It was
erroneously
thought that the giving of reckoning names to definite weights of gold, is the same thing as fixing the value of those weights.
Marx - Capital-Volume-I
Since the metamorphosis of commodities, or the development of their value-form, appears here under a new aspect, money also acquires a fresh function; it becomes the means of payment.
The character of creditor, or of debtor, results here from the simple circulation. The change in the form of that circulation stamps buyer and seller with this new die. At first, therefore, these new parts are just as transient and alternating as those of seller and buyer, and are in turns played by the same actors. But the opposition is not nearly so pleasant, and is far more capable of crystallisation. 47 The same characters can, however, be assumed independently of the circulation of commodities. The class-struggles of the ancient world took the form chiefly of a contest between debtors and creditors, which in Rome ended in the ruin of the plebeian debtors. They were displaced by slaves. In the middle ages the contest ended with the ruin of the feudal debtors, who lost their political power together with the economic basis on which it was established. Nevertheless, the money relation of debtor and creditor that existed at these two periods reflected only the deeper-lying antagonism between the general economic conditions of existence of the classes in question.
Let us return to the circulation of commodities. The appearance of the two equivalents, commodities and money, at the two poles of the process of sale, has ceased to be simultaneous. The money functions now, first as a measure of value in the determination of the price of the commodity sold; the price fixed by the contract measures the obligation of the debtor, or the sum of money that he has to pay at a fixed date. Secondly, it serves as an ideal means of purchase. Although existing only in the promise of the buyer to pay, it causes the commodity to change hands. It is not before the day fixed for payment that the means of payment actually steps into circulation, leaves the hand of the buyer for that of the seller. The circulating medium was transformed into a hoard, because the process stopped short after the first phase, because the converted shape of the commodity, viz. , the money, was withdrawn from circulation. The means of payment enters the circulation, but only after the commodity has left it. The money is no longer the means that brings about the process. It only brings it to a close, by stepping in as the
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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. 48
The obligations falling due within a given period, represent the sum of the prices of the commodities, the sale of which gave rise to those obligations. The quantity of gold necessary to realise this sum, depends, in the first instance, on the rapidity of currency of the means of payment. That quantity is conditioned by two circumstances: first the relations between debtors and creditors form a sort of chain, in such a way that A, when he receives money from his debtor B, straightway hands it over to C his creditor, and so on; the second circumstance is the length of the intervals between the different due-days of the obligations. The continuous chain of payments, or retarded first metamorphoses, is essentially different from that interlacing of the series of metamorphoses which we considered on a former page. By the currency of the circulating medium, the connexion between buyers and sellers, is not merely expressed. This connexion is originated by, and exists in, the circulation alone. Contrariwise, the movement of the means of payment expresses a social relation that was in existence long before.
The fact that a number of sales take place simultaneously, and side by side, limits the extent to which coin can be replaced by the rapidity of currency. On the other hand, this fact is a new lever in economising the means of payment. In proportion as payments are concentrated at one spot, special institutions and methods are developed for their liquidation. Such in the middle ages were the virements at Lyons. The debts due to A from B, to B from C, to C from A, and so on, have only to be confronted with each other, in order to annul each other to a certain extent like positive and negative quantities. There thus remains only a single balance to pay. The greater the amount of the payments concentrated, the less is this balance relatively to that amount, and the less is the mass of the means of payment in circulation.
