(money) --in motion and make it
circulate
.
Marx - Capital-Volume-I
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[--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? puts it, --Vendre est acheter. ? [--To sell is to buy. ? ]
19 --Le prix d'une marchandise ne pouvant e^tre paye? que par le prix d'une autre marchandise? (Mercier de la Rivie`re: --L'Ordre naturel et essentiel des socie? te? s politiques. ? [--The price of one commodity can only be paid by the price of another commodity? ] Physiocrates, ed. Daire II. Partie, p. 554. )
20 --Pour avoir cet argent, il faut avoir vendu,? [--In order to have this money, one must have made a sale,? ] l. c. , p. 543.
21 As before remarked, the actual producer of gold or silver forms an exception. He exchanges his product directly for another commodity, without having first sold it.
22 --Si l'argent repre? sente, dans nos mains, les choses que nous pouvons de? sirer d'acheter, il y repre? sente aussi les choses que nous avons vendues pour cet argent. ? [--If money represents, in our hands, the things we can wish to buy, it also represents the things we have sold to obtain that money? ] (Mercier de la Rivie`re, l. c. , p. 586. )
23 --Il y a donc . . . quatre termes et trois contractants, dont l'un intervient deux fois? [--There are therefore . . . four terms and three contracting parties, one of whom intervenes twice? ] (Le Trosne, l. c. , p. 909. )
24 Self-evident as this may be, it is nevertheless for the most part unobserved by political economists, and especially by the --Free-trader Vulgaris. ?
25 See my observations on James Mill in --Zur Kritik, &c. ,? pp. 74-76. With regard to this subject, we may notice two methods characteristic of apologetic economy. The first is the identification of the
? ? 93 Chapter 3
circulation of commodities with the direct barter of products, by simple abstraction from their points of difference; the second is, the attempt to explain away the contradictions of capitalist production, by reducing the relations between the persons engaged in that mode of production, to the simple relations arising out of the circulation of commodities. The production and circulation of commodities are however, phenomena that occur to a greater or less extent in modes of production the most diverse. If we are acquainted with nothing but the abstract categories of circulation, which are common to all these modes of production, we cannot possibly know anything of the specific points of difference of those modes, nor pronounce any judgment upon them. In no science is such a big fuss made with commonplace truisms as in Political Economy. For instance, J. B. Say sets himself up as a judge of crises, because, forsooth, he knows that a commodity is a product.
26 Translator's note. -- This word is here used in its original signification of the course or track pursued by money as it changes from hand to hand, a course which essentially differs from circulation.
27 Even when the commodity is sold over and over again, a phenomenon that at present has no existence for us, it falls, when definitely sold for the last time, out of the sphere of circulation into that of consumption, where it serves either as means of subsistence or means of production.
28 --Il (l'argent) n'a d'autre mouvement que celui qui lui est imprime? par les productions. ? [--It? (money) --has no other motion than that imparted to it by the products? ] (Le Trosne, l. c. , p. 885. )
29 --Ce sont les productions qui le (l'argent) mettent en mouvement et le font circuler . . . La ce? le? rite? de son mouvement (c. de l'argent) supple? e a` sa quantite? . Lorsqu'il en est besoin il ne fait que glisser d'une main dans l'autre sans s'arre^ter un instant. ? [--It is products which set it?
(money) --in motion and make it circulate . . . The velocity of its? (money's) --motion supplements its quantity. When necessary, it does nothing but slide from hand to hand, without stopping for a moment? ] (Le Trosne, l. c. . pp. 915, 916. )
30 --Money being . . . the common measure of buying and selling, everybody who hath anything to sell, and cannot procure chapmen for it, is presently apt to think, that want of money in the. kingdom, or country, is the cause why his goods do not go off; and so, want of money is the common cry; which is a great mistake. . . What do these people want, who cry out for money? . . . The farmer complains . . . he thinks that were more money in the country; he should have a price for his goods. Then it seems money is not his want, but a price for his corn and cattel, which he would sell, but cannot. . . Why cannot he get a price? . . . (1) Either there is too much corn and cattel in the country, so that most who come to market have need of selling, as he hash, and few of buying; or (2) There wants the usual vent abroad by transportation. . . , or (3) The consumption fails, as when men, by reason of poverty, do not spend so much in their houses as formerly they did; wherefore it is not the increase of specific money, which would at all advance the farmer's goods, but the removal of any of these three causes, which do truly keep down the market. . . The merchant and shopkeeper want money in the same manner, that is, they want a vent for the goods they deal in, by reason that the markets fail? . . . [A nation] --never thrives better, than when riches are tost from hand to hand. ? (Sir Dudley North: --Discourses upon Trade,? Lond. 1691, pp. 11-15, passim. ) Herrenschwand's fanciful notions amount merely to this, that the antagonism, which has its origin in the nature of commodities, and is reproduced in their circulation, can be removed by increasing the circulating medium. But if, on the one hand, it is a popular delusion to ascribe stagnation in production and circulation to insufficiency of the circulating medium, it by no means follows, on the other hand, that an actual paucity of the medium in consequence, e. g. , of bungling legislative interference with the regulation of currency, may not give rise to such stagnation.
