully developed. Whenever there is a general
and extensive disturbance of this mechanism, no matter what its cause,
money becomes suddenly and immediately transformed, from its merely ideal
shape of money of account, into hard cash. Profane commodities can no longer
replace it. The use-value of commodities becomes valueless, and their value vanishes
in the presence of its own independent form. On the eve of the crisis,
the bourgeois, with the self-sufficiency that springs from intoxicating
prosperity, declares money to be a vain imagination. Commodities alone
are money. But now the cry is everywhere: money alone is a commodity! As
the hart pants after fresh water, so pants his soul after money, the only
wealth. In a crisis, the antithesis between commodities
and their value-form, money, becomes heightened into an absolute contradiction.
Hence, in such events, the form under which money appears is of no importance.
The money famine continues, whether payments have to be made in gold or
in credit money such as bank-notes.
If we now consider the sum total of the money current during a
given period, we shall find that, given the rapidity of currency of the
circulating medium and of the means of payment, it is equal to the sum
of the prices to be realised, plus the sum of the payments falling due,
minus the payments that balance each other, minus finally the number of
circuits in which the same piece of coin serves in turn as means of circulation
and of payment. Hence, even when prices, rapidity of currency, and the
extent of the economy in payments, are given, the quantity of money current
and the mass of commodities circulating during a given period, such as
a day, no longer correspond. Money that represents commodities long withdrawn
from circulation, continues to be current. Commodities circulate, whose
equivalent in money will not appear on the scene till some future day.
Moreover, the debts contracted each day, and the payments falling due on
the same day, are quite incommensurable quantities.
Credit-money springs directly out of the function of money
as a means of payment. Certificates of the debts owing for the purchased
commodities circulate for the purpose of transferring those debts to others.
On the other hand, to the same extent as the system of credit is extended,
so is the function of money as a means of payment. In that character it
takes various forms peculiar to itself under which it makes itself at home
in the sphere of great commercial transactions. Gold and silver coin, on
the other hand, are mostly relegated to the sphere of retail trade.
When the production of commodities has sufficiently extended itself,
money begins to serve as the means of payment beyond the sphere of the
circulation of commodities. It becomes the commodity that is the universal
subject-matter of all contracts. Rents, taxes,
and such like payments are transformed from payments in kind into money
payments. To what extent this transformation depends upon the general conditions of
production, is shown, to take one example, by the fact that the Roman Empire
twice failed in its attempt to levy all contributions in money. The unspeakable
misery of the French agricultural population under Louis XIV., a misery
so eloquently denounced by Boisguillebert, Marshal Vauban, and others,
was due not only to the weight of the taxes, but also to the conversion
of taxes in kind into money taxes. In Asia, on
the other hand, the fact that state taxes are chiefly composed of rents
payable in kind, depends on conditions of production that are reproduced
with the regularity of natural phenomena. And this mode of payment tends
in its turn to maintain the ancient form of production. It is one of the
secrets of the conservation of the Ottoman Empire. If the foreign trade,
forced upon Japan by Europeans, should lead to the substitution of money
rents for rents in kind, it will be all up with the exemplary agriculture
of that country. The narrow economic conditions under which that agriculture
is carried on, will be swept away.
In every country, certain days of the year become by habit recognised
settling days for various large and recurrent payments. These dates depend,
apart from other revolutions in the wheel of reproduction, on conditions
closely connected with the seasons. They also regulate the dates for payments
that have no direct connexion with the circulation of commodities such
as taxes, rents, and so on. The quantity of money requisite to make the payments,
falling due on those dates all over the country, causes periodical, though
merely superficial, perturbations in the economy of the medium of payment.

From the law of the rapidity of currency of the
means of payment, it follows that the quantity of the means of payment
required for all periodical payments, whatever their source,
is in inverse proportion to the length of their
periods.
The development of money into a medium of payment makes it necessary
to accumulate money against the dates fixed for the payment of the sums
owing. While hoarding, as a distinct mode of acquiring riches, vanishes
with the progress of civil society, the formation of reserves of the means
of payment grows with that progress.
C. Universal Money
When money leaves the home sphere of circulation, it strips off the
local garbs which it there assumes, of a standard of prices, of coin, of
tokens, and of a symbol of value, and returns to its original form of bullion.
In the trade between the markets of the world, the value of commodities
is expressed so as to be universally recognised. Hence their independent
value-form also, in these cases, confronts them under the shape of universal
money. It is only in the markets of the world that money acquires to the
full extent the character of the commodity whose bodily form is also the
immediate social incarnation of human labour in the abstract. Its real
mode of existence in this sphere adequately corresponds to its ideal concept.
Within the sphere of home circulation, there can be but one commodity
which, by serving as a measure of value, becomes money. In the markets
of the world a double measure of value holds sway, gold and silver.
Money of the world serves as the universal medium of payment,
as the universal means of purchasing, and as the universally recognised
embodiment of all wealth. Its function as a means of payment in the settling
of international balances is its chief one. Hence the watchword of the
mercantilists, balance of trade. Gold and silver
serve as international means of purchasing chiefly and necessarily
in those periods when the customary equilibrium in the interchange of products
between different nations is suddenly disturbed. And lastly, it serves
as the universally recognised embodiment of social wealth, whenever the
question is not of buying or paying, but of transferring wealth from one
country to another, and whenever this transference in the form of commodities
is rendered impossible, either by special conjunctures in the markets or
by the purpose itself that is intended.
Just as every country needs a reserve of money for its home circulation
so, too, it requires one for external circulation in the markets of the
world. The functions of hoards, therefore, arise in part out of the function
of money, as the medium of the home circulation and home payments, and
in part out of its function of money of the world.
For this latter function, the genuine money-commodity, actual gold and
silver, is necessary. On that account, Sir James Steuart, in order to distinguish
them from their purely local substitutes, calls gold and silver “money
of the world.”
The current of the stream of gold and silver is a double one.
On the one hand, it spreads itself from its sources over all the markets
of the world, in order to become absorbed, to various extents, into the
different national spheres of circulation, to fill the conduits of currency,
to replace abraded gold and silver coins, to supply the material of articles
of luxury, and to petrify into hoards.
