A Contribution to the Critique of Political Economy/Chapter 2/Section 3

by Karl Marx

 

3. MONEY.

Money as distinguished from coin, the result of the circulation process C—M—C, forms the starting point of the circulation process M—C—M, i. e. the exchange of money for commodity in order to exchange commodity for money. In the form C—M—C, commodity forms the starting and final points of the movement; in the form M—C—M, money plays that part. In the former case money is the medium of exchange of commodities, in the latter the commodity helps money to become money. Money which appears merely as a means of circulation in the first form becomes an end in the second form; while commodity which appeared first as the end, now becomes but a means. Since money is itself the result of circulation C—M—C, the result of circulation appears at the same time as its starting point in the form M—C—M. While in the case of C—M—C the interchange of matter constituted the real import of the process, the form of the commodity resulting from this first process constitutes the import of the second process M—C—M.

In the form C—M—C the two extreme members are commodities of the same value, but qualitatively different use-values. Their mutual exchange C—C constitutes actual interchange of matter. In the form M—C—M the two extremes are gold and at the same tune gold of equal value. To exchange gold for a commodity in order to exchange the commodity for gold, or if we consider the final result M—M, to exchange gold for gold, geems absurd. But if we translate the formula M—C—M into the expression: to buy in order to sell, which means nothing but to exchange gold for gold through an intervening movement, we recognize at once the prevailing form of capitalist production. In actual practice, however, people do not buy in order to sell, but they buy cheap in order to sell dear. Money is exchanged for a commodity in order to exchange the same commodity for a larger amount of money, so that the extremes M, M are, if not qualitatively, then quantitatively different. Such a quantitative difference presupposes the exchange of non-equivalents, yet commodity and money as such are only opposite forms of the same commodity, i. e. they are different forms of the same magnitude of value. The circuit M—C—M thus conceals under the forms of money and commodity more highly developed relations of production, and is but a reflection within the sphere of simple circulation of a movement of a more advanced character. Money, as distinguished from the medium of circulation, must therefore be developed from the direct form of circulation of commodities, C—M—C.

Gold, i. e., the specific commodity which serves as a measure of value and a medium of circulation, becomes money without any further assistance on the part of society. In England, where silver is neither the measure of value nor the prevailing medium of circulation, it does not become money, just as gold in Holland, as soon as it had been dethroned as a measure of value, ceased to be money. A commodity thus becomes money only in its combined capacity of a measure of value and medium of circulation; or, the unity of the measure of value and medium of circulation is money. As such a unity, however, gold has a separate existence independent of its existence in the two functions. As a measure of value it is only ideal money and ideal gold; as a mere medium of circulation it is symbolic money and symbolic gold; but in its plain metallic bodily form gold is money or money is real gold.

Let us now consider for a moment the commodity gold when it is in a state of rest, and plays the part of money in its relation to other commodities. All commodities represent in their prices a certain quantity of gold, that is to say, they are merely imaginary gold or imaginary money, representatives of gold, just as, on the other hand, money in the form of a token of value appeared as a mere representative of prices of commodities.^[1] Since all commodities are thus but imaginary money, money is the only real commodity. Contrary to commodities, which only represent the independently existing exchange value, i. e., universal social labor, or abstract wealth, gold is the material form of abstract wealth. Through its use-value, every commodity, by its relation to some particular want, expresses only one aspect of material wealth, but one side of wealth. Money, however, satisfies every want since it can be directly converted into the object of any want. Its own use-value is realized in the endless series of use-values which form its equivalents. In its virgin metallic state it holds locked up all the material wealth which lies unfolded in the world of commodities. Thus, while commodities represent in their prices the universal equivalent or abstract wealth, viz., gold, the latter represents in its use-value the use-values of all commodities. Gold is, therefore, the bodily representative of material wealth. It is the "precis de toutes les choses" (Boisguillebert), the compendium of the wealth of society. At one and the same time, it is the direct incarnation of universal labor in its form, and the aggregate of all concrete labor in its substance. It is universal wealth individualized.^[2] As a medium of circulation it underwent all kinds of injury, was clipped, and even reduced to the condition of a mere symbolic paper rag. As money it is restored to its golden glory.^[3] From a serve it becomes a lord. From a mere understrapper it rises to the position of Lord of commodities.^[4]

 

a. HOARDING.

Gold separates itself as money from the process of circulation whenever a commodity interrupts the process of its metamorphosis and remains in its form of a gold chrysalis. This occurs every time a sale is not immediately followed by purchase. The independent isolation of gold as money is, thus, a material expression of the disintegration of the process of circulation, or of the metamorphosis of commodities, into two separate acts independent of each other. The coin itself becomes money as soon as its course is interrupted. In the hands of the seller who takes it in exchange for his commodity, it is money and not coin; as soon as it passes out of his hands it is again coin. Everybody is a seller of the one commodity which he produces, but a buyer of all other commodities which he needs for his existence in society. While his selling is determined by the labor-time required for the production of his commodity, his buying is determined by the continual renewal of the wants of life. In order to be able to buy without having sold anything, he must sell without buying. In fact, the circulation process C—M—C is a dynamic unity of sale and purchase only in so far as it constitutes at the same time the constant process of its separation. In order that money should flow continuously as coin, coin must constantly coagulate as money. The continuous flow of coin depends on its constant accumulations in the form of reserve-funds of coin which spring up throughout the sphere of circulation and form sources of supply; the formation, distribution, disappearance, and reformation of these reserve funds is constantly changing, their existence constantly disappears, their disappearance constantly exists. Adam Smith expressed this never-ceasing transformation of coin into money and of money into coin by saying that every owner of commodities must always keep in supply besides the particular commodity which he sells, a certain quantity of the universal commodity with which he buys. We saw, that in the process C—M—C the second member M—C splits up into a series of purchases which do not take place at once, but at intervals of time, so that one part of M circulates as money while the other rests as money. Money is in that case only suspended coin and the separate parts of the circulating mass of coins appear now in one form, now in another, constantly changing. This first transformation of the medium of circulation into money represents, therefore, but a technical aspect of money circulation.^[5]

The primitive form of wealth is that of a surplus or superabundance, i. e., that part of the products which are not immediately required as use-values, or the possession of such products whose use-value falls outside the sphere of mere necessaries. When considering the transition of commodity into money we saw that this surplus or superabundance of products constitutes the proper sphere of exchange at a low stage of development of production. Superfluous products become exchangeable products or commodities. The adequate form of this surplus is gold and silver, the first form in which wealth as abstract social wealth is preserved. Commodities can not only be stored up in the form of gold and silver, i. e., in the substance of money, but gold and silver are wealth in preserved form. While every use-value performs its service as such by being consumed i. e., destroyed, the use-value of gold as money consists in its being the bearer of exchange value, in embodying universal labor-time as a shapeless raw material. As shapeless metal, exchange value posseses an indestructible form. Gold or silver thus brought to rest as money, forms a hoard. Among nations with an exclusively metallic circulation, such as the ancients were, hoarding is practiced universally from the individual to the state which guards its state hoard. In more ancient times, in Asia and Egypt, these hoards under the protection of kings and priests appear rather as a mark of their power. In Greece and Rome it was part of public policy to accumulate state hoards as the safest and most available form of surplus. The quick transfer of such hoards by conquerors from one country to another and the sudden outpour of a part of these hoards into the general circulation constitute a peculiar feature of ancient economy.