31 --There is a certain measure and proportion of money requisite to drive the trade of a nation, more or less than which would prejudice the same. lust as there is a certain proportion of farthings necessary in
? ? 94 Chapter 3
a small retail trade, to change silver money, and to even such reckonings as cannot be adjusted with the smallest silver pieces. . . . Now, as the proportion of the number of farthings requisite in commerce is to be taken from the number of people, the frequency of their exchanges: as also, and principally, from the value of the smallest silver pieces of money; so in like manner, the proportion of money [gold and silver specie] requisite in our trade, is to be likewise taken from the frequency of commutations, and from the bigness of the payments. ? (William Petty, --A Treatise of Taxes and Contributions. ? Lond. 1667, p. 17. ) The Theory of Hume was defended against the attacks of J. Steuart and others, by A. Young, in his --Political Arithmetic,? Lond; 1774, in which work there is a special chapter entitled --Prices depend on quantity of money, at p. 112, sqq. I have stated in --Zur Kritik, &c. ,? p. 149: --He (Adam Smith) passes over without remark the question as to the quantity of coin in circulation, and treats money quite wrongly as a mere commodity. ? This statement applies only in so far as Adam Smith, ex officio, treats of money. Now and then, however, as in his criticism of the earlier systems of Political Economy, he takes the right view. --The quantity of coin in every country is regulated by the value of the commodities which are to be circulated by It. . . . The value of the goods annually bought and sold in any country requires a certain quantity of money to circulate and distribute them to their proper consumers, and can give employment to no more. The channel of circulation necessarily draws to itself a sum sufficient to fill it, and never admits any more. ? (--Wealth of Nations. ? Bk. IV. , ch. 1. ) In like manner, ex officio, he opens his work with an apotheosis on the division of labour. Afterwards, in the last book which treats of the sources of public revenue, he occasionally repeats the denunciations of the division of labour made by his teacher, A. Ferguson.
32 --The prices of things will certainly rise in every nation, as the gold and silver increase amongst the people, and consequently, where the gold and silver decrease in any nation, the prices of all things must fall proportionately to such decrease of money. ? (Jacob Vanderlint: --Money Answers all Things. ? Lond. 1734, p. 5. ) A careful comparison of thus book with Hume's --Essays,? proves to my mind without doubt that Hume was acquainted with and made use of Vanderlint's work, which is certainly an important one. The opinion that prices are determined by the quantity of the circulating medium, was also held by Barbon and other much earlier writers. --No inconvenience,? says Vanderlint, --can arise by an unrestrained trade, but very great advantage; since, if the cash of the nation be decreased by it, which prohibitions are designed to prevent, those nations that get the cash will certainly find everything advance in price, as the cash increases amongst them. And . . . our manufactures, and everything else, will soon become so moderate as to turn the balance of trade in our favour, and thereby fetch the money back again. ? (l. c. . pp. 43, 44. )
33 That the price of each single kind of commodity forms a pan of the sum of the prices of all the commodities in circulation, is a self-evident proposition. But how use-values which are incommensurable with regard to each other, are to be exchanged, en masse for the total sum of gold and silver in a country, is quite incomprehensible. If we start from the notion that all commodities together form one single commodity, of which each is but an aliquot part, we get the following beautiful result: The total commodity = x cwt. of gold; commodity A = an aliquot part of the total commodity = the same aliquot part of x cwt. of gold. This is stated in all seriousness by Montesquieu: --Si l'on compare la masse de l'or et de l'argent qui est dans le monde avec la somme des marchandises qui s'y vend il est certain que chaque denre? e ou marchandise, en particulier, pourra e^tre compare? e a` une certaine portion de la masse entie`re. Supposons qu'il n'y ait qu'une seule denre? e ou marchandise dans le monde, ou qu'il n'y ait qu'une seule qui s'ache`te, et qu'elle se divise comme l'argent: Cette partie de cette marchandise re? pondra a` une partie de la masse de l'argent; la moitie? du total de l'une a` la moitie? du total de l'autre, &c. . . . L'e? tablissement du prix des choses de? pend toujours fondamentalement de la raison du total des choses au total des signes. ? [--If one compares the amount of gold and silver in the world with the sum of the commodities available, it is certain that each product or commodity, taken in isolation, could be compared with a certain portion of the total amount
? ? 95 Chapter 3
