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SECTION 3.—MONEY. - Karl Marx, Capital: A Critique of Political Economy. Volume I: The Process of Capitalist Production [1867]Edition used:Capital: A Critique of Political Economy. Volume I: The Process of Capitalist Production, by Karl Marx. Trans. from the 3rd German edition, by Samuel Moore and Edward Aveling, ed. Federick Engels. Revised and amplified according to the 4th German ed. by Ernest Untermann (Chicago: Charles H. Kerr and Co., 1909).
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SECTION 3.—MONEY.The commodity that functions as a measure of value, and, either in its own person or by a representative, as the medium of circulation, is money. Gold (or silver) is therefore money. It functions as money, on the one hand, when it has to be present in its own golden person. It is then the money-commodity, neither merely ideal, as in its function of a measure of value, nor capable of being represented, as in its function of circulating medium. On the other hand, it also functions as money, when by virtue of its function, whether that function be performed in person or by representative, it congeals into the sole form of value, the only adequate form of existence of exchange-value, in opposition to use-value, represented by all other commodities. a. Hoarding.The continual movement in circuits of the two antithetical metamorphoses of commodities, or the never ceasing alternation of sale and purchase, is reflected in the restless currency of money, or in the function that money performs of a perpetuum mobile of circulation. But so soon as the series of metamorphoses is interrupted, so soon as sales are not supplemented by subsequent purchases, money ceases to be mobilised; it is transformed, as Boisguillebert says, from "meuble" into "immeuble," from movable into immovable, from coin into money. With the very earliest development of the circulation of commodities, there is also developed the necessity, and the passionate desire, to hold fast the product of the first metamorphosis. This product is the transformed shape of the commodity, or its gold-chrysalis.95 Commodities are thus sold not for the purpose of buying others, but in order to replace their commodity-form by their money-form. From being the mere means of effecting the circulation of commodities, this change of form becomes the end and aim. The changed form of the commodity is thus prevented from functioning as its unconditionally alienable form, or as its merely transient money-form. The money becomes petrified into a hoard, and the seller becomes a hoarder of money. In the early stages of the circulation of commodities, it is the surplus use-values alone that are converted into money. Gold and silver thus become of themselves social expressions for superfluity or wealth. This 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. Answer: Because the Hindoos bury their money. From 1602 to 1734, he remarks, they buried 150 millions of pounds sterling of silver, which originally came from America of Europe.96 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 of the social pledge.97 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.)98 And subsequent sales, by other producers, unfollowed by purchases, merely bring about the distribution of the newly produced precious metals among all the owners of commodities. In this way, all along the line of exchange, hoards of gold and silver of varied extent are accumulated. With the possibility of holding and storing up exchange value in the shape of a particular commodity, arises also the greed for gold. Along with the extension of circulation, increases the power of money, that absolutely social form of wealth ever ready for use. "Gold is a wonderful thing! Whoever possesses it is lord of all he wants. By means of gold one can even get souls into Paradise." (Columbus in his letter from Jamaica, 1503.) Since gold does not disclose what has been transformed into it, everything, commodity or not, is convertible into gold. Everything becomes saleable and buyable. The circulation becomes the great social retort into which everything is thrown, to come out again as a gold crystal. Not even are the bones of saints, and still less are more delicate res sacrosanctæ extra commercium hominum able to withstand this alchemy.99 Just as every qualitative difference between commodities is extinguished in money, so money, on its side, like the radical leveller that it is, does away with all distinctions.100 But money itself is a commodity, an external object, capable of becoming the private property of any individual. Thus social power becomes the private power of private persons. The ancients therefore denounced money as subversive of the economical and moral order of things.101 Modern society, which soon after its birth, pulled Plutus by the hair of his head from the bowels of the earth,102 greets gold as its Holy Grail, as the glittering incarnation of the very principle of its own life. A commodity, in its capacity of a use-value, satisfies a particular want, and is a particular element of material wealth. But the value of a commodity measures the degree of its attraction for all other elements of material wealth, and therefore measures the social wealth of its owner. To a barbarian owner of commodities, and even to a West-European peasant, value is the same as value-form, and therefore, to him the increase in his hoard of gold and silver is an increase in value. It is true that the value of money varies, at one time in consequence of a variation in its own value, at another, in consequence of a change in the value of commodities. But this, on the one hand, does not prevent 200 ounces of gold from still containing more value than 100 ounces, nor, on the other hand, does it hinder the actual metallic form of this article from continuing to be the universal equivalent form of all other commodities, and the immediate social incarnation of all human labour. The desire after hoarding is in its very nature unsatiable. In its qualitative aspect, or formally considered, money has no bounds to its efficacy, i.e., it is the universal representative of material wealth, because it is directly convertible into any other commodity. But, at the same time, every actual sum of money is limited in amount, and therefore, as a means of purchasing, has only a limited efficacy. This antagonism between the quantitive 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.103 By the side of the gross form of a hoard, we find also its æsthetic form in the possession of gold and silver articles. This grows with the wealth of civil society. "Soyons riches ou paraissons riches " (Diderot). In this way there is created, on the one hand, a constantly extending market for gold and silver, unconnected with their functions as money, and, on the other hand, a latent source of supply, to which recourse is had principally in times of crisis and social disturbance. Hoarding serves various purposes in the economy of the metallic circulation. It 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 attached in order to act as circulating coin, at another, circulating coin must be repelled in order to act again as more or less stagnant money, In order that the mass of money, actually current, may constantly saturate the absorbing power of the circulation, it