As the incarnation of labor-time gold is a pledge for its own value, and since it is the embodiment of universal labor-time, the process of circulation pledges gold its constant role of exchange value. Owing to the mere fact that the owner of commodities can retain his commodity in the form of exchange value or retain the exchange-value as a commodity, the exchange of commodities for the purpose of retaining them in the transformed shape of gold becomes circulation's own motive. The metamorphosis C—M takes place for the sake of the metamorphosis, i. e., in order to transform it from particular natural wealth into universal social wealth. Instead of change of matter, change of form becomes its own purpose. From a mere form of the movement exchange value becomes its substance. Commodity is preserved as wealth, as commodity, only in so far as it keeps within the sphere of circulation, and it keeps in that fluent state only in so far as it solidifies in the form of silver and gold. It remains in the stream of circulation as its crystal. At the same time gold and silver themselves become money only in so far as they do not play the part of mediums of circulation. As non-mediums of circulation they become money. The withdrawal of a commodity from circulation in the form of gold is therefore the only means of keeping it constantly within the sphere of circulation.

The owner of commodities can receive money from circulation only in return for a commodity which he gives to it. Constant selling, continual throwing of commodities into circulation is, therefore, the first condition of hoarding from the standpoint of the circulation of commodities. On the other hand, money as a medium of circulation constantly disappears in the very process of circulation by being realized all the time in use-values and becoming dissolved in fleeting pleasures. It must, therefore, be taken out of the all-consuming stream of circulation or the commodity must be kept up in its first metamorphosis, so that money is prevented from performing its function of a means of purchase. The commodity owner who has now become a hoarder, must sell as much as possible and buy as little as possible, as old Cato had taught: "patrem familias vendacem, non emacem esee." While industry constitutes the positive condition of hoarding, saving forms the negative one. The less the equivalent of a commodity is withdrawn from circulation in the form of particular commodities or use-values, the more it is withdrawn in the shape of money or exchange value.^[6] The acquisition of wealth in its universal form thus requires abstinence from wealth in its material reality. Thus the stimulating impulse for hoarding is greed, the objects of which are not commodities as use-values, but exchange value as commodity. In order to get possession of the surplus in its universal form, the particular wants must be treated as so much luxury and excess. Thus the Cortes presented a report to Philipp II., in 1593, in which, among other things, was said: "The Cortes of Valladolid in the year 1586 petitioned Your Majesty not to allow the further importation into the Kingdom of candles, glassware, jewelry, knives and similar articles; these things useless to human life come from abroad to be exchanged for gold, as though the Spaniards were Indians." The hoarder despises the worldly, temporary and transitory enjoyments in his hunt after the eternal treasure, which neither moth nor rust can eat, which is perfectly celestial and earthly at the same time. "The general remote cause of our want of money is the great excess of this Kingdom in consuming the Commodities of Forreine Countries, which prove to us discommodities, in hindering us of so much treasure, which otherwise would bee brought in, in lieu of those toyes . . . Wee . . . consume amongst us, that great abundance of the Wines of Spaine, of France, of the Rhene, of the Levant . . . the Raisins of Spaine, the Corints of the Levant, the Lawnes and Cambricks of Hannaults . . . the Silkes of Italie, the Sugers and Tobaco of the West Indies, the Spices of the East Indies: All which are of no necessetie unto us and yet are bought with ready mony."^[7]

In the form of gold and silver, wealth is indestructible, both because exchange value is preserved in the shape of indestructible metal, and, especially, because gold and silver are prevented from becoming, as mediums of circulation, mere vanishing money forms of the commodity. The destructible substance is thus sacrificed for the indestructible form. "If money be taken (by means of taxation) from him, who spendeth the same . . . upon eating and drinking, or any other perishing Commodity; and the same transferred to one that bestoweth it on Cloaths; I say that even in this case the Commonwealth hath some little advantage; because Cloaths do not altogether perish so soon as Meats and Drinks. But if the same be spent in Furniture of Houses, the advantage is yet a little more; if in Building of Houses, yet more; if in improving of Lands, working of Mines, Fishing, etc., yet more; but most of all, in bringing Gold and Silver into the Country; because those things are not only not perishable, but are esteemed for Wealth at all times and everywhere; whereas other Commodities which are perishable, or whose value depends upon the Fashion; or which are contingently scarce and plentiful, are Wealth, but pro hic et nunc."^[8] The withdrawal of money from the stream of circulation and the saving of it from the social interchange of matter reaches its extreme form in the burying of money, so that social wealth is brought as an underground indestructible treasure into a perfectly secret private relation with the owner of commodities. Dr. Bernier, who stayed for some time at the court of Aurenzeb at Delhi, tells us how the merchants, especially the Mohammedan heathens, who control nearly all the trade and all money, secretly bury their money deep in the ground, "being imbued with the faith that the gold and silver which they put away during their lives will serve them after death in the next world."^[9] However, in so far as the asceticism of the hoarder is combined with active industry, he is rather a Protestant by religion and still more a Puritan. "It can not be denied that buying and selling are necessary, that one can not get along without them, and that one can buy like a Christian especially things that serve in need and in honor; for the patriarchs had also bought and sold cattle, wool, grain, butter, milk and other goods. They are gifts of God which He gives out of the earth and divides among men. But foreign trade which brings over from Calcutta, India and other such places commodities consisting of costly silks, and gold ware, and spices which only serve for luxury and are of no use, draining the land and the people of their money, should not be tolerated if we but had a government of princes. Yet I do not wish to write of that now, for I believe it will have to stop of itself, when we have no money any longer; and so will luxury and gluttony; for no writing or teaching will help until want and poverty will force us."^[10]

In times of disturbance in the process of the social interchange of matter, the burying of money takes place even in bourgeois societies which are at a high stage of development. The social bond in its compact form is being saved from the social movement (with the owner of commodities this bond is the commodity and the adequate form of the commodity is money). The social nervus rerum is buried next to the body whose nerve it is.

The hoard would now become mere useless metal, its money soul would depart from it and it would remain as the burnt ashes of circulation, as its caput mortuum, if it did not constantly tend to get back into circulation. Money, or crystallized exchange value, is, according to its nature, the form of abstract wealth; but, on the other hand, any given sum of money is a quantitatively limited magnitude of value. The quantitative limitation of exchange value is in contradiction with its qualitative universality and the hoarder conceives in it a barrier which turns, in fact, into a qualitative barrier as well and makes of the hoard merely a limited representative of material wealth. Money, in its capacity of a universal equivalent, appears, as we have seen, as a member of an equation, the other member of which consists of an endless series of commodities. It depends on the magnitude of the exchange value to what extent money will be realized in such an endless series, i. e., to what degree it corresponds to the conception of it as an exchange value. The automatic movement of exchange value as exchange value can only tend to its passing beyond its quantitative limits. But by exceeding the quantitative limits of the hoard a new limit is created which must be removed in its turn. There is no definite limit which appears as a barrier to further hoarding, every limit plays that part. Hoard accumulation has, therefore, no inherent limits, no inherent measure; it is an endless process which finds in each successive result an impulse for a new beginning. While the hoard is increased only by being preserved, it is preserved only by being increased.

Money is not only an object of the passion for riches; it is the object of that passion. The latter is essentially auri sacra fames. The passion for riches, contrary to that for special kinds of natural wealth or use-values, such as clothing, ornaments, herds, etc., is possible only when universal wealth has been individualized as such in a particular object and can, therefore, be retained in the form of a single commodity. Money appears then no less as an object than as a source of the passion for riches.^[11] The underlying fact of the matter is that exchange value as such and with it its increase become the final aim. Greed holds the hoard fast by not allowing the money to become a medium of circulation, but the thirst for gold saves the money soul of the hoard by keeping up the lasting affinity of gold for circulation.