This first current is started by the countries that exchange their labour,
realised in commodities, for the labour embodied in the precious metals
by gold and silver-producing countries. On the other hand, there is a continual
flowing backwards and forwards of gold and silver between the different
national spheres of circulation, a current whose motion depends on the
ceaseless fluctuations in the course of exchange.
Countries in which the bourgeois form of production is developed
to a certain extent, limit the hoards concentrated in the strong rooms
of the banks to the minimum required for the proper performance of their
peculiar functions. Whenever these hoards are strikingly
above their average level, it is, with some exceptions, an indication of
stagnation in the circulation of commodities, of an interruption in the
even flow of their metamorphoses.
Footnotes
1. The question — Why does not money directly represent labour-time, so that a piece of paper may represent, for instance,
x hours’ labour, is at bottom the same as the question why, given the production
of commodities, must products take the form of commodities? This is evident,
since their taking the form of commodities implies their differentiation
into commodities and money. Or, why cannot private labour — labour for
the account of private individuals — be treated as its opposite, immediate
social labour? I have elsewhere examined thoroughly the Utopian idea of
“labour-money” in a society founded on the production of commodities (l.
c., p. 61, seq.). On this point I will only say further, that Owen’s “labour-money,” for instance, is no more “money” than a ticket for the theatre. Owen pre-supposes
directly associated labour, a form of production that is entirely inconsistent
with the production of commodities. The certificate of labour is merely
evidence of the part taken by the individual in the common labour, and
of his right to a certain portion of the common produce destined for consumption.
But it never enters into Owen’s head to pre-suppose the production of commodities,
and at the same time, by juggling with money, to try to evade the necessary
conditions of that production.
2. Savages and half-civilised races use
the tongue differently. Captain Parry says of the inhabitants on the west
coast of Baffin’s Bay: “In this case (he refers to barter) they licked
it (the thing represented to them) twice to their tongues, after which
they seemed to consider the bargain satisfactorily concluded.” In the same
way, the Eastern Esquimaux licked the articles they received in exchange.
If the tongue is thus used in the North as the organ of appropriation,
no wonder that, in the South, the stomach serves as the organ of accumulated
property, and that a Kaffir estimates the wealth of a man by the size of
his belly. That the Kaffirs know what they are about is shown by the following:
at the same time that the official British Health Report of 1864 disclosed
the deficiency of fat-forming food among a large part of the working-class,
a certain Dr. Harvey (not, however, the celebrated discoverer of the circulation
of the blood), made a good thing by advertising recipes for reducing the
superfluous fat of the bourgeoisie and aristocracy.
3. See Karl Marx: “Zur Kritik, &c.” “Theorien von der Masseinheit des Geldes,” p. 53, seq.
4. “Wherever gold and silver have by
law been made to perform the function of money or of a measure of value
side by side, it has always been tried, but in vain, to treat them as one
and the same material. To assume that there is an invariable ratio between
the quantities of gold and silver in which a given quantity of labour-time
is incorporated, is to assume in fact, that gold and silver are of one
and the same material, and that a given mass of the less valuable metal,
silver, is a constant fraction of a given mass of gold. From the reign
of Edward III. to the time of George II., the history of money in England
consists of one long series of perturbations caused by the clashing of
the legally fixed ratio between the values of gold and silver, with the
fluctuations in their real values. At one time gold was too high, at another,
silver. The metal that for the time being was estimated below its value,
was withdrawn from circulation, mated and exported. The ratio between the
two metals was then again altered by law, but the new nominal ratio soon
came into conflict again with the real one. In our own times, the slight
and transient fall in the value of gold compared with silver, which was
a consequence of the Indo-Chinese demand for silver, produced on a far
more extended scale in France the same phenomena, export of silver, and
its expulsion from circulation by gold. During the years 1855, 1856 and
1857, the excess in France of gold-imports over gold-exports amounted to
£41,580,000, while the excess of silver-exports over silver-imports
was £14,704,000. In fact, in those countries in which both metals
are legally measures of value, and therefore both legal tender, so that
everyone has the option of paying in either metal, the metal that rises
in value is at a premium, and, like every other commodity, measures its
price in the over-estimated metal which alone serves in reality as the standard
of value. The result of all experience and history with regard to this
equation is simply that, where two commodities perform by law the functions
of a measure of value, in practice one alone maintains that position.”
(Karl Marx, l.c., pp. 52, 53.)
5. The peculiar circumstance, that while
the ounce of gold serves in England as the unit of the standard of money,
the pound sterling does not form an aliquot part of it, has been explained
as follows: “Our coinage was originally adapted to the employment of silver
only, hence, an ounce of silver can always be divided into a certain adequate
number of pieces of coin, but as gold was introduced at a later period
into a coinage adapted only to silver, an ounce of gold cannot be coined
into an aliquot number of pieces.” Maclaren, “A Sketch of the History of
the Currency.” London, 1858, p. 16.
6. With English writers the confusion
between measure of value and standard of price (standard of value) is indescribable.
Their functions, as well as their names, are constantly interchanged.
7. Moreover, it has not general historical
validity.
8. It is thus that the pound sterling
in English denotes less than one-third of its original weight; the pound
Scot, before the union, only 1-36th; the French livre, 1-74th; the Spanish
maravedi, less than 1-1,000th; and the Portuguese rei a still smaller fraction.
9. “Le monete le quali oggi sono ideal,
sono le piû antiche d’ogni nazione, e tutte furono un tempo real, e perche erano reali con esse si contava” [“The coins which today are ideal are the oldest coins of every nation, and all of them were once real, and precisely because they were real they were used for calculation”] (Galiani: Della moneta, l.c., p. 153.)
10. David Urquhart remarks in his “Familiar Words” on the monstrosity (!) that now-a-days a pound (sterling), which
is the unit of the English standard of money, is equal to about a quarter
of an ounce of gold. “This is falsifying a measure, not establishing a
standard.” He sees in this “false denomination” of the weight of gold,
as in everything else, the falsifying hand of civilisation.