is necessary that the quantity of gold and silver in a country be greater than the quantity required to function as coin. This condition is fulfilled by money taking the form of hoards. These reserves serve as conduits for the supply or withdrawal of money to or from the circulation, which in this way never overflows its banks.104 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. Hence, it is only at the end of the term that the buyer has actually received the use-value of the commodity. He therefore buys it before he pays for it. The vendor sells an existing commodity, the purchaser buys as the mere representative of money, or rather of future money. The vendor becomes a creditor, the purchaser becomes a debtor. Since the metamorphosis of commodities, or the development of their value-form, appears here under a new aspect, money also acquires a fresh function; it becomes the means of payment. The character of creditor, or of debtor, results here from the simple circulation. The change in the form of that circulation stamps buyer and seller with this new die. At first, therefore, these new parts are just as transient and alternating as those of seller and buyer, and are in turns played by the same actors. But the opposition is not nearly so pleasant, and is far more capable of crystallization.105 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 economical 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 economical conditions of existence of the classes in question. Let us return to the circulation of commodities. The appearance of the two equivalents, commodities and money, at the two poles of the process of sale, has ceased to be simultaneous. The money functions now, first as a measure of value in the determination of the price of the commodity sold; the price fixed by the contract measures the obligation of the debtor, or the sum of money that he has to pay at a fixed date. Secondly, it serves as an ideal means of purchase. Although existing only in the promise of the buyer to pay, it causes the commodity to change hands. It is not before the day fixed for payment that the means of payment actually steps into circulation, leaves the hand of the buyer for that of the seller. The circulating medium was transformed into a hoard, because the process stopped short after the first phase, because the converted shape of the commodity, viz., the money, was withdrawn from circulation. The means of payment enters the circulation, but only after the commodity has left it. The money is no longer the means that brings about the process. It only brings it to a close, by stepping in as the absolute form of existence of exchange value, or as the universal commodity. The seller turned his commodity into money, in order thereby to satisfy some want; the hoarder did the same in order to keep his commodity in its money-shape, and the debtor in order to be able to pay; if he do not pay, his goods will be sold by the sheriff. The value-form of commodities, money, is therefore now the end and aim of a sale, and that owing to a social necessity springing out of the process of circulation itself. The buyer converts money back into commodities before he has turned commodities into money: in other words, he achieves the second metamorphosis of commodities before the first. The seller's commodity circulates, and realises its price, but only in the shape of a legal claim upon money. It is converted into a use-value before it has been converted into money. The completion of its first metamorphosis follows only at a later period.106 The obligations falling due within a given period, represent the sum of the prices of the commodities, the sale of which gave rise to those obligations. The quantity of gold necessary to realise this sum, depends, in the first instance, on the rapidity of currency of the means of payment. That quantity is conditioned by two circumstances: first the relations between debtors and creditors form a sort of chain, in such a way that A, when he receives money from his debtor B, straightway hands it over to C his creditor, and so on; the second circumstance is the length of the intervals between the different due-days of the obligations. The continuous chain of payments, or retarded first metamorphoses, is essentially different from that interlacing of the series of metamorphoses which we considered on a former page. By the currency of the circulating medium, the connexion between buyers and sellers, is not merely expressed. This connexion is originated by, and exists in, the circulation alone. Contrariwise, the movement of the means of payment expresses a social relation that was in existence long before. The fact that a number of sales take place simultaneously, and side be side, limits the extent to which coin can be replaced by the rapidity of currency. On the other hand, this fact is a new lever in economising the means of payment. In proportion as payments are concentrated at one spot, special institutions and methods are developed for their liquidation. Such in the middle ages were the virements at Lyons. The debts due to A from B, to B from C, to C from A, and so on, have only to be confronted with each other, in order to annul each other to a certain extent like positive and negative quantities. There thus remains only a single balance to pay. The greater the amount of the payments concentrated, the less is this balance relatively to that amount, and the less is the mass of the means of payment in circulation. The function of money as the means of payment implies a contradiction without a terminus medius. In so far as the payments balance one another, money functions only ideally as money of account, as a measure of value. In so far as actual payments have to be made, money does not serve as a circulating medium, as a mere transient agent in the interchange of products, but as the individual incarnation of social labour, as the independent form of existence of exchange value, as the universal commodity. This contradiction comes to a head in those phases of industrial and commercial crises which are known as monetary crises.107 Such a crisis occurs only where the ever-lengthening chain of payments, and an artificial system of settling them, has been fully developed. Whenever there is a general and extensive disturbance of this mechanism, no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes value-less, and their value vanishes in the presence of its own independent form. On the eve of crisis, the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money. But now the cry is everywhere: money alone is a commodity! As the hart pants after fresh water, so pants his soul after money, the only wealth.108 In a crisis, the antithesis between commodities and their value-form, money, becomes heightened into an absolute contradiction. Hence, in such events, the form under which money appears is of no importance. The money famine continues, whether payments have to be made in gold or in credit money such as bank notes.109 If we now consider the sum total of the money current during a given period, we shall find that, given the rapidity of currency of the circulating medium and of the means of payment, it is equal to the sum of the prices to be realised, plus the sum of the payments falling due, minus the payments that balance each other, minus finally