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[7]
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
[1] "Monetary wealth is nothing but ... wealth in products, transformed into money" (Mercier de la Rivière, 1. c. [p. 573]). "A value in the form of product, which has merely changed its form" (ibid., p. 486).
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 naïve 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. ' ' [8] 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.[1]' 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 ' ' [9]
or the social pledge.[2]' 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).[3]' And subsequent sales, by other producers, unfol-lowed 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 sacrosanctœ, extra commercium hominuma 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[85] that it is, does away with all distinctions.[21] But money itself is
" Henry III, most Christian king of France, robbed cloisters of their relics, and turned them into money.[120] It is well known what part the despoiling of the Delphic Temple, by the Phocians, played in the history of Greece.[121] 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.
[2] "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."
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." Modern society, which, soon after its birth, pulled Plutus by the hair of his head from the bowels of the earth,[2]' greets gold as its Holy Grail,[122] 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
[1] "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 crime — money!"
(Sophocles, Antigone [lines 295-301]). (1)
[21] "Avarice hopes to drag Pluto himself out of the bowels of the earth" (Athenaeus, Deipnos[ophistae], 1. VI, 23, Vol. 2, ed. Schweighäuser, p. 397).
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.[1]'
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).[123] 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 sat-urate 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.[1]'
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
" "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 accommo-dates 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, 1. c, Postscript, p. III). John Stuart Mill, who for a long time was an official of the East India Company.[12]* 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" (J. S. Mill's Evidence. "Reports on Bank Acts", 1857, 2084 [,2101]). According to a Parliamentary document of 1864, on the gold and silver import and export of India,[125] 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.
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.(1)
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.[1]' 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 commod-
[1] The following shows the debtor and creditor relations existing between English traders at the beginning of the 18th century. "Such a spirit of cruelty 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, London, 1707, p. 2).
ity 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.[1]'
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 (2) necessary to realise this sum, depends, in the first instance, on the rapidity of currency of the means
[11] 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 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 everyday form of pre-payments. 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 [present edition, Vol. 29, pp. 372-73]).
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 médius. 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.(3) Such a crisis occurs only where the ever-
' 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 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.[126] Commodities alone are money. But now the cry is everywhere: money alone is a commodity! As the hart pants after fresh water,[12]' 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 banknotes.[2]'
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
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.
[11] "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, 1. c, p. 126 [present edition, Vol. 29, pp. 378-79]). "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, [p]p. 3 [-4].
[21] 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 banknotes, 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" ([H. Roy,] The Theory of the Exchanges. The Bank Charter Act of 1844, London, 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" [1. c , p. 236].
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.[3] 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.[1]'
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.(4)'
When the production of commodities has sufficiently extended itself, money begins to serve as the means of payment beyond the
[1] "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, today, 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.)
[21] 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.
sphere of the circulation of commodities. It becomes the commodity that is the universal subject-matter of all contracts.[1]' 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,[128] and others, was due not only to the weight of the taxes, but also to the conversion of taxes in kind into money taxes.[2]' 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
Receipts Payments
Bankers' and Merchants' Bills payable after date £302,674 Bills payable after
£533,596 Cheques on London Bankers Cheques on Bankers, &c,
£533,596 Cheques on London Bankers 663,672 payable on demand 357,715 Bank of England Country Notes 9,627 Notes 22,743 Bank of England Notes 68,554 Gold 9,427 Gold 28,089 Silver and Copper . . . 1,484 Silver and Copper . . . 1,486 Post Office Orders . . . 933
Total £1,000,000 Total £1,000,000
Report from the Select Committee on the Bank Acts, July, 1858, p. lxxi. " "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" ([D. Defoe,] An Essay upon Publick Credit, 3rd Ed., London, 1710, p. 8).
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.[1]'
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 [129] to the length of their periods.[25]
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
[1] "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 banknotes 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, [On the] Regulation of Currencies, London, 1844, p. 85, 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.
[1] 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 J^ 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 j~2 > the half of which will be 5^, so as if we have 5~y millions we have enough" (William Petty, Political Anatomy of Ireland, 1672, Edit.: London, 1691, pp. 13, 14).[130]
c. Universal Money
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.'