To sum up, the activity by which hoards are built up resolves itself into withdrawal of money from circulation by continually repeated sales, and simple hoarding or accumulation. In fact, it is only in the sphere of simple circulation and, especially, in the form of hoarding, that accumulation of wealth as such takes place, while, as we shall see later, in the case of other so-called forms of accumulation it is only a misnomer to call them by that name in mere recollection of the simple accumulation of money. All other commodities are hoarded either as use-values, in which case the manner of storing them up is determined by the peculiarities of their use-value: the storing of grain, e. g., requires special equipment; the accumulation of sheep makes one a shepherd; the accumulation of slaves and land creates relations of master and servant, etc.; the accumulation of particular kinds of wealth requires special processes different from the simple act of hoarding, and develops special individual traits. Or, wealth in the form of commodities is hoarded as exchange-value and in that case hoarding appears as a commercial or a specific economic operation. The one who carries on such operations becomes a dealer in corn, in cattle, etc. Gold and silver are money not through some activity of the individual who accumulates it, but as crystals of the process of circulation which goes on without any aid on his part. He has nothing to do but to put them aside, adding new weights of metal to his hoard, a perfectly senseless operation which, if applied to all other commodities, would deprive them of all value.^[12]

Our hoarder appears as a martyr of exchange value, a holy ascetic crowning the metal pillar. He cares for wealth only in its social form and therefore he buries it away from society. He wants to have the commodity in the form in which it is always capable of entering circulation and therefore he withdraws it from circulation. He dreams of exchange value and therefore does not exchange. The fluid form of wealth and its petrification, the elixir of life and the stone of wisdom madly haunt each other in alchemic fashion. In his imaginary unlimited passion for enjoyment he denies himself all enjoyment. Because he wishes to satisfy all social wants, he barely satisfies his elementary natural wants. While holding fast to his wealth in its metallic bodily form, the latter escapes him as a phantom. As a matter of fact, however, the hoarding of money for the sake of money is the barbaric form of production for production's sake, i. e., the development of the productive forces of social labor beyond the limits of ordinary wants. The lees the production of commodities is developed, the more important is the first crystallization of exchange value into money, or hoarding, which plays, therefore, an important part among the ancient nations, in Asia until the present day, and among modern agricultural nations where exchange value has not as yet taken hold of all the relations of production. Before taking up the consideration of the specific economic function of hoarding within the sphere of metallic circulation, let us mention another form of hoarding.

Quite apart from their aesthetic properties, silver and gold commodities are convertible into money, since the material of which they are made is a money material; and, inversely, gold money and gold bullion can be converted into commodities. Because gold and silver constitute the material of abstract wealth, the greatest display of wealth consists of the utilization of these metals as concrete use-values, and if the owner of commodities hides his treasure at certain stages of production, he is very anxious to appear before other owners of commodities as rico hombre whenever he can do so with safety. He gilds himself and his house.^[13] In Asia, especially in India, where, unlike under the capitalist system, the hoarding of wealth appears not as a subordinate function of the system of production, but as an end in itself, gold and silver commodities are practically but aesthetic forms of hoards. In mediaeval England gold and silver commodities were considered before the law as mere forms of treasure, since their value was but slightly increased by the crude labor spent upon them. They were destined to re-enter circulation and their fineness was therefore prescribed in the same manner as that of coin. The increasing use of gold and silver as objects of luxury with the growth of wealth is such a simple matter that it was perfectly clear to the ancients,^[14] while modern economists have advanced the erroneous proposition that the use of silver and gold articles increases not in proportion to the growth of wealth, but in proportion to the fall in value of the precious metals. Their otherwise accurate references to the use of Californian and Australian gold are inconclusive, since the increased consumption of gold as a raw material does not find justification, according to their theory, in any corresponding decline in its value. From 1810 to 1830, in consequence of the struggle of the American colonies against Spain and the interruption of mining caused by revolutions, the annual average production of precious metals declined by more than one-half. The decline of coin in circulation in Europe amounted to nearly one-sixth, comparing the years 1829 and 1809. Although the quantity produced had thus declined and the cost of production, if it had changed at all, had increased, yet the consumption of precious metals as objects of luxury increased to an extraordinary extent in England during the very war and on the continent after the Peace of Paris. The consumption increased with the general growth of wealth.^[15] It may be stated as a general law that the conversion of gold and silver money into articles of luxury prevails in times of peace, while their reconversion into bullion or even coin takes place in stormy periods.^[16] How considerable the proportion is of the gold and silver treasure in the form of articles of luxury to the quantity of precious metals serving as money may be seen from the fact that in 1829 the proportion in England, according to Jacob, was two to one, and in entire Europe and America the precious metals in the form of articles of luxury exceeded those in the form of money by one-fourth.

We have seen that the circulation of money is but the manifestation of the metamorphoses of commodities, or of the form under which the social interchange of matter takes place. With the change in the total price of commodities in circulation or in the volume of their simultaneous metamorphoses, the rapidity of their change of form in each case being given, the total quantity of gold in circulation must always expand or contract. That is possible only under the condition that the total quantity of money in the country continually bear a varying ratio to the quantity of money in circulation. This condition is met by the process of hoarding. With a fall in prices or rise in the rapidity of circulation, the hoard-reservoirs absorb that part of money which is thrown out of circulation; with a rise in price or a decline in the rapidity of circulation, the hoards open up and return a part of their contents to the stream of circulation. The solidification of circulating money into hoards and the outpouring of hoards into circulation is a constantly oscillating movement in which the prevalence of the one or the other tendency is determined exclusively by fluctuations in the circulation of commodities. Hoards thus serve as conduits for the supply and withdrawal of money to or from circulation, so that every time only that quantity of money circulates as coin which is required by the immediate needs of circulation. If the volume of the entire circulation suddenly expands and the fluent unity of sale and purchase assumes such dimensions that the total sum of prices to be realized increases more rapidly than the rapidity of the circulation of money, the hoards decrease perceptibly; but when the combined movement slackens to an unusual extent, or the movement of buying and selling steadies itself, the medium of circulation solidifies into money in large measure, and the treasure reservoirs fill up far above their average level. In countries with an exclusively metallic circulation or where production is at a low stage of development, the hoards are endlessly split up and scattered all over the land, while in countries where the capitalist system is developed they are concentrated in bank reservoirs. Hoards are not to be confounded with coin reservoirs, which form a constituent part of the total supply of money in circulation, while the interaction between hoards and currency implies the decline or rise of its total supply. Gold and silver commodities form, as we have seen, both conduits for the withdrawal of precious metals, as well as sources of their supply. In ordinary times only their former function is of importance to the economy of metallic circulation.^[17]

 

b. MEANS OF PAYMENT.

The two forms which have so far distinguished money from the circulating medium are those of suspended coin and of the hoard. The temporary transformation of coin into money in the case of the former means that the second phase of C—M—C, namely purchase M—C, must break up within a certain sphere of circulation into a series of successive purchases. As to hoarding, it is simply based on the isolation of the act C—M when it does not immediately pass into M—C, or is but an independent development of the first metamorphosis of a commodity; it represents money as the result of the alienation of all commodities in contradistinction to the medium of circulation as the embodiment of commodities in their always alienable form. Coin reserves and hoards are money only as non-circulating mediums and are non-circulating mediums only because they do not circulate. In the capacity in which we consider money now, it circulates or enters circulation, but does not perform the function of a circulating medium. As a medium of circulation money is always a means of purchase, now it does not act in that capacity.