of money. Let us suppose that there is only one product, or commodity, in the world, or only one that can be purchased, and that it can be divided in the same way as money: a certain part of this commodity would then correspond to a part of the total amount of money; half the total of the one would correspond to half the total of the other &. . . . the determination of the prices of things always depends, fundamentally, on the relation between the total amount of things and the total amount of their monetary symbols? ] (Montesquieu, l. c. t. III, pp. 12, 13. ) As to the further development of this theory by Ricardo and his disciples, James Mill, Lord Overstone, and others, see --Zur Kritik, &c. ,? pp. 140-146, and p. 150, sqq. John Stuart Mill, with his usual eclectic logic, understands how to hold at the same time the view of his father, James Mill, and the opposite view. On a comparison of the text of his compendium, --Principles of Pol. Econ. ,? with his preface to the first edition, in which preface he announces himself as the Adam Smith of his day -- we do not know whether to admire more the simplicity of the man, or that of the public, who took him, in good faith, for the Adam Smith he announced himself to be, although he bears about as much resemblance to Adam Smith as say General Williams, of Kars, to the Duke of Wellington. The original researches of Mr. J. S. Mill which are neither extensive nor profound, in the domain of Political Economy, will be found mustered in rank and file in his little work, --Some Unsettled Questions of Political Economy,? which appeared in 1844. Locke asserts point blank the connexion between the absence of value in gold and silver, and the determination of their values by quantity alone. --Mankind having consented to put an imaginary value upon gold and silver . . . the intrinsic value, regarded in these metals, is nothing but the quantity. " (--Some Considerations,? &c. , 1691, Works Ed. 1777, Vol. II. , p. 15. )
34 It lies of course, entirely beyond my purpose to take into consideration such details as the s
eigniorage on minting. I will, however, cite for the benefit of the romantic sycophant, Adam Muller, who admires the --generous liberality? with which the English Government coins gratuitously, the following opinion of Sir Dudley North: --Silver and gold, like other commodities, have their ebbings and flowings. Upon the arrival of quantities from Spain . . . it is carried into the Tower, and coined. Not long after there will come a demand for bullion to be exported again. If there is none, but all happens to be in coin, what then? Melt it down again; there's no loss in it, for the coining costs the owner nothing. Thus the nation has been abused, and made to pay for the twisting of straw for asses to eat. If the merchant were made to pay the price of the coinage, he would not have sent his silver to the Tower without consideration, and coined money would always keep a value above uncoined silver. ? (North, l. c. , p. 18. ) North was himself one of the foremost merchants in the reign of Charles II.
35 --If silver never exceed what is wanted for the smaller payments it cannot be collected in sufficient quantities for the larger payments . . . the use of gold in the main payments necessarily implies also Its use in the retail trade: those who have gold coin offering them for small purchases, and receiving with the commodity purchased a balance of silver in return; by which means the surplus of silver that would otherwise encumber the retail dealer, is drawn off and dispersed into general circulation. But if there is as much silver as will transact the small payments independent of gold, the retail trader must then receive silver for small purchases ; and it must of necessity accumulate in his hands. ?
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? puts it, --Vendre est acheter. ? [--To sell is to buy. ? ]
19 --Le prix d'une marchandise ne pouvant e^tre paye? que par le prix d'une autre marchandise? (Mercier de la Rivie`re: --L'Ordre naturel et essentiel des socie? te? s politiques. ? [--The price of one commodity can only be paid by the price of another commodity? ] Physiocrates, ed. Daire II. Partie, p. 554. )
20 --Pour avoir cet argent, il faut avoir vendu,? [--In order to have this money, one must have made a sale,? ] l. c. , p. 543.
21 As before remarked, the actual producer of gold or silver forms an exception. He exchanges his product directly for another commodity, without having first sold it.
22 --Si l'argent repre? sente, dans nos mains, les choses que nous pouvons de? sirer d'acheter, il y repre? sente aussi les choses que nous avons vendues pour cet argent. ? [--If money represents, in our hands, the things we can wish to buy, it also represents the things we have sold to obtain that money? ] (Mercier de la Rivie`re, l. c. , p. 586. )
23 --Il y a donc . . . quatre termes et trois contractants, dont l'un intervient deux fois? [--There are therefore . . . four terms and three contracting parties, one of whom intervenes twice? ] (Le Trosne, l. c. , p. 909. )
24 Self-evident as this may be, it is nevertheless for the most part unobserved by political economists, and especially by the --Free-trader Vulgaris. ?