the number of circuits in which the same piece of coin serves in turn as means of circulation and of payment. Hence, even when prices, rapidity of currency, and the extent of the economy in payments, are given, the quantity of money current and the mass of commodities circulating during a given period, such as a day, no longer correspond. Money that represents commodities long withdrawn from circulation, continues to be current. Commodities circulate, whose equivalent in money will not appear on the scene till some future day. Moreover, the debts contracted each day, and the payments falling due on the same day, are quite incommensurable quantities.110 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.111 When the production of commodities has sufficiently extended itself, money begins to serve as the means of payment beyond the sphere of the circulation of commodities. It becomes the commodity that is the universal subject-matter of all contracts.112 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 Biosguillebert, Marshal, Vauban, and others, was due not only to the weight of the taxes, but also to the conversion of taxes in kind into money taxes.113 In Asia, on the other hand, the fact that state taxes are chiefly composed of rents payable in kind, depends on conditions of production that are reproduced with the regularity of natural phenomena. And this mode of payment tends in its turn to maintain the ancient form of production. It is one of the secrets of the conservation of the Ottoman Empire. If the foreign trade, forced upon Japan by Europeans, should lead to the substitution of money rents for rents in kind, it will be all up with the exemplary agriculture of that country. The narrow economical 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.114 From the law of the rapidity of currency of the means of payment, it follows that the quantity of the means of payment required for all periodical payments, whatever their source, is in inverse proportion to the length of their periods.115 The development of money into a medium of payment makes it necessary to accumulate money against the dates fixed for the payment of the sums owing. While hoarding, as a distinct mode of acquiring riches, vanishes with the progress of civil society, the formation of reserves of the means of payment grows with that progress. c. Universal Money.When money leaves the home sphere of circulation, it strips off the local garbs which it there assumes, of a standard of prices, of coin, of tokens, and of a symbol of value, and returns to its original form of bullion. In the trade between the markets of the world, the value of commodities is expressed so as to be universally recognised. Hence their independent value-form also, in these cases, confronts them under the shape of universal money. It is only in the markets of the world that money acquires to the full extent the character of the commodity whose bodily form is also the immediate social incarnation of human labour in the abstract. Its real mode of existence in this sphere adequately corresponds to its ideal concept. Within the sphere of home circulation, there can be but one commodity which, by serving as a measure of value, becomes money. In the markets of the world a double measure of value holds sway, gold and silver.116 Money of the world serves as the universal medium of payment, as the universal means of purchasing, and as the universally recognised embodiment of all wealth. Its function as a means of payment in the settling of international balances is its chief one. Hence the watchword of the mercantilists, balance of trade.117 Gold and silver serve as international means of purchasing chiefly and necessarily in those periods when the customary equilibrium in the interchange of products between different nations is suddenly disturbed. And lastly, it serves as the universally recognised embodiment of social wealth, whenever the question is not of buying or paying, but of transferring wealth from one country to another, and whenever this transference in the form of commodities is rendered impossible, either by special conjunctures in the markets, or by the purpose itself that is intended.118 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.119 For this latter function, the genuine money-commodity, actual gold and silver, is necessary. On that account, Sir James Steuart, in order to distinguish them from their purely local substitutes, calls gold and silver "money of the world." The current of the stream of gold and silver is a double one. On the one hand, it spreads itself from its sources over all the markets of the world, in order to become absorbed, to various extents, into the different national spheres of circulation, to fill the conduits of currency, to replace abraded gold and silver coins, to supply the material of articles of luxury, and to petrify into hoards.120 This first current is started by the countries that exchange their labour, realise 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.121 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.122 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.123 PART II.
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interest and offspring). For the begotten are like those who beget them. But interest is money of money, so that of all modes of making a living, this is the most contrary to nature."
| RECEIPTS. | PAYMENTS. | ||
|---|---|---|---|
| Bankers' and Merchants' Bills payable after date,... | £533,596 | Bills payable after date,... | £302,674 |
| Cheques on Bankers, 8c., payable on demand,... | 357,715 | Cheques on London Bankers,... | 663,672 |
| Country Notes,... | 9,627 | Bank of England 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.
[112.][112] "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 Prince in money." "An Essay upon Publick Credit," 3rd Ed. Lond., 1710, p. 8.)
[113.][113] "L'argent...est devenu le bourreau de toutes choses." Finance is the "alambic, qui a fait évaporer une quantité effroyable de biens et de denrées pour faire ce fatal précis." "L'argent déclare la guerre à tout le genre humain." (Bois guillebert: "Dissertation sur la nature des richesses, de l'argent et des tributs." Edit. Daire. Economistes financiers. Paris, 1843, t. i., pp. 413, 419, 417.)
[114.][114] "On Whitsuntide, 1824," says Mr. Craig before the Commons' Committee of 1826, "there was such an immense demand for notes upon the banks of Edinburgh, that by 11 o'clock they had not a note left in their custody. They sent round to all the different banks to borrow, but could not get them, and many of the transactions were adjusted by slips of paper only; yet by three o'clock the whole of the notes were returned into the banks from which they had issued! It was a mere transfer from hand to hand." Although the average effective circulation of bank-notes in Scotland is less than three millions sterling, yet on certain pay days in the year, every single note in the possession of the bankers, amounting in the whole to about £7,000,000, is called into activity. On these occasions the notes have a single and specific function to perform, and so soon as they have performed it, they flow back into the various banks from which they issued. (See John Fullarton, "Regulation of Currencies." Lond: 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.