As soon as money develops through the process of hoarding into the embodiment of abstract social wealth and the tangible representative of material wealth, it assumes in that capacity special functions within the process of circulation. If money circulates merely as a medium of circulation and therefore as a means of purchase, it is understood that commodity and money confront each other at the same time, i. e., that the same value is present in a double form: at one pole, as a commodity in the hands of the seller; at the other pole as money in the hands of the buyer. This simultaneous existence of the two equivalents at opposite poles and their simultaneous change of places or mutual alienation presupposes in its turn that seller and buyer enter into relations as owners of equivalents that are on hand. But in the course of time, the process of the metamorphosis of commodities which produces the different forms of money, transforms also the owners of commodities or changes the character in which they appear before each other in the community. In the process of metamorphosis of the commodity the guardian of the latter changes his skin as often as the commodity changes place or as the money assumes new forms. Thus, the owners of commodities originally confronted each other only as commodity owners, but later on they became one a buyer, the other a seller; then each became alternately buyer and seller, then hoarders, and finally rich men. In that manner, the owners of commodities do not come out of the process of circulation the same men that they entered. In fact the different forms which money assumes in the process of circulation are but crystallized changes of form of the commodities themselves, which in their turn are but concrete expressions of the changing social relations in which commodity owners carry on the interchange of matter with one another. New trade relations spring up in the process of circulation, and, as representatives of these changed relations, commodity owners assume new economic roles. Just as gold becomes idealized within the process of circulation and plain paper, in its capacity of a representative of gold, performs the function of money, so does the same process of circulation lend the weight of actual seller and buyer to the buyer and seller who enter it merely as representatives of future money and future commodities.

All the forms in which gold develops into money, are but the unfolding of potentialities which the metamorphosis of commodities bears within itself. These forms did not become distinctly differentiated in the process of simple money circulation where money appears as coin and the movement C—M—C forms a dynamic unity; at most, they appeared as mere potentialities as, e. g., in the case of the break in the metamorphosis of a commodity. We have seen that in the process C—M the relations between the commodity and money were those of an actual use-value and ideal exchange-value to an actual exchange value and only ideal use-value. By alienating his commodity as a use-value the seller realized its own exchange value and the use-value of money. On the contrary, the buyer, by alienating his money as exchange value, realized its own use-value and the price of the commodity. Commodity and money changed places accordingly. When it comes to a realization in actual life of this bi-polar contrast, a new break occurs. The seller actually alienates his commodity, but realizes its price only in idea: he has sold his commodity at its price, which is to be realized, however, only subsequently, at a time agreed upon. The purchaser buys as the representative of future money, while the vender sells as the owner of present goods. On the part of the vender, the commodity as use-value is actually alienated, without the price being actually realized; on the part of the purchaser, money is actually realized in the use-value of the commodity, without being actually alienated as exchange value. Instead of a token of value representing money symbolically as was the case before, the purchaser himself performs that part now. And just as in the former case the symbolic nature of the token of value called forth the guarantee of the state which has made it legal tender, so does the personal symbolism of the buyer bring about legally enforcible private contracts among commodity owners.

The contrary may happen in the process M—C, where the money can be alienated as a real means of purchase, and in that way the price of the commodity can be realized before the use-value of the money is realized 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, or, foreign merchants residing in Russia mostly buy agricultural products. In these cases, however, the money always acts in its well known role of a means of purchase and therefore, does not assume any new forms.^[18] We need not dwell, therefore, on this case any longer; but with reference to the changed form which the two processes M—C and C—M assume now, we may note that the difference between purchase and sale which appeared but imaginary in the direct process of circulation, now becomes a real difference, since in the former case only the money is present and in the latter only the commodity, and in either case only that extreme is present from which the initiative comes. Besides, the two forms have this in common: that in either, one of the equivalents is present only in the common will of the buyer and seller,—a will that is binding on both and assumes definite legal forms.

Seller and buyer become creditor and debtor. While the commodity owner looked comical as the guardian of a treasure, he now becomes awe-inspiring, since he no longer identifies himself but his neighbor with a certain sum of money and makes him and not himself a martyr of exchange value. From a believer he becomes a creditor, for religion he substitutes law.

"I stay here on my bond!"

Thus, in the modified form C—M in which the commodity is present and money is only represented, money plays first of all the part of a measure of value. The exchange value of the commodity is estimated in money as its measure; but as exchange value, established by contract, price exists not only in the mind of the seller, but also as a measure of obligation on the part of the buyer. Besides serving as a measure of value, money plays here the part of a means of purchase, although in that capacity it only casts ahead the shadow of its future existence. It attracts the commodity from its position in the hand of the seller into that of the buyer. As soon as the term of the contract expires, money enters circulation, since it changes its position by passing from the hands of the former buyer into those of the former seller. But it does not enter circulation as a circulating medium or as a means of purchase. It performed those functions before it was present and it appears after it has ceased to perform them. It now enters circulation as the only adequate equivalent of the commodity, as the absolute form of existence of exchange value, as the last word of the process of exchange, in short as money, and money in its distinct role of a universal means of payment. In this capacity of a means of payment money appears as the absolute commodity, but within the sphere of circulation and not without it as was the case with hoards. The difference between the means of purchase and the means of payment makes itself unpleasantly felt in periods of commercial crises.^[19]

Originally, the conversion of the product into money in the sphere of circulation appears only as an individual necessity for the commodity owner in so far as his own product has no use-value to him, but has to acquire it first by being alienated. But in order to pay at the expiration of the contract, he must have sold commodities before that. Thus, entirely apart from his individual wants, the movement of the circulation process makes selling a social necessity with every owner of commodities. As a former buyer of a commodity he is compelled to become a seller of another commodity in order to get money not as a means of purchase but as a means of payment, as the absolute form of exchange value. The conversion of commodity into money as a final act, or the first metamorphosis of a commodity as an end in itself which in the case of hoarding seemed to be a matter of caprice on the part of the commodity owner, becomes now an economic function. The motive and essence of sale for the sake of payment becomes from a mere form of the process of circulation its self emanating substance.

In this form of sale the commodity completes its change of position; it circulates while it postpones its first metamorphosis, viz. its transformation into money. On the contrary, on the part of the buyer the second metamorphosis is completed, i. e. money is reconverted into a commodity before the first metamorphosis has taken place, i. e., before the commodity has been turned into money. The first metamorphosis thus takes place after the second in point of time; and thereby, money i. e. the form of the commodity in its first metamorphosis, acquires a new destination. Money or the spontaneous development of exchange value, is no longer a mere intermediary form of the circulation of commodities, but its final result.