11. When Anacharsis was asked for what
purposes the Greeks used money, he replied, “For reckoning.” (Ashen. Deipn.
1. iv. 49 v. 2. ed. Schweighauser, 1802.)
12. “Owing to the fact that money, when
serving as the standard of price, appears under the same reckoning names
as do the prices of commodities, and that therefore the sum of £3
17s. 10 1/2d. may signify on the one hand an ounce weight of gold, and
on the other, the value of a ton of iron, this reckoning name of money
has been called its mint-price. Hence there sprang up the extraordinary
notion, that the value of gold is estimated in its own material, and that,
in contradistinction to all other commodities, its price is fixed by the
State. It was erroneously thought that the giving of reckoning names to
definite weights of gold, is the same thing as fixing the value of those
weights.” (Karl Marx, l.c., p. 52.)
13. See “Theorien von der Masseinheit
des Geldes” in “Zur Kritik der Poll Oekon. &c.,” p. 53, seq. The fantastic
notions about raising or lowering the mint-price of money by transferring
to greater or smaller weights of gold or silver, the names already legally
appropriated to fixed weights of those metals; such notions, at least in
those cases in which they aim, not at clumsy financial operations against
creditors, both public and private but at economic quack remedies, have
been so exhaustively treated by Wm. Petty in his “Quantulumcunque concerning
money: To the Lord Marquis of Halifax, 1682,” that even his immediate followers,
Sir Dudley North and John Locke, not to mention later ones, could only
dilute him. “If the wealth of a nation” he remarks, “could be decupled
by a proclamation, it were strange that such proclamations have not long
since been made by our Governors.” (l.c., p. 36.)
14. “Ou bien, il faut consentir à dire qu’une valeur d’un million en argent vaut plus qu’une valeur égale en marchandises.” [“Or indeed it must be admitted that a million in money is worth more than an equal value in commodities”] (Le Trosne, l.c., p. 919), which amounts to saying “qu’une valeur vaut plus qu’une valeur égale.” [“that one value is worth more than another value which is equal to it.”]
15. Jerome had to wrestle hard, not
only in his youth with the bodily flesh, as is shown by his fight in the
desert with the handsome women of his imagination, but also in his old
age with the spiritual flesh. “I thought,” he says, “I was in the spirit
before the Judge of the Universe.” “Who art thou?” asked a voice. “I am
a Christian.” “Thou liest,” thundered back the great Judge, “thou art nought
but a Ciceronian.”
16. “ec se tou ... puros t’antameeibesqai panta, jhsin d’Hracleitos, cai pur apantwn, woper crusou crhmata cai crhmatwn crusos.” [“As Heraclitus says, all things are exchanged for fire and fire for all things, as wares are exchanged for gold and gold for wares.”] (F. Lassalle: “Die Philosophie Herakleitos des Dunkeln.” Berlin, 1858, Vol. I, p. 222.) Lassalle in his note on this passage, p. 224, n. 3., erroneously makes gold a mere symbol of value.
17. Note by the Institute of Marxism-Leninism in the Russian edition. — In his letter of November 28, 1878, to N.
F. Danielson (Nikolai-on) Marx proposed that this sentence be corrected
to read as follows: “And, as a matter of fact, the value of each single
yard is but the materialised form of a part of the social labour expended
on the whole number of yards.” An analogous correction was made in a copy
of the second German edition of the first volume of “Capital” belonging
to Marx; however, not in his handwriting.
18. “Toute vente est achat.” [“Every sale is a purchase.”] (Dr. Quesnay: “Dialogues sur le Commerce et les Travaux des Artisans.” Physiocrates ed. Daire I. Partie, Paris, 1846, p. 170), or as Quesnay in his “Maximes générales” puts it, “Vendre est acheter.” [“To sell is to buy.”]
19. “Le prix d’une marchandise ne pouvant
être payé que par le prix d’une autre marchandise” (Mercier
de la Rivière: “L’Ordre naturel et essentiel des sociétés
politiques.” [“The price of one commodity can only be paid by the price of another commodity”] Physiocrates, ed. Daire II. Partie, p. 554.)
20. “Pour avoir cet argent, il faut
avoir vendu,” [“In order to have this money, one must have made a sale,”] l.c., p. 543.
21. As before remarked, the actual producer
of gold or silver forms an exception. He exchanges his product directly
for another commodity, without having first sold it.
22. “Si l’argent représente, dans nos mains, les choses que nous pouvons désirer d’acheter, il y représente aussi les choses que nous avons vendues pour cet argent.” [“If money represents, in our hands, the things we can wish to buy, it also represents the things we have sold to obtain that money”] (Mercier de la Rivière, l.c., p. 586.)
23. “Il y a donc ... quatre termes et
trois contractants, dont l’un intervient deux fois” [“There are therefore ... four terms and three contracting parties, one of whom intervenes twice”] (Le Trosne, l.c., p. 909.)
24. Self-evident as this may be, it
is nevertheless for the most part unobserved by political economists, and
especially by the “Free-trader Vulgaris.”
25. See my observations on James Mill
in “Zur Kritik, &c.,” pp. 74-76. With regard to this subject, we may
notice two methods characteristic of apologetic economy. The first is the
identification of the circulation of commodities with the direct barter
of products, by simple abstraction from their points of difference; the
second is, the attempt to explain away the contradictions of capitalist
production, by reducing the relations between the persons engaged in that
mode of production, to the simple relations arising out of the circulation
of commodities. The production and circulation of commodities are however,
phenomena that occur to a greater or less extent in modes of production
the most diverse. If we are acquainted with nothing but the abstract categories
of circulation, which are common to all these modes of production, we cannot
possibly know anything of the specific points of difference of those modes,
nor pronounce any judgment upon them. In no science is such a big fuss
made with commonplace truisms as in Political Economy. For instance, J.
B. Say sets himself up as a judge of crises, because, forsooth, he knows
that a commodity is a product.
26. Translator’s note. — This word is here used in its original signification of the course or track
pursued by money as it changes from hand to hand, a course which essentially
differs from circulation.