[115.][115] 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 artizans and labourers, who receive and pay every Saturday, the 40/52 parts of 1 million of money would answer these ends; but if the circles be quarterly, according to our custom of paying rent, and gathering taxes then 10 millions were requisite. Wherefore, supposing payments in general to be of a mixed circle between one week and 13, then add 10 millions to 40/52, the half of which will be 5½, so as if we have 5½ millions we have enough." (William Petty: "Political Anatomy of Ireland." 1672. Edit.: Lond. 1691, pp. 13, 14.)
[116.][116] Hence the absurdity of every law prescribing that the banks of a country shall form reserves of that precious metal alone which circulates at home. The "pleasant difficulties" thus self-created by the Bank of England, are well known. On the subject of the great epochs in the history of the changes in the relative value of gold and silver, see Karl Marx l. c. p. 215 sq. Sir Ropert 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.—Note to the 4th German edition.—We find ourselves once more in a period of a marked change in the relative values of gold and silver. About 25 years ago the ratio of gold to silver was 15.5 to 1, now it is about 22 to 1, and silver is continually falling against gold. This is essentially a result of a revolution in the processes of production of these two metals. Formerly gold was obtained almost exclusively by washing alluvial strata containing gold, the products of disintegration of gold-carrying rocks. But now this method is no longer sufficient and has been crowded to the rear by the mining of quartz layers containing gold, a method formerly considered as secondary, although well known even to the ancients (Diodorus, III, 12-14). On the other hand, immense new silver deposits were discovered in the American Rocky Mountains, and these as well as the Mexican silver mines opened up by means of railroads, which permitted the influx of modern machinery and fuel and thereby reduced the cost and increased the output of silver mining. But there is a great difference in the way in which both metals occur in the ore beds. The gold is generally solid, but scattered in minute particles through the quartz layers. The whole diggings must therefore be crushed and the gold washed out or extracted by means of quicksilver. Frequently one million grams of quartz do not contain more than 1 to 3 grams of gold, and rarely more than 30 to 60 grams. Silver, on the other hand, is rarely found in the pure state, but it occurs in some ores which are easily separated from the dross and contain as much as 40 to 90% of silver. Or smaller quantities of it are found in ores like copper, lead, etc., which are themselves worth mining. This alone is sufficient to show that the work of producing gold has rather increased, while that of producing silver has certainly decreased, and this quite naturally explains the fall in the value of silver. This fall in value would express itself in a still greater fall of price, if the price of silver were not held up even now by artificial means. The silver deposits of America, however, have been made accessible only to a small extent, and there is, consequently, every prospect of a continued fall in the value of silver. This must be further promoted by the relative decrease of the demand for silver for articles of use and luxury, its displacement by plated wares, aluminum, etc. Judge, then, of the utopianism of the bimetallist illusion that a forced international quotation could raise silver to its old value of 15.5 to 1. The chances are rather that silver will lose more and more of its character as money on the world market. F. E.
[117.][117] The opponents, themselves, of the mercantile system, a system which considered the settlement of surplus trade balances in gold and silver as the aim of international trade, entirely misconceived the functions of money of the world. I have shown by the example of Ricardo in what way their false conception of the laws that regulate the quantity of the circulating medium, is reflected in their equally false conception of the international movement in the precious metals (l. c. pp. 150 sq.). His erroneous dogma: "An unfavourable balance of trade never arises but from a redundant currency.... The exportation of the coin is caused by its cheapness, and is not the effect, but the cause of an unfavourable balance," already occurs in Barbon: "The Balance of Trade, if there be one, is not the cause of sending away the money out of a nation; but that proceeds from the difference of sending away the money out of a nation; but that proceeds from the difference of the value of bullion in every country." (N. Barbon; l. c. pp. 59, 60.) MacCulloch in "the Literature of Political Economy, a classified catalogue, Lond. 1845," praises Barbon for this anticipation, but prudently passes over the naïve forms, in which Barbon clothes the absurd supposition on which the "currency principle" is based. The absence of real criticism and even of honesty, in that catalogue, culminates in the sections devoted to the history of the theory of money; the reason is that MacCulloch in this part of the work is flattering Lord Overstone whom he calls "fecile princeps argentariorum."
[118.][118] For instance, in subsidies, money loans for carrying on wars or for enabling banks to resume cash payment, 8c., it is the money form, and no other, of value that may be wanted.
[119.][119] 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, l. c., p. 134.)—Note to the 4th German edition.—A still more convincing illustration is given by the ease with which the same France, in 1871 to 1873, was able to pay off in 30 months a war indemnity ten times larger, and to a considerable extent also in metal money. F. E.
[120.][120] "L'argent se partage entre les nations relativement au besoin qu'elles en ont.... étant toujours attiré par les productions." (Le Trosne l. c., p. 916.) "The mines which are continually giving gold and silver, do give sufficient to supply such a needful balance to every nation." (J. Vanderlint, l. c., p. 40.)