That such time sales in which the two poles of the sale are separated in point of time, have their natural origin in the simple circulation of commodities, requires no elaborate proof. In the first place, the development of circulation leads to a continual repetition of the mutual transactions between the same commodity owners who confront each other as seller and buyer. The repetition is not accidental; on the contrary, goods are ordered, let us say, for a certain date in the future when they are to be delivered and paid for. In that case the sale is ideal, i. e. it is legally accomplished without the actual presence of the goods and money. Both forms of money, those of a medium of circulation and of a means of payment still coincide here, since in the first place, commodity and money change places simultaneously, and secondly, the money does not buy the commodity, but realizes the price of the commodity purchased before. In the second place, the nature of a great many use-values makes the simultaneous alienation and delivery of the goods impossible, and delivery has to be postponed for a certain time; e. g., when the use of a house is sold for one month, the use-value of the house is delivered only at the expiration of the month, although it changes hands at the beginning of the month. Since the actual transfer of the use-value and its virtual alienation are separated here in point of time, the realization of its price occurs also atfer its change of place. Finally, the difference in the seasons and in the length of time required for the production of various commodities brings about a situation where one tries to sell his goods, while the other is not ready to buy; and with the repeated purchases and sales between the same commodity owners the two ends of sale fall apart according to the conditions of production of the respective commodities. Thus arises a relation of creditor and debtor between the owners of commodities which, though constituting the natural foundation of the credit system, may be fully developed before the latter comes into existence. It is clear that with the extension of the credit system, and, consequently, with the development of the capitalist system of production in general, the function of money as a means of payment will extend at the expense of its function as a means of purchase and, still more, as an element of hoarding. In England, e. g., money as coin has been almost completely banished into the sphere of retail and petty trade between producers and consumers, while it dominates the sphere of large commercial transactions as a means of payment.^[20]

As the universal means of payment money becomes the universal commodity of all contracts, at first only in the sphere of circulation of commodities.^[21] But with the development of this function of money, all other forms of payment are gradually converted into money payments. The extent to which money is developed as the exclusive means of payment indicates the degree to which exchange value has taken hold of production in its depth and breadth.^[22]

The volume of money in circulation, as a means of payment, is determined in the first place, by the amount of payments, i. e. by the sum total of the prices of the commodities alienated, but not about to be alienated, as in the case of the simple circulation of money. The quantity thus determined is subject, however, to two modifications. The first modification is due to the rapidity with which the same piece of money repeats the same function, i. e. with which the several payments succeed one another. A pays B, whereupon B pays C, and so forth. The rapidity with which the same coin repeats its function as a means of payment, depends first, upon the continuity of the relation of creditor and debtor among the owners of commodities, the same commodity owner being the creditor of one person and the debtor of another, etc., and secondly, upon the interval which separates the times of various payments. This chain of payments or of supplementary first metamorphoses of commodities is qualitatively different from the chain of metamorphoses which is formed by the circulation of money as a circulating medium. The latter not only makes its appearance gradually, but is even formed in that manner. A commodity is first converted into money, then again into a commodity, thereby enabling another commodity to become money, etc.; or, seller becomes buyer, whereby another commodity owner turns seller. This successive connection is accidentally formed in the very process of the exchange of commodities. But when the money which A has paid to B is passed on from B to C, from C to D, etc., and that, too, at intervals rapidly succeeding one another, then this external connection reveals but an already existing social connection. The same money passes through different hands not because it appears as a means of payment; it passes as a means of payment because the different hands have already clasped each other. The rapidity with which money circulates as a means of payment thus shows that individuals have been drawn into the process of circulation much deeper than would be indicated by the same rapidity of the circulation of money as coin or as a means of purchase.

The sum total of prices made up by all the purchases and sales taking place at the same time, and, therefore, side by side, constitutes the limit for the substitution of the volume of coin by the rapidity of its circulation. If the payments that are to be made simultaneously are concentrated at one place—which naturally arises at first at points where the circulation of commodities is largest—the payments balance each other as negative and positive quantities: A is under obligations to pay B, while he has to be paid by C, etc. The quantity of money required as a means of payment will, therefore, be determined not by the total amount of payments which have to be made simultaneously, but by the greater or less concentration of the same and by the magnitude of the balance remaining after their mutual neutralization as negative and positive quantities. Special arrangements are made for settlements of this kind even where the credit system is not developed at all, as was the case e. g. in ancient Rome. The consideration of these arrangements, however, as well as that of the general time limits of payment, which are everywhere established among certain elements in the community, does not belong here. We may add that the specific influence which these time settlements exert on the periodic fluctuations in the quantity of money in circulation, has been scientifically investigated but lately.

In so far as the payments mutually balance as positive and negative quantities, no money actually appears on the scene. It figures here only in its capacity of a measure of value: first, in the prices of commodities, and second, in the magnitude of mutual obligations. Aside from its ideal form, exchange value does not exist here independently, not even in the form of a token of value; that is to say, money plays here only the part of ideal money of account. The function of money as a means of payment thus implies a contradiction. On the one hand, in so far as payments balance, it serves only ideally as a measure of value. On the other hand, in so far as a payment has actually to be made, money enters circulation not as a transient circulating medium, but as the final resting form of the universal equivalent, as the absolute commodity, in a word, as money. Therefore, whenever such a thing as a chain of payments and an artificial system of settling them, is developed, money suddenly changes its visionary nebulous shape as a measure of value, turning into hard cash or means of payment, as soon as some shock causes a violent interruption of the flow of payments and disturbs the mechanism of their settlement. Thus, under conditions of fully developed capitalist production, where the commodity owner has long become a capitalist, knows his Adam Smith, and condescendingly laughs at the superstition that gold and silver alone constitute money or that money differs at all from other commodities as the absolute commodity, money suddenly reappears not as a medium of circulation, but as the only adequate form of exchange value, as the only form of wealth, exactly as it is looked upon by the hoarder. In its capacity of such an exclusive form of wealth, it reveals itself, unlike under the monetary system, not in mere imaginary, but in actual depreciation and worthlessness of all material wealth. That is what constitutes the particular phase of crises of the world market which is known as a money crisis. The summum bonum for which everybody is crying at such times as for the only form of wealth, is cash, hard cash; and by the side of it all other commodities just because they are use-values, appear useless like so many trifles and toys, or, as our Dr. Martin Luther says, as mere objects of ornament and gluttony. This 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 economical relations are involved.^[23]

Payments, in their turn, require the formation of reserve funds, the accumulation of money as a means of payment The building up of reserve funds appears no longer as a practice carried on outside of the sphere of circulation, as in the case of hoarding; nor as a mere technical accumulation of coin, as in the case of coin reserves; on the contrary, money must now be gradually accumulated to be available on certain future dates when payments become due. While hoarding, in its abstract form as a means of enrichment, declines with the development of the capitalist system of production, that species of hoarding which is directly called for by the process of production, increases; or, to put it differently, a part of the treasure which is generally formed in the sphere of circulation of commodities, is absorbed as a reserve fund of means of payment. The more developed the capitalist system of production, the more these reserve funds are limited to the necessary minimum. Locke, in his work "On the Lowering of Interest"^[24] furnishes interesting data with reference to the size of these reserve funds in his time. They show what a considerable part of the total money in circulation the reservoirs for means of payment absorbed in England just at the time when banking began to develop.

The law as to quantity of money in circulation, as it has been formulated in the analysis of the simple circulation of money, receives an essential modification when the circulation of the means of payment is taken into account. The rapidity of the circulation of money whether as circulating: medium or as means of payment—being given, the total amount of money in circulation at a given time will be determined by the sum total of the prices of commodities to be realized, plus the total amount of payments falling due at the same time, minus the amount of payments balancing each other. The general law that the volume of money in circulation depends on the prices of commodities is not affected by this in the least, since the extent of the payments is itself determined by the prices stipulated in contracts. What is, however, strikingly demonstrated, is that even if the rapidity of circulation and the economy of payments be assumed to remain the same, the sum total of the prices of the commodities circulating in a given period of time, say one day, and the volume of money in circulation on the same day are by no means equal, because there is a large number of commodities in circulation whose prices have yet to be realized in money at a future date, and there is a quantity of money in circulation which constitutes the payment for commodities which have long gone out of circulation. The latter amount will depend on the sum of payments falling due on the same day although contracted for at entirely different periods.