27. Even when the commodity is sold
over and over again, a phenomenon that at present has no existence for
us, it falls, when definitely sold for the last time, out of the sphere
of circulation into that of consumption, where it serves either as means
of subsistence or means of production.
28. “Il (l’argent) n’a d’autre mouvement que celui qui lui est imprimé par les productions.” [“It” (money) “has no other motion than that imparted to it by the products”] (Le Trosne, l.c., p. 885.)
29. “Ce sont les productions qui le
(l’argent) mettent en mouvement et le font circuler ... La célérité
de son mouvement (c. de l’argent) supplée à sa quantité.
Lorsqu’il en est besoin il ne fait que glisser d’une main dans l’autre
sans s’arrêter un instant.” [“It is products which set it” (money) “in motion and make it circulate ... The velocity of its” (money’s) “motion supplements its quantity. When necessary, it does nothing but slide from hand to hand, without stopping for a moment”] (Le Trosne, l.c.. pp. 915, 916.)
30. “Money being ... the common measure
of buying and selling, everybody who hath anything to sell, and cannot
procure chapmen for it, is presently apt to think, that want of money in
the kingdom, or country, is the cause why his goods do not go off; and
so, want of money is the common cry; which is a great mistake... What do
these people want, who cry out for money? ... The farmer complains ...
he thinks that were more money in the country; he should have a price for
his goods. Then it seems money is not his want, but a price for his corn
and cattel, which he would sell, but cannot... Why cannot he get a price?
... (1) Either there is too much corn and cattel in the country, so that
most who come to market have need of selling, as he hath, and few of buying;
or (2) There wants the usual vent abroad by transportation..., or (3) The
consumption fails, as when men, by reason of poverty, do not spend so much
in their houses as formerly they did; wherefore it is not the increase
of specific money, which would at all advance the farmer’s goods, but the
removal of any of these three causes, which do truly keep down the market...
The merchant and shopkeeper want money in the same manner, that is, they
want a vent for the goods they deal in, by reason that the markets fail” ...
[A nation] “never thrives better, than when riches are tost from hand to
hand.” (Sir Dudley North: “Discourses upon Trade,” Lond. 1691, pp. 11-15,
passim.) Herrenschwand’s fanciful notions amount merely to this, that the
antagonism, which has its origin in the nature of commodities, and is reproduced
in their circulation, can be removed by increasing the circulating medium.
But if, on the one hand, it is a popular delusion to ascribe stagnation
in production and circulation to insufficiency of the circulating medium,
it by no means follows, on the other hand, that an actual paucity of the
medium in consequence, e.g., of bungling legislative interference
with the regulation of currency, may not give rise to such stagnation.
31. “There is a certain measure and
proportion of money requisite to drive the trade of a nation, more or less
than which would prejudice the same. Just as there is a certain proportion
of farthings necessary in a small retail trade, to change silver money,
and to even such reckonings as cannot be adjusted with the smallest silver
pieces.... Now, as the proportion of the number of farthings requisite
in commerce is to be taken from the number of people, the frequency of
their exchanges: as also, and principally, from the value of the smallest
silver pieces of money; so in like manner, the proportion of money [gold
and silver specie] requisite in our trade, is to be likewise taken from
the frequency of commutations, and from the bigness of the payments.” (William
Petty, “A Treatise of Taxes and Contributions.” Lond. 1667, p. 17.) The
Theory of Hume was defended against the attacks of J. Steuart and others,
by A. Young, in his “Political Arithmetic,” Lond. 1774, in which work there
is a special chapter entitled “Prices depend on quantity of money, at p.
112, sqq. I have stated in “Zur Kritik, &c.,” p. 149: “He (Adam Smith)
passes over without remark the question as to the quantity of coin in circulation,
and treats money quite wrongly as a mere commodity.” This statement applies
only in so far as Adam Smith, ex officio, treats of money. Now and then,
however, as in his criticism of the earlier systems of Political Economy,
he takes the right view. “The quantity of coin in every country is regulated
by the value of the commodities which are to be circulated by It.... The
value of the goods annually bought and sold in any country requires a certain
quantity of money to circulate and distribute them to their proper consumers,
and can give employment to no more. The channel of circulation necessarily
draws to itself a sum sufficient to fill it, and never admits any more.”
(“Wealth of Nations.” Bk. IV., ch. 1.) In like manner, ex officio, he opens
his work with an apotheosis on the division of labour. Afterwards, in the
last book which treats of the sources of public revenue, he occasionally
repeats the denunciations of the division of labour made by his teacher,
A. Ferguson.
32. “The prices of things will certainly rise in every nation, as the gold and silver increase amongst the people,
and consequently, where the gold and silver decrease in any nation, the
prices of all things must fall proportionately to such decrease of money.”
(Jacob Vanderlint: “Money Answers all Things.” Lond. 1734, p. 5.) A careful
comparison of this book with Hume’s “Essays,” proves to my mind without
doubt that Hume was acquainted with and made use of Vanderlint’s work,
which is certainly an important one. The opinion that prices are determined
by the quantity of the circulating medium, was also held by Barbon and
other much earlier writers. “No inconvenience,” says Vanderlint, “can arise
by an unrestrained trade, but very great advantage; since, if the cash
of the nation be decreased by it, which prohibitions are designed to prevent,
those nations that get the cash will certainly find everything advance
in price, as the cash increases amongst them. And ... our manufactures,
and everything else, will soon become so moderate as to turn the balance
of trade in our favour, and thereby fetch the money back again.” (l.c..
pp. 43, 44.)
33. That the price of each single kind
of commodity forms a part of the sum of the prices of all the commodities
in circulation, is a self-evident proposition. But how use-values which
are incommensurable with regard to each other, are to be exchanged, en
masse for the total sum of gold and silver in a country, is quite incomprehensible.