[1] Hence the absurdity of every law prescribing that the banks of a country shall form reserves ofthat precious metal alone which circulates at home. The "pleasant difficulties" ' (1) ' 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, 1. c, p. 136 sq. [present edition, Vol. 29, p. 387 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 [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 pro-cessing 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. 258-61]. 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 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 watch-word of the mercantilists, balance of trade." Gold and silver serve as
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 today 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 ' 3 Z that compulsory international quotation will raise silver again to the old value ratio of 1 : 154-. It is more likely that silver will forfeit its money function more and more in the markets of the world.— F. E.jj
[1] The opponents, themselves, of the mercantile system,[61] 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 (1. c., pp. 150 sq. [present edition, Vol. 29, p. 399 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," [133] 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, 1. c, pp. 59, 60). MacCulloch in The Literature of Political Economy: A Classified Catalogue, London, 1845 [p. 157], praises Barbon for this anticipation, but prudently passes over the naive forms, in which Barbon clothes the absurd supposition on which the "currency principle" [134] 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 argentariorum" (2)
[I.e., p. 181].
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.[1]'
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.[21] 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".[135]
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.[3]' This first current is started
" 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.
T> "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" (Fullarton, I.e., p. 131).// 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.// 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.[2] 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.[3]
[1] "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,
1. c, p. 39).
[2] 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 banknotes.
[3] "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 vic-tuals, 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]p. 14 [, 15]).[130]
Endnotes
[7] The Civil War in America broke out in April 1861 and ended in April 1865. It was a war of the North against the Confederacy of the Southern States. The decisive role in the victory of the North in April 1865 was played by the workers and farmers. The international democratic public and the international working-class movement sympathised with and gave all possible support to the position of the Northern States.—9, 207, 262, 398, 540, 720, 760
[8] The Established Church — the state national church in England, the Church of England. The Thirty-Nine Articles, which enunciated the articles of faith of the Church of England, were worked out during the reign of Elizabeth I (1558-1603) and approved by the British Parliament in 1571.— 10
[9] Blue-Books — periodical collections of documents of the British Parliament and Foreign Office, thus called because of the colour of the paper and the cover. The first were published in the 17th century.—10, 29, 30, 260, 498, 670
[85] Levellers—representatives of a radical-democratic trend during the English revolution of the mid-17th century. Here Marx hints at the circumstance that commodities as values are equal and in that sense reflect the ideal of the Levellers, who wanted to remove all social inequalities.— 95
[120] See M. Augier, Du crédit public et de son histoire depuis les temps anciens jusqu'à nos jours, Paris, 1842, pp. 106-08.
[121] Most Christian king (Le Roi très chrétien) — the official title of the kings of France. — 142 12 ' The despoiling of the Delphic Temple by the Phocians in 355 B. C. served as a pretext for the beginning of the war, which lasted for 10 years and ended in the conquest by Philip II of Macedon of vast territories in the Balkans.— 142
[122] The Holy Grail—according to a medieval legend, the cup used by Christ at the Last Supper, the object of quests by mythical figures.— 143
[123] "Soyons riches ou paraissons riches" ("Let us be rich or let us appear rich") (D. Diderot, Le salon de 1767, d mon ami M. Grimm).—144
[125] "East India (Bullion). Return to an Address of the Honourable the House ofCommons, dated 8 February 1864", p. 3.—145
[126] See F. von Schiller, Die Bürgschaft.— 149
[128] See [P.] Boisguillebert, Le détail de la France and Dissertation sur la nature des richesses... In: Economistes financiers..., Paris, 1843; [S. le Prestre de] Vauban, Projet d'une dîme royale. In: Economistes financiers..., Paris, 1843.— 151