[121.][121] "Exchanges rise and fall every week, and at some particular times in the year run high against a nation, and at other times run as high on the contrary." (N. Barbon, l. c., p. 39.)
[122.][122] These various functions are liable to come into dangerous conflict with one another whenever gold and silver have also to serve as a fund for the conversion of bank-notes.
[123.][123] "What money is more than of absolute necessity for a Home Trade, is dead stock...and brings no profit to that it's kept in, but as it is transported in trade, as well as imported" (John Bellers, Essays, p. 12.) "What if we have too much coin? We may melt down the heaviest and turn it into the splendour of plate, vessels or utensils of gold or silver; or send it out as a commodity, where the same is wanted or desired; or let it out at interest, where interest is high" (W. Petty: "Quantulumcunque," p. 39.) "Money is but the fat of the Body Politick, whereof too much doth as often hinder its agility, as too little makes it sick...as fat lubricates the motion of the muscles, feeds in want of victuals, fills up the uneven cavities, and beautifies the body; so doth money in the state quicken its action, feeds from abroad in time of dearth at home; evens accounts...and beautifies the whole; altho more especially the particular persons that have it in plenty." (W. Petty. "Political Anatomy of Ireland," p. 14.)
[1.][1] The contrast between the power, based on the personal relations of dominion and servitude, that is conferred by landed property, and the impersonal power that is given by money, is well expressed by the two French proverbs, "Nulle terre sans seigneur," and "L'argent n'a pas de maitre."
[2.][2] "Avec de l'argent on achète des marchandises, et avec des marchandises on achète de l'argent." (Mercier de la Raviere: "L'ordre naturel et essentiel des sociétés politiques," p. 543.)
[3.][3] "When a thing is bought in order to be sold again, the sum employed is called money advanced; when it is bought not to be sold, it may be said to be expended."—(James Steuart: "Works," 8c. Edited by Gen. Sir James Steuart, his son. Lond., 1805. V. I., p. 274.)
[4.][4] "On n'échange pas de l'argent contre de l'argent," says Mercier de la Rivière to the Mercantilists (1. c., p. 486). In a work, which, ex professo, treats of "trade" and "speculation," occurs the following: "All trade consists in the exchange of things of different kinds; and the advantage" (to the merchant?) "arises out of this difference. To exchange a pound of bread against a pound of bread...would be attended with no advantage;...Hence trade is advantageously contrasted with gambling, which consists in a mere exchange of money for money." (Th, Corbet, "An Inquiry into the Causes and Modes of the Wealth of Individuals; or the principles of Trade and Speculation explained." London, 1841, p. 5.) Although Corbet does not see that M—M, the exchange of money for money, is the characteristic form of circulation, not only of merchants' capital but of all capital, yet at least he acknowledges that this form is common to gambling and to one species of trade, viz., speculation: but then comes MacCulloch and makes out, that to buy in order to sell, is to speculate, and thus the difference between Speculation and Trade vanishes. "Every transaction in which an individual buys produce in order to sell it again, is, in fact, a speculation." (MacCulloch: "A Dictionary Practical, 8c., of Commerce." Lond., 1847, p. 1058.) With much more naiveté, Pinto, the Pindar of the Amsterdam Stock Exchange, remarks, "Le commerce est un jeu: (taken from Locke) et ce n'est pas avec des gueux qu'on peut gagner. Si l'on gagnait long-temps en tout avec tous, il faudrait rendre de bon accord les plus grandes parties du profit pour recommencer le jeu." (Pinto: "Traité de la Circulation et du Crédit." Amsterdam, 1771, p. 231.)
[5.][5] "Capital is divisible...into the original capital and the profit, the increment to the capital...although in practice this profit is immediately turned into capital, and set in motion with the original." (F. Engels, "Umrisse zu einer Kritik der Nationalokonomie, in: Deutsch-Französische Jahrbücher, herausgegeben von Arnold Ruge und Karl Marx." Paris, 1844, p. 99.)
[6.][6] Aristotle opposes Œconomic to Chrematistic. He starts from the former. So far as it is the art of gaining a livelihood, it is limited to procuring those articles that are necessary to existence, and useful either to a household or the state. "True wealth (
) consists of such values in use; for the quantity of possessions of this kind, capable of making life pleasant, is not unlimited. There is, however, a second mode of acquiring things, to which we may by preference and with correctness give the name of Chrematistic, and in this case, there appear to be no limits to riches and possessions. Trade (
is literally retail trade, and Aristotle takes this kind because in it values in use predominate) does not in its nature belong to Chrematistic, for here the exchange has reference only to what is necessary to themselves (the buyer or seller)." Therefore, as he goes on to show, the original form of trade was barter, but with the extension of the latter, there arose the necessity for money. On the discovery of money, barter of necessity developed into 
into trading in commodities, and this again, in opposition to its original tendency, grew into Chrematistic, into the art of making money. Now Chrematistic is distinguishable from Œconomic in this way, that "in the case of Chrematistic, circulation is the source of riches (
).And it appears to revolve about money, for money is the beginning and end of this kind of exchange (
). Therefore also riches, such as Chrematistic strives for, are unlimited. Just as every art that is not a means to an end, but an end in itself, has no limit to its aims, because it seeks constantly to approach nearer and nearer to that end, while those arts that pursue means to an end, are not boundless, since the goal itself imposes a limit upon them, so with Chrematistic, there are no bounds to its aims, these aims being absolute wealth. Œconomic not Chrematistic has a limit...the object of the former is something different from money, of the latter the augmentation of money...By confounding these two forms, which overlap each other, some people have been led to look upon the preservation and increase of money ad infinitum as the end and aim of Œconomic." (Aristotles De Rep. edit. Bekker. lib. I. c. 8, 9. passim.)