If we start from the notion that all commodities together form one single
commodity, of which each is but an aliquot part, we get the following beautiful
result: The total commodity = x cwt. of gold; commodity A = an aliquot
part of the total commodity = the same aliquot part of x cwt. of gold. This
is stated in all seriousness by Montesquieu: “Si l’on compare la masse
de l’or et de l’argent qui est dans le monde avec la somme des marchandises
qui s’y vend il est certain que chaque denrée ou marchandise, en particulier,
pourra être comparée à une certaine portion de la masse
entière. Supposons qu’il n’y ait qu’une seule denrée ou marchandise
dans le monde, ou qu’il n’y ait qu’une seule qui s’achète, et qu’elle se divise comme l’argent: Cette partie de cette marchandise répondra
à une partie de la masse de l’argent; la moitié du total
de l’une à la moitié du total de l’autre, &c.... L’établissement
du prix des choses dépend toujours fondamentalement de la raison
du total des choses au total des signes.” [“If one compares the amount of gold and silver in the world with the sum of the commodities available, it is certain that each product or commodity, taken in isolation, could be compared with a certain portion of the total amount of money. Let us suppose that there is only one product, or commodity, in the world, or only one that can be purchased, and that it can be divided in the same way as money: a certain part of this commodity would then correspond to a part of the total amount of money; half the total of the one would correspond to half the total of the other &c. ... the determination of the prices of things always depends, fundamentally, on the relation between the total amount of things and the total amount of their monetary symbols”] (Montesquieu, l.c. t. III, pp.
12, 13.) As to the further development of this theory by Ricardo and his
disciples, James Mill, Lord Overstone, and others, see “Zur Kritik, &c.,”
pp. 140-146, and p. 150, sqq. John Stuart Mill, with his usual eclectic
logic, understands how to hold at the same time the view of his father,
James Mill, and the opposite view. On a comparison of the text of his compendium,
“Principles of Pol. Econ.,” with his preface to the first edition, in which
preface he announces himself as the Adam Smith of his day — we do not
know whether to admire more the simplicity of the man, or that of the public,
who took him, in good faith, for the Adam Smith he announced himself to
be, although he bears about as much resemblance to Adam Smith as say General
Williams, of Kars, to the Duke of Wellington. The original researches of
Mr. J. S. Mill which are neither extensive nor profound, in the domain
of Political Economy, will be found mustered in rank and file in his little
work, “Some Unsettled Questions of Political Economy,” which appeared in
1844. Locke asserts point blank the connexion between the absence of value
in gold and silver, and the determination of their values by quantity alone.
“Mankind having consented to put an imaginary value upon gold and silver
... the intrinsic value, regarded in these metals, is nothing but the quantity."
(“Some Considerations,” &c., 1691, Works Ed. 1777, Vol. II.,
p. 15.)
34. It lies of course, entirely beyond
my purpose to take into consideration such details as the seigniorage on
minting. I will, however, cite for the benefit of the romantic sycophant,
Adam Muller, who admires the “generous liberality” with which the English
Government coins gratuitously, the following opinion of Sir Dudley North:
“Silver and gold, like other commodities, have their ebbings and flowings.
Upon the arrival of quantities from Spain ... it is carried into the Tower,
and coined. Not long after there will come a demand for bullion to be exported
again. If there is none, but all happens to be in coin, what then? Melt
it down again; there’s no loss in it, for the coining costs the owner nothing.
Thus the nation has been abused, and made to pay for the twisting of straw
for asses to eat. If the merchant were made to pay the price of the coinage,
he would not have sent his silver to the Tower without consideration, and
coined money would always keep a value above uncoined silver.” (North,
l.c., p. 18.) North was himself one of the foremost merchants in the reign
of Charles II.
35. “If silver never exceed what is
wanted for the smaller payments it cannot be collected in sufficient quantities
for the larger payments ... the use of gold in the main payments necessarily
implies also its use in the retail trade: those who have gold coin
offering them for small purchases, and receiving with the commodity purchased
a balance of silver in return; by which means the surplus of silver that
would otherwise encumber the retail dealer, is drawn off and dispersed
into general circulation. But if there is as much silver as will transact
the small payments independent of gold, the retail trader must then receive
silver for small purchases, and it must of necessity accumulate in his
hands.” (David Buchanan; “Inquiry into the Taxation and Commercial Policy
of Great Britain.” Edinburgh, 1844, pp. 248, 249.)
36. The mandarin Wan-mao-in, the Chinese
Chancellor of the Exchequer, took it into his head one day to lay before
the Son of Heaven a proposal that secretly aimed at converting the assignats
of the empire into convertible bank-notes. The assignats Committee, in
its report of April, 1854, gives him a severe snubbing. Whether he also
received the traditional drubbing with bamboos is not stated. The concluding
part of the report is as follows: — “The Committee has carefully examined
his proposal and finds that it is entirely in favour of the merchants,
and that no advantage will result to the crown.” (“Arbeiten der Kaiserlich
Russischen Gesandtschaft zu Peking über China.” Aus dem Russischen
von Dr. K. Abel und F. A. Mecklenburg. Erster Band. Berlin, 1858, p. 47
sq.) In his evidence before the Committee of the House of Lords on the
Bank Acts, a governor of the Bank of England says, with regard to the abrasion
of gold coins during currency: “Every year a fresh class of sovereigns
becomes too light. The class which one year passes with full weight, loses
enough by wear and tear to draw the scales next year against it.” (House
of Lords’ Committee, 1848, n. 429.)
37. The following passage from Fullarton
shows the want of clearness on the part of even the best writers on money,
in their comprehension of its various functions: “That, as far as concerns
our domestic exchanges, all the monetary functions which are usually performed
by gold and silver coins, may be performed as effectually by a circulation
of inconvertible notes, having no value but that factitious and conventional
value they derive from the law, is a fact which admits, I conceive, of no
denial. Value of this description may be made to answer all the purposes
of intrinsic value, and supersede even the necessity for a standard, provided
only the quantity of the issues be kept under due limitation.” (Fullarton:
“Regulation of Currencies,” London, 1845, p. 21.) Because the commodity
that serves as money is capable of being replaced in circulation by mere
symbols of value, therefore its functions as a measure of value and a standard
of prices are declared to be superfluous!