[129] Apparently this is a slip of the pen by Marx: the quantity of the necessary means of periodic payment is not in inverse but in direct proportion to the length of the periods. It is this dependence which Petty establishes and Marx refers to him in footnote 2. See also this volume, p. 130.—152
[25] "German Literature". In: The Saturday Review of Politics, Literature, Science, and Art, No. 638, January 18, 1868, p. 97.—16
[61] Mercantilism—the first school of bourgeois political economy, theoretically sub-stantiating the economic policy defended by the trade bourgeoisie. Mercantilists equated wealth with money and called for active interference by the state in the economic life. For Marx's comments on Ferrier's and Ganilh's mercantilist views on value see the Economic Manuscript of 1861-63 (present edition, Vol. 31, pp. 97-103, 151). — 71, 154
[133] Marx quotes Ricardo's book The High Price of Bullion, a Proof of the Depreciation of Bank Notes, 4th ed., London, 1811, pp. 11-12, 14.—154
[134] The currency principle — one of the schools of the quantity theory of money widely subscribed to in Britain in the first half of the 19th century. The proponents of the quantity theory sought to maintain the stability of money circulation by means of obligatory gold backing of bank notes. Marx showed the untenability of the currency principle in A Contribution to the Critique of Political Economy (present edition, Vol. 29, pp. 412-15).—154, 615
[135] J. Steuart, An Inquiry into the Principles of Political Oeconomy..., Vol. II, Dublin, 1770, p. 370. Cf. K. Marx, A Contribution to the Critique of Political Economy (present edition, Vol. 29, p. 398).—155
[1] Capital—Marx's major work to which he devoted four decades (from the early 1840s till the end of his life). Marx started studying political economy at the end of 1843 in Paris. His aim was to write a treatise containing a critical analysis of political economy. As a result of his research in this field appeared such works as the Economic and Philosophic Manuscripts of 1844, The German Ideology, The Poverty of Philosophy, Wage Labour and Capital, Manifesto of the Communist Party and others. After an interval caused by the 1848-49 revolution, Marx continued his economic studies in London, where he lived as a refugee from August 1849. Here he studied the works of different economists, the history of economic development and the economics of his time in various countries, especially in England which was then a classic example of a capitalist country. He investigated theories of money, credit and the causes of economic crises, the history of landownership and the theory of ground rent, the socio-economic condition of the working class and questions of population, the history of technology and other problems. -By 1857 he had completed his enormous preparatory work and then proceeded to the final stage — the systématisation and generalisation of the collected material. From January 1857 to June 1858, Marx wrote a manuscript containing 50 signatures, which was, in fact, the first rough draft of Capital. In the present edition it was published in vols 28 and 29. At first Marx intended to publish his work in separate instalments, and the first instalment, as he wrote, "should form a relative whole" (see present edition, Vol. 40, p. 287), which embraces only the first section of Book I — the section consisting of 3 chapters: 1) The Commodity; 2) Money or Simple Circulation and 3) Capital. However, the final variant of the first instalment — A Contribution to the Critique of Political Economy — does not contain the third chapter. Marx wrote the chapter on commodity especially. He wrote the chapter on money for "the first instalment" on the basis of the manuscript of 1857-58. A Contribution to the Critique of Political Economy. Part One was published in 1859 (present edition, Vol. 29). It was to be followed by "the second instalment", i. e. by the chapter on capital. However, soon afterwards, Marx had to postpone this work for a year and a half as he was occupied in writing the pamphlet Herr Vogt (present edition, Vol. 17) and in other urgent matters. Only in August 1861, did he begin work on "the second instalment". By the middle of 1863, he had written a new rough draft which was considerably longer than the manuscript of 1857-58 — 23 notebooks, having a total volume of about 200 signatures. The complete manuscript of 1861-63, which is considered to be the second rough draft of Capital, is reproduced in vols 30-34 of the present edition. Later on Marx decided to divide the theoretical part of the work on capital into 3 parts. The historico-critical section was to be the fourth and concluding part, and was to be based on the part of the 1861-63 manuscript entitled "Theories of Surplus Value". In his letter to Kugelmann dated October 13, 1866, Marx writes, "The whole work is thus divided into the following parts: Book I. The Process of Production of Capital. Book II. The Process of Circulation of Capital. Book III. Structure of the Process as a Whole. Book IV. On the History of the Theory" (see present edition, Vol. 42, p. 328). Marx also gave up his plan to publish the work in