We have seen that a change in the values of gold and silver does not affect their function as measures of value or money of account. But this change is of decisive importance for money as a hoard, since with the rise or fall of value of gold and silver, the total value of a gold or silver hoard will also rise or fall. Of still greater importance is the effect of this change on money as a means of payment. The payment takes place after the sale of the commodity, or the money serves in two different capacities at two different periods; first, as a measure of value, then as a means of payment corresponding to the measurement. If, during this interval, the value of the precious metals or the labor-time necessary for their production undergoes a change, the same quantity of gold or silver will be worth more or less when it appears as a means of payment than what it was when it served as a measure of value, i. e., when the contract was concluded. The function of a particular commodity, like gold or silver, to serve as money or independent exchange value comes here in conflict with the nature of the particular commodity whose magnitude of value depends on changes in the cost of its production. The great social revolution which caused the fall in value of the precious metals in Europe, is as well known as the revolution of an opposite character which had been brought about at an early period in the history of the ancient Roman republic by the rise in value of copper in terms of which the debts of the plebeians had been contracted. Without attempting here to follow any further the fluctuations of value of the precious metals and their effect on the system of bourgeois political economy, it is at once apparent that a fall in the value of the precious metals favors the debtors at the expense of the creditors, while a rise in their value favors the creditors at the expense of the debtors.

 

c. WORLD MONEY.

Gold becomes money as distinguished from coin only after it is withdrawn from circulation in the shape of a hoard; it then enters circulation as a non-medium of circulation, and finally breaks through the barriers of home circulation to assume the part of a universal equivalent in the world of commodities. It becomes world money.

While the general measures of weight of the precious metals served as their original measures of value, the reverse process takes place now in the world market, and the reckoning names of money are turned back into corresponding weight names. In the same way, while shapeless crude metal (aes rude) was the original form of the medium of circulation and the coin form constituted but the official stamp certifying that a given piece of metal was of a certain weight, now the precious metal in its capacity of a world coin throws off its stamp and shape and reassumes the indistinguishable bullion form; and even if national coins, such as Russian imperials, Mexican dollars, and English sovereigns, do circulate abroad, their name is of no importance, and only their contents count. Finally, as international money, the precious metals come again to perform their original function of mediums of exchange, which, like the exchange of commodities, arose first not within the various primitive communities, but at their points of contact with one another. As world money, money thus reassumes its primitive form. On leaving the sphere of home circulation, it strips off the particular forms which it has acquired in the course of the development of the process of exchange within that particular national sphere, those local garbs of standard of price, of coin, of auxiliary coin, and of token of value.

We have seen that in the home circulation of a country, only one commodity serves as a measure of value. Since, however, that function is performed by gold in some countries and by silver in others, there is a double standard of value in the world market and money assumes two forms in all its other functions. The translation of the values of commodities from gold prices into silver prices and vice versa depends in each case upon the relative value of the two metals, which is constantly changing and, therefore, appears to be constantly in the process of determination. Commodity owners in every national sphere of circulation have to use gold and silver alternately for foreign circulation and thus to exchange the metal which is accepted as money at home for the metal which they happen to need as money abroad. Every nation is, therefore, utilizing both metals, gold and silver, as world money.

In the international circulation of commodities, gold and silver appear not as mediums of circulation, but as universal mediums of exchange. The universal medium of exchange performs its function only under its two developed forms of a means of purchase and of a means of payment, whose mutual relation in the world market is the very reverse of what it is at home. In the sphere of home circulation, money in the form of coin, played exclusively the part of a means of purchase, either as the intermediary in the dynamic unity C—M—C or as the representative of the transient form of exchange value in the unceasing change of positions by commodities. In the world market it is just the contrary. Gold and silver appear here as a means of purchase when the exchange of matter is but one-sided, and purchase and sale do not coincide. The frontier trade at Kiachta e. g. is both actually and according to treaty, one of barter, in which silver plays only the part of a measure of value. The war of 1857–58 compelled the Chinese to sell without buying. Silver suddenly appeared now as a means of purchase. Out of regard to the letter of the treaty, the Russians made up the French five frank coins into crude silver commodities, which were made to serve as a means of exchange. Silver has always served as a means of purchase between Europe and America on one side and Asia on the other, where it settles down in the form of hoards. Furthermore, the precious metals serve as international means of purchase whenever the ordinary balance of exchange of matter between two nations is suddenly upset, as e. g. when a failure of crops forces one of them to buy on an extraordinary scale. Finally, the precious metals are international means of purchase in the hands of gold and silver producing countries, in which case they directly constitute a product and commodity and not merely a converted form of a commodity. The more the exchange of commodities between different national spheres of circulation is developed, the more important becomes the function of world money to serve as a means of payment for the settlement of international balances.

Like home circulation, international circulation requires a constantly changing quantity of gold and silver. A part of the accumulated hoards serves therefore, in each country as a reserve fund of world money, which now declines, now rises, according to the fluctuations of the exchange of commodities.^[25] Besides the special movements which take place between national spheres of circulation, world-money possesses a universal movement, whose starting points are at the sources of production from which gold and silver streams spread out in different directions all over the world market. Here gold and silver enter the world circulation as commodities and are exchanged for commodity equivalents in proportion to the labor-time contained in them, before they penetrate national spheres of circulation. In the latter, they appear now with a given magnitude of value. Every fall or rise in the cost of their production equally affects, therefore, their relative value throughout the world market; on the other hand, that value is entirely independent of the extent to which the different national spheres of circulation absorb gold or silver. The part of the metal stream which is caught up by every separate sphere in the world of commodities, partly enters directly the home circulation of money to make up for worn out coin; partly is dammed up in the different reservoirs containing hoards of coin, means of payment and world-money; partly is turned into articles of luxury, while the rest simply forms a treasure. At an advanced stage of development of the capitalist system of production the formation of hoards is reduced to the minimum required by the various processes of circulation for the free play of their mechanism. The hoard as such becomes idle wealth, unless it appears as a temporary form of a surplus resulting from a favorable balance of payments or as the result of an interrupted exchange of matter, i. e. as the solidification of a commodity in its first metamorphosis.

Gold and silver, in their capacity of money, being by conception universal commodities, assume in their capacity of world money the form adapted to a universal commodity. To the extent to which all commodities are exchanged for them, they become the transformed impersonation of all commodities and, therefore, universally alienable commodities. Their function of serving as the embodiment of universal labor-time is realized more and more as the interchange of matter produced by concrete labor embraces increasing parts of the world. They become universal equivalents to the extent to which the series of particular equivalents which constitute their spheres of exchange, increases. Since in the sphere of world circulation commodities unfold their own exchange value on a universal scale, they assume the form of world money when transformed into gold and silver. As commodity owning nations are thus turning gold into money by their diversified industry and universal trade, industry and trade appear to them only as a means of getting money out of the world market in the shape of gold and silver. Gold and silver, as world money, are, therefore, as much products of the universal circulation of commodities as they are means of widening its sphere. Like chemistry which grew up behind the backs of the alchemists who tried to find a way of making gold, so do the sources of world industry and world trade spring up behind the backs of the owners of commodities, while they are hunting for the commodity in its magic form. Gold and silver help to create the world market by anticipating its existence in their conception of money. That this magic effect of the precious metals is by no means confined to the period of infancy of capitalist society but is a necessary outgrowth of the perverse conception which the representatives of the commodity world have of their own work in society, is shown by the extraordinary influence exerted in the middle of the nineteenth century by the discovery of new gold fields.