38. From the fact that gold and silver,
so far as they are coins, or exclusively serve as the medium of circulation,
become mere tokens of themselves, Nicholas Barbon deduces the right of
Governments “to raise money,” that is, to give to the weight of silver
that is called a shilling the name of a greater weight, such as a crown;
and so to pay creditors shillings, instead of crowns. “Money does wear
and grow lighter by often telling over... It is the denomination and currency
of the money that men regard in bargaining, and not the quantity of silver...’Tis
the public authority upon the metal that makes it money.” (N. Barbon, l.c., pp. 29, 30, 25.)
39. “Une richesse en argent n’est que ... richesse en productions, converties en argent.” [“Monetary wealth is nothing but ... wealth in products, transformed into money”] (Mercier de la Rivière,
l.c.) “Une valeur en productions n’a fait que changer de forme.” [“A value in the form of products, which has merely changed its form.”] (Id., p. 486.)
40. “’Tis by this practice’ they keep all their goods and manufactures at such low rates.” (Vanderlint, l.c.,
pp. 95, 96.)
41. “Money ... is a pledge.” (John Bellers: “Essays about the Poor, Manufactures, Trade, Plantations, and Immorality,” Lond., 1699, p. 13.)
42. A purchase in a “categorical” sense,
implies that gold and silver are already the converted form of commodities,
or the product of a sale.
43. Henry III., most Christian king
of France, robbed cloisters of their relics, and turned them into money.
It is well known what part the despoiling of the Delphic Temple, by the
Phocians, played in the history of Greece. Temples with the ancients served
as the dwellings of the gods of commodities. They were “sacred banks.”
With the Phoenicians, a trading people par excellence, money was the transmuted
shape of everything. It was, therefore, quite in order that the virgins,
who, at the feast of the Goddess of Love, gave themselves up to strangers,
should offer to the goddess the piece of money they received.
43a.
“Gold, yellow, glittering, precious gold!
Thus much of this, will make black white; foul, fair;
Wrong, right; base, noble; old, young; coward, valiant.
... What this, you gods? Why, this
Will lug your priests and servants from your sides;
Pluck stout men’s pillows from below their heads;
This yellow slave
Will knit and break religions; bless the accurs’d;
Make the hoar leprosy ador’d; place thieves,
And give them title, knee and approbation,
With senators on the bench; this is it,
That makes the wappen’d widow wed again:
... Come damned earth,
Though common whore of mankind.”
(Shakespeare: Timon of Athens.)
43b.
Money! Nothing worse
in our lives, so current, rampant, so corrupting.
Money — you demolish cities, root men from their homes,
you train and twist good minds and set them on
to the most atrocious schemes. No limit,
you make them adept at every kind of outrage,
every godless crimes — money!”
(Sophocles, Antigone.)
44. “The desire of avarice to draw Pluto himself out of the bowels of the earth.” (The Deipnosophists, VI, 23, Athenaeus)
45. “Accrescere quanto più si può il numero de’venditori d’ogni merce, diminuere quanto più si puo il numero dei compratori, questi sono i cardini sui quali si raggirano tutte le operazioni di economia politica.” [“These are the pivots around which all the measures of political economy turn: the maximum possible increase in the number of sellers of each commodity, and the maximum possible decrease in the number of buyers”] (Verri, l.c., p. 52.)
46. “There is required for carrying
on the trade of the nation a determinate sum of specifick money which varies,
and is sometimes more, sometimes less, as the circumstances we are in require....
This ebbing and flowing of money supplies and accommodates itself, without
any aid of Politicians.... The buckets work alternately; when money is
scarce, bullion is coined; when bullion is scarce, money is melted.” (Sir
D. North, l.c., Postscript, p. 3.) John Stuart Mill, who for a long time
was an official of the East India Company, confirms the fact that in India
silver ornaments still continue to perform directly the functions of a
hoard. The silver ornaments are brought out and coined when there is a
high rate of interest, and go back again when the rate of interest falls.
(1. S. Mill’s Evidence “Reports on Bank Acts,” 1857, 2084.) According to
a Parliamentary document of 1864 on the gold and silver import and export
of India, the import of gold and silver in 1863 exceeded the export by
£19,367,764. During the 8 years immediately preceding 1864, the excess
of imports over exports of the precious metals amounted to £109,652,917.
During this century far more than £200,000,000 has been coined in
India.
47. The following shows the debtor and
creditor relations existing between English traders at the beginning of
the 18th century. “Such a spirit of crudity reigns here in England among
the men of trade, that is not to be met with in any other society of men,
nor in any other kingdom of the world.” (“An Essay on Credit and the Bankrupt
Act,” Lond., 1707, p. 2.)
48. It will be seen from the following
quotation from my book which appeared in 1859, why I take no notice in
the text of an opposite form: “Contrariwise, in the process in M—C, the
money can be alienated as a real means of purchase, and in that way, the
price of the commodity can be realised before the use-value of the money
is realised and the commodity actually delivered. This occurs constantly
under the every-day form of prepayments. And it is under this form, that
the English government purchases opium from the ryots of India.... In these
cases, however, the money always acts as a means of purchase.... Of course
capital also is advanced in the shape of money.... This point of view,
however, does not fall within the horizon of simple circulation.” (“Zur
Kritik, &c.,” pp. 119, 120.)
49. The monetary crisis referred to
in the text, being a phase of every crisis, must be clearly distinguished
from that particular form of crisis, which also is called a monetary crisis,
but which may be produced by itself as an independent phenomenon in such
a way as to react only indirectly on industry and commerce. The pivot of
these crises is to be found in moneyed capital, and their sphere of direct
action is therefore the sphere of that capital, viz., banking, the stock
exchange, and finance.
50. “The sudden reversion from a system
of credit to a system of hard cash heaps theoretical fright on top of the
practical panic; and the dealers by whose agency circulation is affected,
shudder before the impenetrable mystery in which their own economic relations
are involved” (Karl Marx, l.c., p. 126.) “The poor stand still, because
the rich have no money to employ them, though they have the same land and
hands to provide victuals and clothes, as ever they had; ...which is the true riches of a nation, and not the money.” John Bellers, Proposals for Raising a College of Industry, London, 1696, p3.