The function of money as the means of payment implies a contradiction without a terminus medius. In so far as the payments balance one another, money functions only ideally as money of account, as a measure of value. In so far as actual payments have to be made, money does not serve as a circulating medium, as a mere transient agent in the interchange of products, but as the individual incarnation of social labour, as the independent form of existence of exchange-value, as the universal commodity. This contradiction comes to a head in those phases of industrial and commercial crises which are known as monetary crises. 49 Such a crisis occurs only where the ever-lengthening chain of payments, and an artificial system of settling them, has been fully developed. Whenever there is a general and extensive disturbance of this mechanism, no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes valueless, and their value vanishes in the presence of its own independent form. On the eve of the crisis, the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money. But now the cry is everywhere: money alone is a commodity! As the hart pants after fresh
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water, so pants his soul after money, the only wealth. 50 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. 51
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. 52
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. 53
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. 54 Rents, taxes, and such like payments are transformed from payments in kind into money payments. To what extent this transformation depends upon the general conditions of production, is shown, to take one example, by the fact that the Roman Empire twice failed in its attempt to levy all contributions in money. The unspeakable misery of the French agricultural population under Louis XIV. , a misery so eloquently denounced by Boisguillebert, Marshal Vauban, and others, was due not only to the weight of the taxes, but also to the conversion of taxes in kind into money taxes. 55 In Asia, on the other hand, the fact that state taxes are chiefly composed of rents payable in kind, depends on conditions of production that are reproduced with the regularity of natural phenomena. And this mode of payment tends in its turn to maintain the ancient form of production. It is one of the secrets of the conservation of the Ottoman Empire. If the foreign trade, forced upon Japan by Europeans, should lead to the substitution of money rents for rents in kind, it will be all up with the exemplary agriculture of that country. The narrow economic conditions under which that agriculture is carried on, will be swept away.
In every country, certain days of the year become by habit recognised settling days for various large and recurrent payments. These dates depend, apart from other revolutions in the wheel of reproduction, on conditions closely connected with the seasons. They also regulate the dates for payments that have no direct connexion with the circulation of commodities such as taxes, rents, and so on. The quantity of money requisite to make the-payments, falling due on those dates all over the country, causes periodical, though merely superficial, perturbations in the economy of the medium of payment. 56
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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 57proportion to the length of their periods. 58
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. 59
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. 60 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. 61
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. 62 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. 63 This first current is started by the countries that exchange their labour, realised in commodities, for the labour embodied in the precious metals by gold and silver-producing countries. On the other hand, there is a continual flowing backwards and forwards of gold and silver between the different national spheres of circulation, a current whose motion depends on the ceaseless fluctuations in the course of exchange. 64
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
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performance of their peculiar functions. 65 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. 66
1 The question -- Why does not money directly represent labour-time, so that a piece of paper may represent, for instance, x hours' labour, is at bottom the same as the question why, given the production of commodities, must products take the form of commodities? This is evident, since their taking the form of commodities implies their differentiation into commodities and money. Or, why cannot private labour -- labour for the account of private individuals -- be treated as its opposite, immediate social labour? I have elsewhere examined thoroughly the Utopian idea of --labour-money? in a society founded on the production of commodities (l. c. , p. 61, seq. ). On this point I will only say further, that Owen's --labour-money,? for instance, is no more --money? than a ticket for the theatre. Owen pre-supposes directly associated labour, a form of production that is entirely in consistent with the production of commodities. The certificate of labour is merely evidence of the part taken by the individual in the common labour, and of his right to a certain portion of the common produce destined for consumption. But it never enters into Owen's head to pre-suppose the production of commodities, and at the same time, by juggling with money, to try to evade the necessary conditions of that production.
2 Savages and half-civilised races use the tongue differently. Captain Parry says of the inhabitants on the west coast of Baffin's Bay: --In this case (he refers to barter) they licked it (the thing represented to them) twice to their tongues, after which they seemed to consider the bargain satisfactorily concluded. ? In the same way, the Eastern Esquimaux licked the articles they received in exchange. If the tongue is thus used in the North as the organ of appropriation, no wonder that, in the South, the stomach serves as the organ of accumulated property, and that a Kaffir estimates the wealth of a man by the size of his belly. That the Kaffirs know what they are about is shown by the following: at the same time that the official British Health Report of 1864 disclosed the deficiency of fat-forming food among a large part of the working-class, a certain Dr. Harvey (not, however, the celebrated discoverer of the circulation of the blood), made a good thing by advertising recipes for reducing the superfluous fat of the bourgeoisie and aristocracy.