[7.][7] "Commodities (here used in the sense of use-values) are not the terminating object of the trading capitalist, money is his terminating object." (Th. Chalmers, On Pol. Econ. 8c., 2nd Ed., Glasgow, 1882, p. 165, 166.)
[8.][8] "Il mercante non conta quasi per niente il lucro fatto, ma mira sempre al futuro." (A. Genovesi, Lezioni di Economia Civile 1765), Custodi's edit of Italian Economists. Parte Moderna t. xiii. p. 139.)
[9.][9] "The inextinguishable passion for gain, the auri sacra fames, will always lead capitalists." (MacCulloch: "The principles of Polit. Econ." London, 1830, p. 179.) This view, of course, does not prevent the same MacCulloch and others of his kidney, when in theoretical difficulties, such, for example, as the question of overproduction, from transforming the same capitalist into a moral citizen, whose sole concern is for use-values, and who even developes an insatiable hunger for boots, hats, eggs, calico, and other extremely familiar sorts of use-values.
[10.][10] 
is a characteristic Greek expression for hoarding. So in English to save has the same two meanings: sauver and épargner.
[11.][11] "Questo infinito che le cose non hanno in progresso, hanno in giro." (Galiani.)
[12.][12] "Ce n'est pas la matière qui fait le capital, mais la valeur de ces matières." (J. B. Say: "Traité de l'Econ. Polit." Sème. éd. Paris, 1817, t. 1., p. 428.)
[13.][13] "Currency (!) employed in producing articles...is capital" (MacLeod: "The Theory and Practice of Banking." London, 1855, v. 1., ch. i., p. 55.) "Capital is commodities." (James Mill: "Elements of Pol. Econ." Lond., 1821, p. 74.)
[14.][14] Capital: "portion fructifiante de la richesse accumulée...valeur permanente, multipliante." (Sismondi: "Nouveaux principes de l'écon. polit.," t. i., p. 88. 89.)
[15.][15] "L'échange est une transaction admirable dans laquelie les deux contractants gagnent—toujours (!)" (Destutt de Tracy: "Traité et de ls Volonté et de ses effets." Paris, 1826, p. 68.) This work appeared afterwards as "Traité de l'Econ. Polit.
[16.][16] "Mercier de la Rivière," 1. c. p. 544.
[17.][17] "Que l'une de ces deux valeurs soit argent, ou qu'elles soient toutes deux marchandises usuelles, rien de plus indifférent en soi." (Mercier de la Rivière," 1. c. p. 548.)
[18.][18] "Ce ne sont pas les contractants qui prononcent sur valeur; elle est déridée, avant la convention." ("Le Trosne," p. 906)
[19.][19] "Dove è egualità non è lucro." (Galiani, "Della Moneta in Custodi, Parte Moderna," t. iv. p. 244.)
[20.][20] "Léchange devient désavantageux pour l'une des parties, lorsque quelque chose étrangère vient diminuer ou exagérer le prix; alors l'égaliteé est blessée, mais la lésion procède de cette cause et non de l'échange8quot:. ("Le Trosne," 1. c. p. 904.)
[21.][21] "L'échange est de sa nature un contrat d'égalit8acute; qui se fait de valeur pour valeur égale. Il n'est donc pas un moyen de s'enrichir, puisque l'on donne autant que l'on recoit." ("Le Trosne," 1. c. p. 903.)
[22.][22] Condillac: "Le Commerce et le Gouvernement" (1776). Edit. Daire et Molinari in the "Mélanges d'Econ. Polit." Paris, 1847, p. 267, etc.
[23.][23] Le Trosne, therefore, answers his friend Condillac with justice as follows: "Dans une...société formée il n'y a pas de surabondant en aucun genre." At the same time, in a bantering way, he remarks: "If both the persons who exchange receive more to an equal amount, and part with less to an equal amount, they both get the same." It is because Condillac has not the remotest idea of the nature of exchange value that he has been chosen by Herr Professor Wilhelm Roscher as a proper person to answer for the soundness of his own childish notions. See Roscher's "Die Grundlagen der Nationalökomonie, Dritte Auflage'" 1858.
[24.][24] S. P. Newman: "Elements of Polit. Econ." Andover and New York, 1835, p.175
[25.][25] "By the augmentation of the nominal value of the produce...sellers nor enriched...since what they gains as sellers, they precisely expand in the quality of buyers." ("The Essential Principles of the Wealth of Nations." 8c., London, 1797,p. 66.)
[26.][26] "Si l'on est forcé de donner pour 18 livres une quantité de telle production quien valait 24, lorsqu'on employera ce mème argent à acheter, on aura égalment pour 18 l. ce que l'on payait 24." ("Le Trosne." 1. c. p. 897.)