51. The following shows how such times
are exploited by the “amis du commerce.” “On one occasion (1839) an old
grasping banker (in the city) in his private room raised the lid of the
desk he sat over, and displayed to a friend rolls of bank-notes, saying
with intense glee there were £600,000 of them, they were held to
make money tight, and would all be let out after three o’clock on the same
day.” (“The Theory of Exchanges. The Bank Charter Act of 1844.” Lond. 1864,
p. 81). The Observer, a semi-official government organ, contained
the following paragraph on 24th April, 1864: “Some very curious rumours
are current of the means which have been resorted to in order to create
a scarcity of banknotes.... Questionable as it would seem, to suppose that
any trick of the kind would be adopted, the report has been so universal
that it really deserves mention.”
52. “The amount of purchases or contracts entered upon during the course of any given day, will not affect the quantity
of money afloat on that particular day, but, in the vast majority of cases,
will resolve themselves into multifarious drafts upon the quantity of money
which may be afloat at subsequent dates more or less distant.... The bills
granted or credits opened, to-day, need have no resemblance whatever, either
in quantity, amount or duration, to those granted or entered upon to-morrow
or next day, nay, many of today’s bills, and credits, when due, fall in
with a mass of liabilities whose origins traverse a range of antecedent
dates altogether indefinite, bills at 12, 6, 3 months or 1 often aggregating
together to swell the common liabilities of one particular day....” (“The
Currency Theory Reviewed; in a Letter to the Scottish People.” By a Banker
in England. Edinburgh, 1845, pp. 29, 30 passim.)
53. As an example of how little ready
money is required in true commercial operations, I give below a statement
by one of the largest London houses of its yearly receipts and payments.
Its transactions during the year 1856, extending to many millions of pounds
sterling, are here reduced to the scale of one million.
Receipts.Payments.
Bankers’ and Merchants’£533,596Bills payable after date£302,674
Cheques on Bankers, &c. payable on demand357,715Cheques on London Bankers663,672
Country Notes9,627Bank of England Notes22,743
Bank of England Notes68,554Gold9,427
Gold28,089Silver and Copper1,484
Silver and Copper1,486
Post Office Orders933
Total £1,000,000Total £1,000,000
“Report from the Select Committee on the Bank Acts, July, 1858,” p. lxxi.
54. “The course of trade being thus
turned, from exchanging of goods for goods, or delivering and taking, to
selling and paying, all the bargains ... are now stated upon the foot of
a Price in money.” (“An Essay upon Publick Credit.” 3rd Ed. Lond., 1710,
p. 8.)
55. “L’argent ... est devenu le bourreau de toutes choses.” Finance is the “alambic, qui a fait évaporer
une quantité effroyable de biens et de denrées pour faire ce fatal
précis.” “L’argent déclare la guerre à tout le genre
humain.” [“Money ... has become the executioner of all things.” Finance is the “alembic that evaporates a frightful quantity of goods and commodities in order to obtain this fatal extract.” “Money [...] declares war [...] on the whole human race”] (Boisguillebert: “Dissertation sur la nature des richesses, de l’argent et des tributs.” Edit. Daire. Economistes financiers. Paris, 1843, t. i., pp. 413, 419, 417.)
56. “On Whitsuntide, 1824,” says Mr. Craig before the Commons’ Committee of 1826, “there was such an immense
demand for notes upon the banks of Edinburgh, that by 11 o’clock they had
not a note left in their custody. They sent round to all the different
banks to borrow, but could not get them, and many of the transactions were
adjusted by slips of paper only; yet by three o’clock the whole of the
notes were returned into the banks from which they had issued! It was a
mere transfer from hand to hand. “Although the average effective circulation
of bank-notes in Scotland is less than three millions sterling, yet on
certain pay days in the year, every single note in the possession of the
bankers, amounting in the whole to about £7,000,000, is called into
activity. On these occasions the notes have a single and specific function
to perform, and so soon as they have performed it, they flow back into the
various banks from which they issued. (See John Fullarton, “Regulation
of Currencies.” Lond. 1845, p. 86, note.) In explanation it should be stated,
that in Scotland, at the date of Fullarton’s work, notes and not cheques
were used to withdraw deposits.
57. Note by the Institute of Marxism-Leninism in the Russian edition: Apparently a slip of the pen. When writing
inverse the author evidently meant direct.
58. To the question, “If there were
occasion to raise 40 millions p. a., whether the same 6 millions (gold)
... would suffice for such revolutions and circulations thereof, as trade
requires,” Petty replies in his usual masterly manner, “I answer yes: for
the expense being 40 millions, if the revolutions were in such short circles,
viz., weekly, as happens among poor artisans and labourers, who receive
and pay every Saturday, then 40/52 parts of 1 million of money would answer
these ends, but if the circles be quarterly, according to our custom of
paying rent, and gathering taxes, then 10 millions were requisite. Wherefore,
supposing payments in general to be of a mixed circle between one week
and 13, then add 10 millions to 40/52, the half of which will be 5 1/2,
so as if we have 5 1/2 millions we have enough.” (William Petty: “Political
Anatomy of Ireland.” 1672, Edit.: Lond. 1691, pp. 13, 14.)
59. Hence the absurdity of every law
prescribing that the banks of a country shall form reserves of that precious
metal alone which circulates at home. The “pleasant difficulties” thus
self-created by the Bank of England, are well known. On the subject of
the great epochs in the history of the changes in the relative value of
gold and silver, see Karl Marx, l.c., p. 136 sq. Sir Robert Peel, by his
Bank Act of 1844, sought to tide over the difficulty, by allowing the Bank
of England to issue notes against silver bullion, on condition that the
reserve of silver should never exceed more than one-fourth of the reserve
of gold. The value of silver being for that purpose estimated at its price
in the London market.
[Added in the 4th German edition. — We find ourselves once
more in a period of serious change in the relative values of gold and silver.