3 See Karl Marx: --Zur Kritik, &c. ? --Theorien von der Masseinheit des Geldes,? p. 53, seq.
4 --Wherever gold and silver have by law been made to perform the function of money or of a measure of value side by side, it has always been tried, but in vain, to treat them as one and the same material. To assume that there is an invariable ratio between the quantities of gold and silver in which a given quantity of labour-time is incorporated, is to assume in fact, that gold and silver are of one and the same material, and that a given mass of the less valuable metal, silver, is a constant fraction of a given mass of gold. From the reign of Edward III. to the time of George II. , The history of money in England consists of one long series of perturbations caused by the clashing of the legally fixed ratio between The values of gold and silver, with the fluctuations in their real values. At one time gold was too high, at another, silver. The metal that for the time being was estimated below its value, was withdrawn from circulation, mated and exported. The ratio between the two metals was then again altered by law, but the new nominal ratio soon came into conflict again with the real one. In our own times, the slight and transient fall in the value of gold compared with silver, which was a consequence of The Indo-Chinese demand for silver, produced on a far more extended scale in France the same phenomena, export of silver, and its expulsion from circulation by gold. During the years 1855, 1856 and 1857, the excess in France of gold-imports over gold-exports amounted to ? 41,580,000, while the
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excess of silver-exports over silver-imports was ? 14,704,000. In fact, in those countries in which both metals are legally measures of value, and therefore both legal tender so that everyone has the option of paying in either metal, the metal That rise in value is at a premium, and, like every other commodity, measures its price in the over-estimated metal which alone serve in reality as The standard of value. The result of all experience and history with regard to this equation is simply that, where two commodities perform by law the functions of a measure of value, in practice one alone maintains that position. ? (Karl Marx, l. c. , pp. 52, 53. )
5 The peculiar circumstance, that while the ounce of gold serves in England as the unit of the standard of money, the pound sterling does not form an aliquot part of it, has been explained as follows: --Our coinage was originally adapted to the employment of silver only, hence, an ounce of silver can always be divided into a certain adequate number of pieces of coin, but as gold was introduced at a later period into a coinage adapted only to silver, an ounce of gold cannot be coined into an aliquot number of pieces. ? Maclaren, --A Sketch of the History of the Currency. ? London, 1858, p. 16.
6 With English writers the confusion between measure of value and standard of price (standard of value) is indescribable. Their functions, as well as their names, are constantly interchanged.
7 Moreover, it has not general historical validity.
8 It is thus that the pound sterling in English denotes less than one-third of its original weight; the pound Scot, before the union, only 1-36th; the French livre, 1-74th; the Spanish maravedi, less than 1- 1,000th; and the Portuguese rei a still smaller fraction.
9 --Le monete le quali oggi sono ideal, sono le piu^ antiche d'ogni nazione, e tutte furono un tempo real, e perche erano reali con esse si contava? [--The coins which today are ideal are the oldest coins of every nation, and all of them were once real, and precisely because they were real they were used for calculation? ] (Galiani: Della moneta, l. c. , p. 153. )
10 David Urquhart remarks in his --Familiar Words? on the monstrosity (! ) that now-a-days a pound (sterling), which is the unit of the English standard of money, is equal to about a quarter of an ounce of gold. --This is falsifying a measure, not establishing a standard. ? He sees in this --false denomination? of the weight of gold, as in everything else. the falsifying hand of civilisation.
11 When Anacharsis was asked for what purposes the Greeks used money, he replied, --For reckoning. ? (Ashen. Deipn. 1. iv. 49 v. 2. ed. Schweighauser, 1802. )
12 ? Owing to the fact that money, when serving as the standard of price, appears under the same reckoning names as do the prices of commodities, and that therefore the sum of ? 3 17s. 10 1/2d. may signify on the one hand an ounce weight of gold, and on the other, the value of a ton of iron, this reckoning name of money has been called its mint-price. Hence there sprang up the extraordinary notion, that the value of gold is estimated in its own material, and that, in contradistinction to all other commodities, its price is fixed by the State.