[27.][27] "Chaque vendeur ne peut done parvenir à renchérir habituellements ses marchandises, qu'en se soumettant aussi à payer habituellement plus cher les marchandises des autres vendeurs; et par la meme raison, chaque consommateur ne peut payer habituellement moins cher ce qu'il acheète, qu'en se soumettant aussi a une diminution semblable sur le prix des choses qu il vend." (Mercier de la Raviére," 1. c. p. 555.)
[28.][28] R. Torrens: "An Essay on the Production of Wealth." London, 1821, p. 349.
[29.][29] "The idea of profits being paid by the consumers, is assuredly, very absurd. Who are the consumers?" (G. Ramsay: " An Essay on the Distribution of Wealth." Edinburgh, 1886, p. 183.)
[30.][30] "When a man is in want of a demand, does Mr. Malthus recommend him to pay some other person to take off his goods?" is a question put by an angry disciple of Ricardo to Malthus, who, like his disciple, Parson Chalmers, economically glorifies this class of simple buyers or consumers. (See "An Inquiry into those principles respecting the Nature of Demand and necessity of Consumption, lately advocated by Mr. Malthus, " 8c. Lond., 1821, p.55.)
[31.][31] Destutt de Tracy, although, or perhaps because, he was a member of the Institute, held the opposite view. He says, industrial capitalists make profits because "they all sell for more than it has cost to produce. And to whom do they sell? In the first instance to other another." (1. c., p. 289)
[32.][32] "L'échange qui se fait de deux valeurs égales n'augmente ni ne diminue la masse des valeurs subsistantes dans la société. L'échange de deux valeurs inégales...ne change rien non plus à la somme des valeurs sociales, bien qu'il ajoute à la fortune de l'un ce pu'il ote de la fortune de l'autre." J.B. Say, 1.c.t.I., pp. 344, 345.) Say, not in the least troubled as to the consequences of this statement, borrows it, almost word for word, from the Physiocrats. The following example will shew how Monsieur Say turned to account the writings of the Physiocrats, in his day quite forgotton, for the purpose of expanding the "value" of his own. His most celebrated saying, "On n'achète des produits qu'avec des produits" (1.c., t. II., p. 438) runs as follows in the original physiocratic work: " Les productions ne se paient qu'avec des productions." ("Le Trosne," 1. c., p. 899)
[33.][33] "Exchange confers no value at all upon products." (F. Wayland: "The Elements of Political Economy." Boston, 1853, p. 168.)
[34.][34] Under the rule of invariable equivalents commerce would be impossible. (G. Opdyke: "A Treatise on Polit Economy." New York, 1851, p. 66-69.) "The difference between real value and exchange-value is based upon this fact, namely, that the value of a thing is different from the socalled equivalent given for it in trade, i.e., that this equivalent is no equivalent." (F. Engels, 1. c. p. 96.)
[35.][35] Benjamin Franklin: Works Vol. II edit. Sparks in "Positions to be examined concerning National Wealth, " p. 376.
[36.][36] Aristotle, 1. c. c. 10.
[37.][37] Profit, in the usual condition of the market, is not made by exchanging. Had it not existed before, neither could it after that transaction." (Ramsay 1. c., p. 184.)
[38.][38] From the foregoing investigation, the reader will see that this statement only means that the formation of capital must be possible even though the price and value of a commodity be the same; for its formation cannot be attributed to any deviation of the one from the other. If prices actually differ from values, we must, first of all reduce the former to the latter, in other words treat the difference as accidental in order that the phenomena may be observed in their purity, and our observations not interfered with by disturbing circumstances that have nothing to do with the process in question. We know, moreover, that this reduction is no mere scientific process. The continual oscillation in prices, their rising and falling, compensate each other, and reduce themselves to an average price, which is their hidden regulator. It forms the guiding star of the merchant or the manufacturer in every undertaking that requires time. He knows that when a long period of time is taken, commodities are sold neither over nor under, but at their average price. If therefore he thought about the matter at all, he would formulate the problem of the formation of capital as follows: How can we account for the origin of capital on the supposition that prices are regulated by the average price, i.e., ultimately by the value of the commodities? I say " ultimately," because average prices do not directly coincide with the value of commodities, as Adam Smith, Ricardo, and other believe.
[39.][39] In the form of money...capital is productive of no profit." (Ricardo: "Princ. of Pol. Econ.." p. 267.)
[40.][40] In encyclopædias of classical antiquities we find such nonsense as this—that in the ancient world capital was fully developed, "except that the free labourer and a system of credit was wanting." Mommsen also, in his "History of Rome," commits, in this respect, one blunder after another.
[41.][41] Hence legislation in various countries fixes a maximum for labour-contracts. Wherever free labour is the rule, the laws regulate the mode of terminating this contract. In some States, particularly in Mexico (before the American Civil War, also in the territories taken from Mexico, and also a matter of fact, in the Danubian provinces till the revolution affect by Kusa), slavery is hidden under the form of peonage. By means of advances, repayable in labour, which are handed down from generation to generation, not only the individual labourer, but his family, become, de facto, the property of other persons and their families. Juarez abolished peonage. The so-called Emperor Maximilian re-established it by a decree, which, in the House of Representatives at Washington, was aptly denounced as a decree for the re-introduction of slavery into Mexico. "I may make over to another the use for a limited time, of my particular bodily and mental aptitudes and capabilities; because, in consequence of this restriction, they are impressed with a character of alienation with regard to me as a whole. But by the alienation of all my labour-time and the whole of my work, I should be converting the substance itself, in other words, my general activity and reality, my person, into the property of another." (Hegel, "Philosophie des Rechts." Berlin, 1840. p. 104 § 67.)