Just as money develops into world-money, so the commodity owner develops into a cosmopolitan. The cosmopolitan relation of men is originally only a relation of commodity owners. The commodity as such rises above all religious, political, national, and language barriers. Price is its universal language and money, its common form. But with the development of world-money as distinguished from national coin, there develops the cosmopolitanism of the commodity owner as the faith of practical reason opposed to traditional, religious, national and other prejudices which hinder the interchange of matter among mankind. As the identical gold that lands in England in the form of American eagles, turns there into sovereigns and three days later circulates in Paris in the form of Napoleons, only to emerge in Venice in a few weeks as so many ducats, retaining all the while the same value, it becomes clear to the commodity owner that nationality "is but the guinea's stamp." The lofty idea which he conceives of the entire world is that of a market, the world market.^[26]

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1. "Non solo i metalli ricchi son segni delle cose …; ma viccndevolmente le cose … sono segni dell'oro e dell'argento." (A. Genovesi, "Lezioni di Economia Civile," 1765, p. 281 in Custodi, Parte Mod. l. VIII.) ("Not only are precious metals tokens of things, but vice versa, things are tokens of gold and silver.")
2. Petty. "Gold and silver are universal wealth." (Political Arithmetic, l. c, p. 242.)
3. E. Misselden. "Free Trade, or the Means to Make Trade Flourish," etc., London, 1622. "The natural matter of Commerce is Merchandise, which Merchants from the end of Trade have stiled Commodities. The Artificiall matter of Commerce is Money, which hath obtained the title of sinewes of warre and of State. … Money, though it be in nature and time after Merchandise, yet forasmuch as it is now in use become the chiefe." (p. 7.) He compares his own treatment of merchandise and money with the manner of "Old Jacob, who, blessing his Grandchildren, crost his hands, and laide his right hand on the yonger, and his left hand on the elder." (l. c.) Boisguillebert, "Dissert, sur la Nature Des Richesses," etc. "Violà donc l'esclave du commerce devenu son maître . . . La misère des peuples ne vient que de ce qu' ón a fait un maître, ou plutôt un tyran de ce qui était un esclave." (p. 395, 399.)
4. Boisguillebert, l. c. "On a fait une idole de ces métaux (l'or et l'argent) et laissant là, l'objet et l'intention pour lesquels ils avaient été appélés dans le commerce, savoir, pour y servir de gages dans l'echange et la tradition reciproque, on les a presque quittés de ce service pour en former des divinités, aux quelles on a sacriflé et sacrifle toujours plus de biens et de besoins précieux et même d'hommes, que jamais l'aveugle antiquité n'en immola à ces fausses divinités," etc. (l. c, p. 395.)
5. In the first halt of the perpetuum mobile, i. e., in the suspension of the function of money as a medium of circulation, Boisguillebert at once suspects its independent existence from commodities. Money, he says, must be "in constant motion, it can be money only by being mobile, but as soon as it becomes motionless all is lost." ("Dans un mouvement continuel, ce qui ne pent être que tant qu'il est meuble, mais sitot qu'il devient immeuble tout est perdu." ("Le Detail de la France," p. 231.) What he overlooks is that this halt constitutes the condition of its movement. What he really wants is that the value form of commodities should appear merely in the transitory form of their change of matter, but should never become an end in itself.
6. ". . . The more the stock . . . is . . . encreased in wares, the more it decreaseth in treasure." (E. Misselden, l. c., p. 23.)
7. l. c., p. 11–13 passim.
8. Petty, "Political Arith.," l. c, p. 196 {1899 edition, v. I, p. 269. Transl.)
9. Francois Bernier, "Voyage contenant la description des états du Grand Mogul." (Paris edition, 1830, t. l., conf., p. 312–314.
10. Dr. Martin Luther, "Bücher vom Kaufhandel und Wucher," 1524. In the same passage Luther says: "Gott hat uns Deutschen dahin geschleidert, dass wir unser gold und silber müssen in frembde Länder stossen, alle Welt reich machen, und selbst Bettler Bleiben. England sollte wohl weniger Goldes haben, wenn Deutschland ihm sein Tuch liesse. Und der König von Portugal sollt auch weniger haben, wenn wir ihm seine Würze liessen. Rechne Du, wie viel eine Messe zu Frankfurt aus Deutschen Landen gefürt wird, ohne Not und Ursache: so wirst Du Dich wundern, wie es zugehe, dass noch ein heller in Deutschen Landen sei. Frankfurt ist das Silber-und Goldloch, dadurch aus Deutschem Lande fleisst, was nur guillet und wüchst, gemünzt oder geschlagen wird bei uns; wäre das Loch zuegestopft, so dürft man itzt der Klage nicht hören, die allethalben eitel Schuld und kein Geld, alle Land und Städte ausgewuchert sind. Aber lass gehen, es will doch also gehen; wir Deutsche müssen Deutsche bleiben! wir lassen nicht ab, wir müssen denn."
    In the work quoted above Misselden wishes to retain the gold and silver at least within the confines of Christendom: "The other forreine remote causes of the want of money, are the Trades maintained out of Christendome to Turky, Persia and the East Indies, which trades are maintained for the most part with ready money, yet in a different manner from the trades of Christendome within itselfe. For although the trades within Christendome are driven with ready monies, yet those monies are still contained and continued within the bounds of Christendome. There is indeede a fluxus and refluxus, a flood and ebbe of the monies of Christendome traded within it selfe; for sometimes there is more in one part of Christendome, sometimes there is lesse in another, as one Country wanteth and another aboundeth: It cometh and goeth, and whirleth about the Circle of Christendome, but is still contained within the compasse thereof. But the money that is traded out of Christendome into the parts aforesaid is continually issued out and never returneth againe." (p. 19–20.)
11. "A nummo prima origo avaritiae . . . haec paulatim exarsit rabie quadam, non jam avaritia, sed fames auris." (Plin., Hist. Nat., l. XXXIII., c. XIV.)
    ("From money first springs avarice . . . the latter gradually grows into a kind of madness, which is no more avarice, but a thirst for gold.")
12. Horace thus understands nothing of the philosophy of hoarding when he says (Satir. l. II., Satir. III): "Siquis emat citharas, emptas comportat in unum, Nec studio citharae nec musae deditus ulli; Si scalpra et formas non sutor; nautica vela Aversus mercaturis; delirus et amens, Undique dicatur merito. Qui discrepat istis, Qui nummos aurunque recondit nescius uti Compositis metuensque velut contingere sacrum?"
    

    "If one buys fiddles, hoards them up when bought,
    Though music's study ne'er engaged his thought,
    One lasts and awls, unversed in cobbler's craft.
    One sails for ships, not knowing fore from aft.
    You'd call them mad: but tell me, if you please.
    How that man's case is different from these.
    Who as he gets it, stows away his gain,
    And thinks to touch a farthing were profane?"
    

    (Transl. by John Covington, London, 1874, p. 60.)
    Mr. Senior understands the question much better: "L'argent paraît etre la seule chose dont le désir est universel, et il en est ainsi parceque l'argent est une richesse abstraite et parcque les hommes, en la possédant peuvent satisfaire à tous leur besoins de quelque nature qu'ils soient." ("Principes Fondamentaux de l'Economie Politique, tirés de leçons edites et inedites de N. W. Senior, par Comte Jean Arrivabene," Paris, 1836, p. 221. (The corresponding passage in the English edition of his Political Economy, London, 1863, is to be found on p. 27. Translator.) So does Storch: "Since money represents all other forms of wealth, it is only necessary to accumulate it to provide for oneself all kinds of wealth existing in the world." (l. c., v. 2, p. 134.)