It was erroneously thought that the giving of reckoning names to definite weights of gold, is the same thing as fixing the value of those weights. ? (Karl Marx, l. c. , p. 52. )
13 See --Theorien von der Masseinheit des Geldes? in --Zur Kritik der Pol Oekon. &c. ,? p. 53, seq. The fantastic notions about raising or lowering the mint-price of money by transferring to greater or smaller weights of gold or silver, the names already legally appropriated to fixed weights of those metals; such notions, at least in those cases in which they aim, not at clumsy financial operations against creditors, both public and private but at economic quack remedies, have been so exhaustively treated by Wm. Petty in his --Quantulumcunque concerning money: To the Lord Marquis of Halifax, 1682,? that even his immediate followers, Sir Dudley North and John Locke, not to mention later ones, could only dilute him. --If the wealth of a nation? he remarks, --could be decupled by a
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proclamation, it were strange that such proclamations have not long since been made by our Governors. ? (l. c. , p. 36. )
14 --Ou bien, il faut consentir a` dire qu'une valeur d'un million en argent vaut plus qu'une valeur e? gale en marchandises. ? [--Or indeed it must be admitted that a million in money is worth more than an equal value in commodities? ] (Le Trosne, l. c. , p. 919), which amounts to saying --qu'une valeur vaut plus qu'une valeur e? gale. ? [--that one value is worth more than another value which is equal to it. ? ]
15 Jerome had to wrestle hard, not only in his youth with the bodily flesh, as is shown by his fight in the desert with the handsome women of his imagination, but also in his old age with the spiritual flesh. --I thought,? he says, --I was in the spirit before the Judge of the Universe. ? --Who art thou? ? asked a voice. --I am a Christian. ? --Thou liest,? thundered back the great Judge, --thou art nought but a Ciceronian. ?
16
--? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? '? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? '? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? . ? [--As Heraclitus says, all things are exchanged for fire and fire for all things, as wares are exchanged for gold and gold for wares. ? ] (F. Lassalle: --Die Philosophie Herakleitos des Dunkeln. ? Berlin, 1858, Vol. I, p. 222. ) Lassalle in his note on this passage, p. 224, n. 3. , erroneously makes gold a mere symbol of value.
1\7 Note by the Institute of Marxism-Leninism in the Russian edition. -- In his letter of November 28, 1878, to N. F. Danielson (Nikolai-on) Marx proposed that this sentence be corrected to read as follows: --And, as a matter of fact, the value of each single yard is but the materialised form of a part of the social labour expended on the whole number of yards. ? An analogous correction was made in a copy of the second German edition of the first volume of --Capital? belonging to Marx; however, not in his handwriting.
18 --Toute vente est achat. ? [--Every sale is a purchase. ? ] (Dr. Quesnay: --Dialogues sur le Commerce et les Travaux des Artisans. ? Physiocrates ed. Daire I. Partie, Paris, 1846, p. 170), or as Quesnay in his --Maximes ge? ne? rales?
The character of creditor, or of debtor, results here from the simple circulation. The change in the form of that circulation stamps buyer and seller with this new die. At first, therefore, these new parts are just as transient and alternating as those of seller and buyer, and are in turns played by the same actors. But the opposition is not nearly so pleasant, and is far more capable of crystallisation. 47 The same characters can, however, be assumed independently of the circulation of commodities. The class-struggles of the ancient world took the form chiefly of a contest between debtors and creditors, which in Rome ended in the ruin of the plebeian debtors. They were displaced by slaves. In the middle ages the contest ended with the ruin of the feudal debtors, who lost their political power together with the economic basis on which it was established. Nevertheless, the money relation of debtor and creditor that existed at these two periods reflected only the deeper-lying antagonism between the general economic conditions of existence of the classes in question.
Let us return to the circulation of commodities. The appearance of the two equivalents, commodities and money, at the two poles of the process of sale, has ceased to be simultaneous. The money functions now, first as a measure of value in the determination of the price of the commodity sold; the price fixed by the contract measures the obligation of the debtor, or the sum of money that he has to pay at a fixed date. Secondly, it serves as an ideal means of purchase. Although existing only in the promise of the buyer to pay, it causes the commodity to change hands. It is not before the day fixed for payment that the means of payment actually steps into circulation, leaves the hand of the buyer for that of the seller. The circulating medium was transformed into a hoard, because the process stopped short after the first phase, because the converted shape of the commodity, viz. , the money, was withdrawn from circulation. The means of payment enters the circulation, but only after the commodity has left it. The money is no longer the means that brings about the process. It only brings it to a close, by stepping in as the
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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. 48
The obligations falling due within a given period, represent the sum of the prices of the commodities, the sale of which gave rise to those obligations. The quantity of gold necessary to realise this sum, depends, in the first instance, on the rapidity of currency of the means of payment. That quantity is conditioned by two circumstances: first the relations between debtors and creditors form a sort of chain, in such a way that A, when he receives money from his debtor B, straightway hands it over to C his creditor, and so on; the second circumstance is the length of the intervals between the different due-days of the obligations. The continuous chain of payments, or retarded first metamorphoses, is essentially different from that interlacing of the series of metamorphoses which we considered on a former page. By the currency of the circulating medium, the connexion between buyers and sellers, is not merely expressed. This connexion is originated by, and exists in, the circulation alone. Contrariwise, the movement of the means of payment expresses a social relation that was in existence long before.