[42.][42] The capitalist epoch is therefore characterised by this, that labour-power takes in the eyes of the labourer himself the form of a commodity which is his property; his labour consequently becomes wage labour. On the other hand, it is only from this moment that the produce of labour universally becomes a commodity.
[43.][43] "The value or worth of a man, is as of all other things his price—that is to say, so much as would be given for the use of his power." (Th. Hobbes: "Leviathan" in Works, Ed. Molesworth. Lond. 1839-44, v. iii., p. 76.)
[44.][44] Hence the Roman Villicus, as overlooker of the agricultural slaves, received "more meagre fare than working slaves, because his work was lighter." (Th. Mommsen, Röm. Geschichte, 1856, p. 810.)
[45.][45] Compare W. H. Thornton: "Overpopulation and its Remedy," Lond., 1846
[46.][46] Petty.
[47.][47] Its (labour's natural price.... consists in such a quantity of necessaries and comforts of life, as, from the nature of the climate, and the habits of the country, are necessary to support the labourer, and to enable him to rear such a family as may preserve, in the market, an undiminished supply of labour" (R.Torrens: "An Essay on the external Corn Trade." Lond., 1815, p. 62.) The word labour is here used incorrectly for labour-power.
[48.][48] Rossi. "Cours d'Econ. Polit: "Bruxelles, 1842, p. 370.
[49.][49] Sismondi: Nouv. Princ. etc., t. I, p. 112
[50.][50] All labour is paid after it has ceased." ("An inquiry into those Principles respecting the nature of Demand," 8c., p. 104.) "Le crédit commercial a dü commencer au moment où l'ouvrier, premier artisan de la production, a pu, au moyen de ses êconomies, attendre le salaire de son travail jusqu, à la fin de la semaine, de la quinzaine, du mois, du trimestre, 8c. (Ch. Ganilh: "Des Systèmes de l'Econ. Polit." 2éme, edit, Paris, 1821, t. I. p.150.)
[51.][51] "L'ouvrier préte son industrie," but adds Storch slyly: he "risks nothing" except "de perdre son salaire...L'ouvrier ne transmet rien de materiel." (Storch: "Cours d'Econ. Polit. Econ." Pétersbourg, 1815, t. II., p. 37.)
[52.][52] One example. In London there are two sorts of bakers, the "full priced," who sell bread at its full value, and the "undersellers," who sell it under its value. The latter class comprises more than three-fourths of the total number of bakers. (p. xxxii in the Report of H. S. Tremenheere, commissioner to examine into "the grievances complained of by the journeymen bakers," 8c., Lond. 1862.) The undersellers, almost without exception, sell bread adulterated with alum, soap, pearl ashes, chalk, Derbyshire stone-dust, and such like agreeable nourishing and wholesome ingredients. (See the above cited blue book, as also the report of "the committee of 1855 on the adulteration of bread," and Dr. Hassall's "Adulterations detected," 2d Ed. Lond. 1862.) Sir John Gordon stated before the committee of 1855, that "in consequence of these adulterations, the poor man, who lives on two pounds of bread a day, does not now get one fourth part of nourishing matter, let alone the deleterious effects on his health." Tremenheere states (l. c. p. xlviii), as the reason, why a very large part of the working class, although well aware of this adulteration, nevertheless accept the alum, stone-dust, 8c., as part of their purchase: that it is for them "a matter of necessity to take from their baker or from the chandler's shop, such bread as they choose to supply." As they are not paid their wages before the end of the week, they in their turn are unable "to pay for the bread consumed by their families, during the week, before the end of the week," and Tremenheere adds on the evidence of witnesses, "it is notorious that bread composed of those mixtures, is made expressly for sale in this manner." In many English and still more Scotch agricultural districts, wages are paid fortnightly and even monthly; with such long intervals between the payments, the agricultural labourer is obliged to buy on credit.... He must pay higher prices, and is in fact tied to the shop which gives him credit. Thus at Horningham in Wilts, for example, where the wages are monthly, the same flour that he could buy elsewhere at 1s 10d per stone, costs him 2s 4d per stone. ("Sixth Report" on "Public Health" by "The Medical Officer of the Privy Council, 8c., 1864." p. 264.) "The block printers of Paisley and Kilmarnock enforced, by a strike, fortnightly, instead of monthly payment of wages." (Reports of the Inspectors of Factories for 31st Oct., 1853," p. 34.) As a further pretty result of the credit given by the workmen to the capitalist, we may refer to the method current in many English coal mines, where the labourer is not paid till the end of the month, and in the meantime, receives sums on account from the capitalist, often in goods for which the miner is obliged to pay more than the market price (Truck-system). "It is a common practice with the coal masters to pay once a month, and advance cash to their workmen at the end of each intermediate week. The cash is given in the shop" (i.e., the Tommy shop which belongs to the master); "the men take it on one side and lay it out on the other ." (Children's Employment Commission, III, Report, London, 1864, p. 38, n. 192.)