About 25 years ago the ratio expressing the relative value of gold and
silver was 15-1/2:1; now it is approximately 22:1, and silver is still
constantly falling as against gold. This is essentially the result of a
revolution in the mode of production of both metals. Formerly gold was
obtained almost exclusively by washing it out from gold-bearing alluvial
deposits, products of the weathering of auriferous rocks. Now this method
has become inadequate and has been forced into the background by the processing
of the quartz lodes themselves, a way of extraction which formerly was
only of secondary importance, although well known to the ancients (Diodorus,
III, 12-14) (Diodor’s v. Sicilien “Historische Bibliothek,” book III, 12-14.
Stuttgart 1828, pp. 258-261). Moreover, not only were new huge silver deposits
discovered in North America, in the Western part of the Rocky Mountains,
but these and the Mexican silver mines were really opened up by the laying
of railways, which made possible the shipment of modern machinery and fuel
and in consequence the mining of silver on a very large scale at a low
cost. However there is a great difference in the way the two metals occur
in the quartz lodes. The gold is mostly native, but disseminated throughout
the quartz in minute quantities. The whole mass of the vein must therefore
be crushed and the gold either washed out or extracted by means of mercury.
Often 1,000,000 grammes of quartz barely yield 1-3 and very seldom 30-60
grammes of gold. Silver is seldom found native, however it occurs in special
quartz that is separated from the lode with comparative ease and contains
mostly 40-90% silver; or it is contained, in smaller quantities, in copper,
lead and other ores which in themselves are worthwhile working. From this
alone it is apparent that the labour expended on the production of gold
is rather increasing while that expended on silver production has decidedly
decreased, which quite naturally explains the drop in the value of the
latter. This fall in value would express itself in a still greater fall
in price if the price of silver were not pegged even to-day by artificial
means. But America’s rich silver deposits have so far barely been tapped,
and thus the prospects are that the value of this metal will keep on dropping
for rather a long time to come. A still greater contributing factor here
is the relative decrease in the requirement of silver for articles of general
use and for luxuries, that is its replacement by plated goods, aluminium,
etc. One may thus gauge the utopianism of the bimetallist idea that compulsory
international quotation will raise silver again to the old value ratio
of 1:15-1/2. It is more likely that silver will forfeit its money function
more and more in the markets of the world. — F E.]
60. The opponents, themselves, of the
mercantile system, a system which considered the settlement of surplus
trade balances in gold and silver as the aim of international trade, entirely
misconceived the functions of money of the world. I have shown by the example
of Ricardo in what way their false conception of the laws that regulate
the quantity of the circulating medium, is reflected in their equally false
conception of the international movement of the precious metals (l.c.,
pp. 150 sq.). His erroneous dogma: “An unfavourable balance of trade never
arises but from a redundant currency.... The exportation of the coin is
caused by its cheapness, and is not the effect, but the cause of an unfavourable
balance,” already occurs in Barbon: “The Balance of Trade, if there be
one, is not the cause of sending away the money out of a nation; but that
proceeds from the difference of the value of bullion in every country.”
(N. Barbon; l.c., pp. 59, 60.) MacCulloch in “The Literature of Political
Economy, a classified catalogue, Lond. 1845,” praises Barbon for this anticipation,
but prudently passes over the naive forms, in which Barbon clothes the
absurd supposition on which the “currency principle” is based. The absence
of real criticism and even of honesty, in that catalogue culminates in
the sections devoted to the history of the theory of money; the reason
is that MacCulloch in this part of the work is flattering Lord Overstone
whom he calls “facile princeps argentanorum.”
61. For instance, in subsidies, money
loans for carrying on wars or for enabling banks to resume cash payments,
&c., it is the money-form, and no other, of value that may be wanted.
62. “I would desire, indeed, no more
convincing evidence of the competency of the machinery of the hoards in
specie-paying countries to perform every necessary office of international
adjustment, without any sensible aid from the general circulation, than
the facility with which France, when but just recovering from the shock
of a destructive foreign invasion, completed within the space of 27 months
the payment of her forced contribution of nearly 20 millions to the allied
powers, and a considerable proportion of the sum in specie, without any
perceptible contraction or derangement of her domestic currency, or even
any alarming fluctuation of her exchanges.” (Fullerton, l.c., p. 141.)
[Added in the 4th German edition. — We have a still more striking
example in the facility with which the same France was able in 1871-73
to pay off within 30 months a forced contribution more than ten times as
great, a considerable part of it likewise in specie. — F. E.]
63. “L’argent se partage entre les nations relativement au besoin qu’elles en ont ... étant toujours attiré
par les productions.” [“Money is shared among the nations in accordance with their need for it ... as it is always attracted by the products”] (Le Trosne, l.c., p. 916.) “The mines which are continually giving gold and silver, do give sufficient to supply such a needful balance to every nation.”
(J. Vanderlint, l.c., p. 40.)
64. “Exchanges rise and fall every week, and at some particular times in the year run high against a nation, and
at other times run as high on the contrary.” (N. Barbon, l.c., p. 39)
65. These various functions are liable
to come into dangerous conflict with one another whenever gold and silver
have also to serve as a fund for the conversion of bank-notes.
66. “What money is more than of absolute
necessity for a Home Trade, is dead stock ... and brings no profit to that
country it’s kept in, but as it is transported in trade, as well as imported.”
(John Bellers, “Essays,” p. 13.) “What if we have too much coin? We may
melt down the heaviest and turn it into the splendour of plate, vessels
or utensils of gold or silver, or send it out as a commodity, where the
same is wanted or desired; or let it out at interest, where interest is
high.” (W. Petty: “Quantulumcunque,” p. 39.) “Money is but the fat of the
Body Politick, whereof too much doth as often hinder its agility, as too
little makes it sick ... as fat lubricates the motion of the muscles, feeds
in want of victuals, fills up the uneven cavities, and beautifies the body;
so doth money in the state quicken its action, feeds from abroad in time
of dearth at home, evens accounts ... and beautifies the whole; altho more
especially the particular persons that have it in plenty.” (W. Petty, “Political
Anatomy of Ireland,” p. 14.)
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