The fact that a number of sales take place simultaneously, and side by side, limits the extent to which coin can be replaced by the rapidity of currency. On the other hand, this fact is a new lever in economising the means of payment. In proportion as payments are concentrated at one spot, special institutions and methods are developed for their liquidation. Such in the middle ages were the virements at Lyons. The debts due to A from B, to B from C, to C from A, and so on, have only to be confronted with each other, in order to annul each other to a certain extent like positive and negative quantities. There thus remains only a single balance to pay. The greater the amount of the payments concentrated, the less is this balance relatively to that amount, and the less is the mass of the means of payment in circulation.
The function of money as the means of payment implies a contradiction without a terminus medius. In so far as the payments balance one another, money functions only ideally as money of account, as a measure of value. In so far as actual payments have to be made, money does not serve as a circulating medium, as a mere transient agent in the interchange of products, but as the individual incarnation of social labour, as the independent form of existence of exchange-value, as the universal commodity. This contradiction comes to a head in those phases of industrial and commercial crises which are known as monetary crises. 49 Such a crisis occurs only where the ever-lengthening chain of payments, and an artificial system of settling them, has been fully developed. Whenever there is a general and extensive disturbance of this mechanism, no matter what its cause, money becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities can no longer replace it. The use-value of commodities becomes valueless, and their value vanishes in the presence of its own independent form. On the eve of the crisis, the bourgeois, with the self-sufficiency that springs from intoxicating prosperity, declares money to be a vain imagination. Commodities alone are money. But now the cry is everywhere: money alone is a commodity! As the hart pants after fresh
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water, so pants his soul after money, the only wealth. 50 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. 51
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. 52
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. 53
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. 54 Rents, taxes, and such like payments are transformed from payments in kind into money payments. To what extent this transformation depends upon the general conditions of production, is shown, to take one example, by the fact that the Roman Empire twice failed in its attempt to levy all contributions in money. The unspeakable misery of the French agricultural population under Louis XIV. , a misery so eloquently denounced by Boisguillebert, Marshal Vauban, and others, was due not only to the weight of the taxes, but also to the conversion of taxes in kind into money taxes. 55 In Asia, on the other hand, the fact that state taxes are chiefly composed of rents payable in kind, depends on conditions of production that are reproduced with the regularity of natural phenomena. And this mode of payment tends in its turn to maintain the ancient form of production. It is one of the secrets of the conservation of the Ottoman Empire. If the foreign trade, forced upon Japan by Europeans, should lead to the substitution of money rents for rents in kind, it will be all up with the exemplary agriculture of that country. The narrow economic conditions under which that agriculture is carried on, will be swept away.
In every country, certain days of the year become by habit recognised settling days for various large and recurrent payments. These dates depend, apart from other revolutions in the wheel of reproduction, on conditions closely connected with the seasons. They also regulate the dates for payments that have no direct connexion with the circulation of commodities such as taxes, rents, and so on. The quantity of money requisite to make the-payments, falling due on those dates all over the country, causes periodical, though merely superficial, perturbations in the economy of the medium of payment. 56
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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 57proportion to the length of their periods. 58
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. 59
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. 60 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. 61
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. 62 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. 63 This first current is started by the countries that exchange their labour, realised in commodities, for the labour embodied in the precious metals by gold and silver-producing countries. On the other hand, there is a continual flowing backwards and forwards of gold and silver between the different national spheres of circulation, a current whose motion depends on the ceaseless fluctuations in the course of exchange. 64
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
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performance of their peculiar functions. 65 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. 66
1 The question -- Why does not money directly represent labour-time, so that a piece of paper may represent, for instance, x hours' labour, is at bottom the same as the question why, given the production of commodities, must products take the form of commodities? This is evident, since their taking the form of commodities implies their differentiation into commodities and money. Or, why cannot private labour -- labour for the account of private individuals -- be treated as its opposite, immediate social labour? I have elsewhere examined thoroughly the Utopian idea of --labour-money? in a society founded on the production of commodities (l. c. , p. 61, seq. ). On this point I will only say further, that Owen's --labour-money,? for instance, is no more --money? than a ticket for the theatre. Owen pre-supposes directly associated labour, a form of production that is entirely in consistent with the production of commodities. The certificate of labour is merely evidence of the part taken by the individual in the common labour, and of his right to a certain portion of the common produce destined for consumption. But it never enters into Owen's head to pre-suppose the production of commodities, and at the same time, by juggling with money, to try to evade the necessary conditions of that production.