separate instalments and decided first to complete the whole work and then to publish it. Marx continued his work, concentrating mainly on those parts that were not sufficiently elaborated in the 1861-63 manuscript. He studied an enormous quantity of economic and technical literature, including books on agriculture, on credit and money and turnover. He also studied statistical material, various parliamentary documents, official reports on child labour in industry, on housing conditions of the British working class, etc. Marx then wrote a new manuscript (from August 1863 to the end of 1865), which constituted a more detailed variant of the three theoretical volumes of Capital. Only after the whole work was completed (January 1866), did Marx begin preparing it for the press, having decided, on Engels' advice, not to prepare the whole work but only Volume I of Capital. The final touches were made by Marx with great thoroughness and, in fact, became yet another recasting of Volume I of Capital as a whole. To ensure the integrity, completeness and clarity of the exposition, Marx thought it necessary to reproduce in a comparatively short form the major problems dealt with in A Contribution to the Critique of Political Economy (published in 1859) at the beginning of Volume I of Capital—they now constitute the whole of the first part "Commodities and Money" (in the first edition which was not yet subdivided into parts the first chapter bore this title). After the publication of Volume I of Capital (September 1867), Marx continued work on it in preparation for publication in German and translation into foreign lan-guages. For the second edition (1872) he made more subdivisions and also a lot of changes in the text (see this volume, pp. 12-13), gave important instructions for the Russian edition, published in Petersburg in 1872 and the first foreign translation of Capital, once more changed the book's structure and thoroughly edited the French edition (1872-75). Marx intended to take into consideration most of the changes made in the French edition when preparing the third German edition of Volume I. At the same time, after the publication of Volume I of Capital Marx continued his work on the subsequent volumes, intending to finish the whole edition as soon as possible. However, he was unable to do so. A lot of time was taken up by his activities in the General Council of the First International, and his work was increasingly hampered by poor health. After Marx's death, Engels finished preparing the third (1883) German edition of Volume I of Capital for press, which was taken as the basis for the translation into English made by Samuel Moore and Eduard Aveling and edited by Engels (1887).— 1,311
[2] Marx is referring to the sections "Historical Notes on the Analysis of Commodities" and "Theories of the Medium of Circulation and of Money" in A Contribution to the Critique of Political Economy. Part One (present edition, Vol. 29, pp. 292-302, 389-417), which he later abandoned as he intended to prepare a special historico-critical concluding volume of Capital (see Note 1).— 7, 532
[3] A reference to Lassalle's work Herr Bastiat-Schulze von Delitzsch der ökonomische Julian, oder: Capital und Arbeit, Berlin, 1864, Drittes Kapitel: "III. Tausch, Werth und freie Concurrenz", especially p. 149.— 8
[21] The Anti-Corn Law League was founded in 1838 by the Manchester factory owners Cobden and Bright. Defending the interests of manufacturers, the League secured the repeal of the Corn Laws which provided for the limitation and prohibition of grain imports, which served the interests of the landed aristocracy. The Corn Law adopted in 1815 prohibited the import of corn while the price of bread in England itself remained less than 80 sh. per quarter. In 1822 this law was slightly altered, and in 1828 a sliding scale was introduced, according to which there was a rise in import duties on corn when its price fell on the home market and vice versa. Trying to achieve the repeal of corn laws and to establish trade in corn, the League aimed at reducing domestic prices for corn and thus at reducing wages for wage-workers.The slogan of free trade was widely used by the League in its advocacy of the unity of interests of workers and manufacturers. The Corn Laws were repealed in 1846.'— 15, 296, 458, 462, 667, 703
[12] "Segui il tuo corso, e lascia dir le genti" ("Follow your own course, and let people talk") — Marx paraphrased Dante's words from the Divine Comedy ("Purgatory", Canto V, line 13): "Vien di retro a me..." ("Follow me...").— 11
[11] 1 ' The plan outlined here was not realised by Marx. The work referred to here as Book II, was published by Engels as Volume II of Capital (1885) after Marx's death, and Book III as Volume III of Capital (1894). Book IV was not published in Marx's or Engels' lifetime. See also Note 2.— 11, 565
[130] i3o Marx quotes from W. Petty's Verbum Sapienti, which was published as a supplement to his book The Political Anatomy of Ireland, London, 1691, and which had its own pagination.— 152, 156, 278