13. To what extent the inner man of the commodity owner remains unchanged, even when he has become civilized and has developed into a capitalist, is shown by the example of a London representative of a cosmopolitan banking house who adopted as a fitting coat of arms for his family a £100,000 bank note, which he had hung up in a glass frame. The point here is in the mocking contempt of the note for circulation.
14. See the passage from Xenophon, quoted below.
15. Jacob, l. c., v. 2, ch. 25 and 26.
16. "In times of great agitation and insecurity, especially during internal commotions or invasions, gold and silver articles are rapidly converted into money; whilst during periods of tranquility and prosperity, money is converted into plate and jewelry." (l. c., v. 2, p. 367.)
17. In the following passage Xenophon develops money in its specific forms of money and hoard: "ἐν μόνῳ τούτῳ ὧν ἐγὼ οἶδα ἔργων οὐδὲ φθονεῖ οὐδεὶς τοῖς ἐπισκευαζομένοις...ἀργυρῖτις δὲ ὅσῳ ἂν πλείων φαίνηται καὶ ἀργύριον πλεῖον γίγνηται, τοσούτῳ πλείονες ἐπὶ τὸ ἔργον τοῦτο ἔρχονται....καὶ γὰρ δὴ ἔπιπλα μέν ἐπειδὰν ἱκανά τις κτήσηται τῇ οἰκίᾳ, οὐ μάλα ἔτι προσωνοῦνται. ἀργύριον δὲ οὐδείς πω οὕτω πολὺ ἐκτήσατο ὥστε μὴ ἔτι προσδεῖσθαι: ἀλλ᾽ ἤν τισι γένηται παμπληθές, τὸ περιττεῦον κατορύττοντες οὐδὲν ἧττον ἥδονται ἢ χρώμενοι αὐτῷ. καὶ μὴν ὅταν γε εὖ πράττωσιν αἱ πόλεις ἰσχυρῶς, οἱ ἄνθρωποι ἀργυρίου δέονται. Οἱ μὲν γὰρ ἄνδρες ἀμφὶ ὅπλα τε καλὰ καὶ ἵππους ἀγαθοὺς καὶ οἰκίας καὶ κατασκευὰς μεγαλοπρεπεῖς βούλονται δαπανᾶν, αἱ δὲ γυναῖκες εἰς ἐσθῆτα πολυτελῆ καὶ χρυσοῦν κόσμον τρέπονται. ὅταν τε αὖ νοσήσωσι πόλεις ἢ ἀφορίαις καρπῶν ἢ πολέμῳ ἔτι καὶ πολὺ μᾶλλον τῆς γῆς ἀργοῦ γιγνομένης καὶ εἰς ἐπιτήδεια καὶ εἰς ἐπικούρους νομίσματος δέονται." (Xen. de Vectigalibus, c. IV.) ("Of all operations with which I am acquainted, this is the only one in which no sort of jealousy is felt at a further development of the industry . . . the larger the quantity of ore discovered and the greater the amount of silver extracted, the greater the number of persons ready to engage in the operation . . . No one when he has got sufficient furniture for his house dreams of making further purchases on this head, but of silver no one ever yet possessed so much that he was forced to cry "Enough." On the contrary, if ever anybody does become possessed of an immoderate amount he finds as much pleasure in digging a hole in the ground and hoarding it as an actual employment of it . . . When a state is prosperous there is nothing which people so much desire as silver. The men want money to expend on beautiful armor and fine horses, and houses and sumptuous paraphernalia of all sorts. The women betake themselves to expensive apparel and ornaments of gold. Or when states are sick, either through barrenness of corn and other fruits, or through war, the demand for current coin is even more imperative (whilst the ground lies unproductive), to pay for necessaries or military aid." (Transl. by H. G. Dakyns, London, 1892, v. 2, Revenues, p. 335–336.) Aristotle develops in Book I., ch. 9 of his Politics the two opposite movements of circulation, C—M—C and M—C—M, calling them "economics" and "chrematistics" respectively. The two forms are represented by the Greek tragedian Euripides as Sikn (right) and Keodos (profit).
18. Of course, capital also is advanced in the shape of money, and the money thus advanced may be advanced capital, but this point of view does not fall within the horizon of simple circulation.
19. The difference between the means of purchase and the means of payment is emphasized by Luther.
20. Mr. MacLeod, in spite of his doctrinaire conceit about definitions, fails so utterly to grasp the most elementary economic relations that he tries to deduce the very origin of money from its crowning form, viz., that of a means of payment. He says among other things that since people do not always need each other's services at the same time, and not to the same extent, "there would remain over a certain difference or amount of service due from the first to the second—debt." The owner of this debt needs the services of a third person, who does not directly need those of the second, and "transfers to the third the debt dut to him from the first. Evidence of debts changes so hands—currency. . . . When a person received an obligation expressed by metallic currency, he is able to command the services not only of the original debtor, but of the whole of the industrious community." (MacLeod, "Theory and Practice of Banking," etc., London, 1855, v. I., ch. I.)
21. Bailey, l. c., p. 3. "Money is the general commodity of contracts, or that in which the majority of bargains about property, to be completed at a future time, are made."
22. Says Senior (in his Lectures, published by Comte Arrivabene, l. c., p. 117): "Since the value of everything changes within a certain period of time, people select as a means of payment an article whose value changes least and which retains longest a given average ability to buy things. Thus, money becomes the expression or representative of values." On the contrary: just because gold, silver, etc., have become money, i. e., the embodiment of independently existing exchange value, they become the universal means of payment. When the consideration as to the stability of the value of money mentioned by Mr. Senior comes into play, i. e., in periods when money asserts itself as the universal means of payment through the force of circumstances, then is just the time when fluctuations in the value of money are discovered. Such was the time of Elizabeth in England, when Lord Burleigh and Sir Thomas Smith, in view of the manifest depreciation of the precious metals, put through an act of parliament which obliged the universities of Oxford and Cambridge to stipulate the payment of one-third of their ground rents in wheat and malt.
23. Boisguillebert, who would stem the development of bourgeois relations of production and violently attacks the bourgeois personally, has a soft heart for those forms of money in which it appears only ideally or transiently. Thus he speaks first of the medium of circulation and next of the means of payment. What he does not see is the direct transition of money from its ideal to the material form, since the hard cash is latently present in the ideal measure of value. That money is but another form of commodities, he says, is shown by wholesale trade, in which exchange takes place without tbe intervention of money, after "les marchandises sont appreciês." ("Le Detail de la France," l., c., p, 210.)
24. Locke, l. c., p. 17, 18.
25. "Il danaro ammassato supplisce a quella somma, che per essere attualmente in circolazione, per l'eventuale promiscuità de' commerci si allontana e sorte della sfera della circolazione medesima." ("The accumulated money supplements that amount which, in order to be actually in circulation and to meet all possible perturbations of trade, retires from that sphere of circulation."  (G. R. Carli, note to Berri's "Meditazioni sulla Economia Politica," p. 196, t. XV. of Custodi's l. c.)
26. Montanari, "Della Moneta," 1683, l. c, p. 40. "E cosi fattamente diffusa per tutto il globo terrestre la communicazione de' populi insieme, che puo quasi dirsi esser il mondo tutto divinuto una sola citta in cui si fa perpetua fiera d'ogni mercanzia, e dove ogni uomo di tutto cio che la terra, gli animali e l'umana industria altrove producono, puo mediante il danaro stando in sua casa provedersi e godere. Maravigliosa invenzione." ("The communication of nations among themselves is so widely extended all over the globe that it may be almost said that the entire world has become one city in which a perpetual fair of merchandise is held and where every man may by means of money acquire and enjoy, while staying at home, all that the earth, the animals and human industry produce elsewhere. Marvelous invention!")