2 Savages and half-civilised races use the tongue differently. Captain Parry says of the inhabitants on the west coast of Baffin's Bay: --In this case (he refers to barter) they licked it (the thing represented to them) twice to their tongues, after which they seemed to consider the bargain satisfactorily concluded. ? In the same way, the Eastern Esquimaux licked the articles they received in exchange. If the tongue is thus used in the North as the organ of appropriation, no wonder that, in the South, the stomach serves as the organ of accumulated property, and that a Kaffir estimates the wealth of a man by the size of his belly. That the Kaffirs know what they are about is shown by the following: at the same time that the official British Health Report of 1864 disclosed the deficiency of fat-forming food among a large part of the working-class, a certain Dr. Harvey (not, however, the celebrated discoverer of the circulation of the blood), made a good thing by advertising recipes for reducing the superfluous fat of the bourgeoisie and aristocracy.
3 See Karl Marx: --Zur Kritik, &c. ? --Theorien von der Masseinheit des Geldes,? p. 53, seq.
4 --Wherever gold and silver have by law been made to perform the function of money or of a measure of value side by side, it has always been tried, but in vain, to treat them as one and the same material. To assume that there is an invariable ratio between the quantities of gold and silver in which a given quantity of labour-time is incorporated, is to assume in fact, that gold and silver are of one and the same material, and that a given mass of the less valuable metal, silver, is a constant fraction of a given mass of gold. From the reign of Edward III. to the time of George II. , The history of money in England consists of one long series of perturbations caused by the clashing of the legally fixed ratio between The values of gold and silver, with the fluctuations in their real values. At one time gold was too high, at another, silver. The metal that for the time being was estimated below its value, was withdrawn from circulation, mated and exported. The ratio between the two metals was then again altered by law, but the new nominal ratio soon came into conflict again with the real one. In our own times, the slight and transient fall in the value of gold compared with silver, which was a consequence of The Indo-Chinese demand for silver, produced on a far more extended scale in France the same phenomena, export of silver, and its expulsion from circulation by gold. During the years 1855, 1856 and 1857, the excess in France of gold-imports over gold-exports amounted to ? 41,580,000, while the
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excess of silver-exports over silver-imports was ? 14,704,000. In fact, in those countries in which both metals are legally measures of value, and therefore both legal tender so that everyone has the option of paying in either metal, the metal That rise in value is at a premium, and, like every other commodity, measures its price in the over-estimated metal which alone serve in reality as The standard of value. The result of all experience and history with regard to this equation is simply that, where two commodities perform by law the functions of a measure of value, in practice one alone maintains that position. ? (Karl Marx, l. c. , pp. 52, 53. )
5 The peculiar circumstance, that while the ounce of gold serves in England as the unit of the standard of money, the pound sterling does not form an aliquot part of it, has been explained as follows: --Our coinage was originally adapted to the employment of silver only, hence, an ounce of silver can always be divided into a certain adequate number of pieces of coin, but as gold was introduced at a later period into a coinage adapted only to silver, an ounce of gold cannot be coined into an aliquot number of pieces. ? Maclaren, --A Sketch of the History of the Currency. ? London, 1858, p. 16.
6 With English writers the confusion between measure of value and standard of price (standard of value) is indescribable. Their functions, as well as their names, are constantly interchanged.
7 Moreover, it has not general historical validity.
8 It is thus that the pound sterling in English denotes less than one-third of its original weight; the pound Scot, before the union, only 1-36th; the French livre, 1-74th; the Spanish maravedi, less than 1- 1,000th; and the Portuguese rei a still smaller fraction.
9 --Le monete le quali oggi sono ideal, sono le piu^ antiche d'ogni nazione, e tutte furono un tempo real, e perche erano reali con esse si contava? [--The coins which today are ideal are the oldest coins of every nation, and all of them were once real, and precisely because they were real they were used for calculation? ] (Galiani: Della moneta, l. c. , p. 153. )
10 David Urquhart remarks in his --Familiar Words? on the monstrosity (! ) that now-a-days a pound (sterling), which is the unit of the English standard of money, is equal to about a quarter of an ounce of gold. --This is falsifying a measure, not establishing a standard. ? He sees in this --false denomination? of the weight of gold, as in everything else. the falsifying hand of civilisation.
11 When Anacharsis was asked for what purposes the Greeks used money, he replied, --For reckoning. ? (Ashen. Deipn. 1. iv. 49 v. 2. ed. Schweighauser, 1802. )
12 ? Owing to the fact that money, when serving as the standard of price, appears under the same reckoning names as do the prices of commodities, and that therefore the sum of ? 3 17s. 10 1/2d. may signify on the one hand an ounce weight of gold, and on the other, the value of a ton of iron, this reckoning name of money has been called its mint-price. Hence there sprang up the extraordinary notion, that the value of gold is estimated in its own material, and that, in contradistinction to all other commodities, its price is fixed by the State.
It was erroneously thought that the giving of reckoning names to definite weights of gold, is the same thing as fixing the value of those weights. ? (Karl Marx, l. c. , p. 52. )
13 See --Theorien von der Masseinheit des Geldes? in --Zur Kritik der Pol Oekon. &c. ,? p. 53, seq. The fantastic notions about raising or lowering the mint-price of money by transferring to greater or smaller weights of gold or silver, the names already legally appropriated to fixed weights of those metals; such notions, at least in those cases in which they aim, not at clumsy financial operations against creditors, both public and private but at economic quack remedies, have been so exhaustively treated by Wm. Petty in his --Quantulumcunque concerning money: To the Lord Marquis of Halifax, 1682,? that even his immediate followers, Sir Dudley North and John Locke, not to mention later ones, could only dilute him. --If the wealth of a nation? he remarks, --could be decupled by a
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proclamation, it were strange that such proclamations have not long since been made by our Governors. ? (l. c. , p. 36. )
14 --Ou bien, il faut consentir a` dire qu'une valeur d'un million en argent vaut plus qu'une valeur e? gale en marchandises. ? [--Or indeed it must be admitted that a million in money is worth more than an equal value in commodities? ] (Le Trosne, l. c. , p. 919), which amounts to saying --qu'une valeur vaut plus qu'une valeur e? gale. ? [--that one value is worth more than another value which is equal to it. ? ]
15 Jerome had to wrestle hard, not only in his youth with the bodily flesh, as is shown by his fight in the desert with the handsome women of his imagination, but also in his old age with the spiritual flesh. --I thought,? he says, --I was in the spirit before the Judge of the Universe. ? --Who art thou? ? asked a voice. --I am a Christian. ? --Thou liest,? thundered back the great Judge, --thou art nought but a Ciceronian. ?
16
--? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? '? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? '? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? . ? [--As Heraclitus says, all things are exchanged for fire and fire for all things, as wares are exchanged for gold and gold for wares. ? ] (F. Lassalle: --Die Philosophie Herakleitos des Dunkeln. ? Berlin, 1858, Vol. I, p. 222. ) Lassalle in his note on this passage, p. 224, n. 3. , erroneously makes gold a mere symbol of value.
1\7 Note by the Institute of Marxism-Leninism in the Russian edition. -- In his letter of November 28, 1878, to N. F. Danielson (Nikolai-on) Marx proposed that this sentence be corrected to read as follows: --And, as a matter of fact, the value of each single yard is but the materialised form of a part of the social labour expended on the whole number of yards. ? An analogous correction was made in a copy of the second German edition of the first volume of --Capital? belonging to Marx; however, not in his handwriting.
18 --Toute vente est achat. ? [--Every sale is a purchase. ? ] (Dr. Quesnay: --Dialogues sur le Commerce et les Travaux des Artisans. ? Physiocrates ed. Daire I. Partie, Paris, 1846, p. 170), or as Quesnay in his --Maximes ge? ne? rales?