25 See my observations on James Mill in --Zur Kritik, &c. ,? pp. 74-76. With regard to this subject, we may notice two methods characteristic of apologetic economy. The first is the identification of the
? ? 93 Chapter 3
circulation of commodities with the direct barter of products, by simple abstraction from their points of difference; the second is, the attempt to explain away the contradictions of capitalist production, by reducing the relations between the persons engaged in that mode of production, to the simple relations arising out of the circulation of commodities. The production and circulation of commodities are however, phenomena that occur to a greater or less extent in modes of production the most diverse. If we are acquainted with nothing but the abstract categories of circulation, which are common to all these modes of production, we cannot possibly know anything of the specific points of difference of those modes, nor pronounce any judgment upon them. In no science is such a big fuss made with commonplace truisms as in Political Economy. For instance, J. B. Say sets himself up as a judge of crises, because, forsooth, he knows that a commodity is a product.
26 Translator's note. -- This word is here used in its original signification of the course or track pursued by money as it changes from hand to hand, a course which essentially differs from circulation.
27 Even when the commodity is sold over and over again, a phenomenon that at present has no existence for us, it falls, when definitely sold for the last time, out of the sphere of circulation into that of consumption, where it serves either as means of subsistence or means of production.
28 --Il (l'argent) n'a d'autre mouvement que celui qui lui est imprime? par les productions. ? [--It? (money) --has no other motion than that imparted to it by the products? ] (Le Trosne, l. c. , p. 885. )
29 --Ce sont les productions qui le (l'argent) mettent en mouvement et le font circuler . . . La ce? le? rite? de son mouvement (c. de l'argent) supple? e a` sa quantite? . Lorsqu'il en est besoin il ne fait que glisser d'une main dans l'autre sans s'arre^ter un instant. ? [--It is products which set it?
(money) --in motion and make it circulate . . . The velocity of its? (money's) --motion supplements its quantity. When necessary, it does nothing but slide from hand to hand, without stopping for a moment? ] (Le Trosne, l. c. . pp. 915, 916. )
30 --Money being . . . the common measure of buying and selling, everybody who hath anything to sell, and cannot procure chapmen for it, is presently apt to think, that want of money in the. kingdom, or country, is the cause why his goods do not go off; and so, want of money is the common cry; which is a great mistake. . . What do these people want, who cry out for money? . . . The farmer complains . . . he thinks that were more money in the country; he should have a price for his goods. Then it seems money is not his want, but a price for his corn and cattel, which he would sell, but cannot. . . Why cannot he get a price? . . . (1) Either there is too much corn and cattel in the country, so that most who come to market have need of selling, as he hash, and few of buying; or (2) There wants the usual vent abroad by transportation. . . , or (3) The consumption fails, as when men, by reason of poverty, do not spend so much in their houses as formerly they did; wherefore it is not the increase of specific money, which would at all advance the farmer's goods, but the removal of any of these three causes, which do truly keep down the market. . . The merchant and shopkeeper want money in the same manner, that is, they want a vent for the goods they deal in, by reason that the markets fail? . . . [A nation] --never thrives better, than when riches are tost from hand to hand. ? (Sir Dudley North: --Discourses upon Trade,? Lond. 1691, pp. 11-15, passim. ) Herrenschwand's fanciful notions amount merely to this, that the antagonism, which has its origin in the nature of commodities, and is reproduced in their circulation, can be removed by increasing the circulating medium. But if, on the one hand, it is a popular delusion to ascribe stagnation in production and circulation to insufficiency of the circulating medium, it by no means follows, on the other hand, that an actual paucity of the medium in consequence, e. g. , of bungling legislative interference with the regulation of currency, may not give rise to such stagnation.
31 --There is a certain measure and proportion of money requisite to drive the trade of a nation, more or less than which would prejudice the same. lust as there is a certain proportion of farthings necessary in
? ? 94 Chapter 3
a small retail trade, to change silver money, and to even such reckonings as cannot be adjusted with the smallest silver pieces. . . . Now, as the proportion of the number of farthings requisite in commerce is to be taken from the number of people, the frequency of their exchanges: as also, and principally, from the value of the smallest silver pieces of money; so in like manner, the proportion of money [gold and silver specie] requisite in our trade, is to be likewise taken from the frequency of commutations, and from the bigness of the payments. ? (William Petty, --A Treatise of Taxes and Contributions. ? Lond. 1667, p. 17. ) The Theory of Hume was defended against the attacks of J. Steuart and others, by A. Young, in his --Political Arithmetic,? Lond; 1774, in which work there is a special chapter entitled --Prices depend on quantity of money, at p. 112, sqq. I have stated in --Zur Kritik, &c. ,? p. 149: --He (Adam Smith) passes over without remark the question as to the quantity of coin in circulation, and treats money quite wrongly as a mere commodity. ? This statement applies only in so far as Adam Smith, ex officio, treats of money. Now and then, however, as in his criticism of the earlier systems of Political Economy, he takes the right view. --The quantity of coin in every country is regulated by the value of the commodities which are to be circulated by It. . . . The value of the goods annually bought and sold in any country requires a certain quantity of money to circulate and distribute them to their proper consumers, and can give employment to no more. The channel of circulation necessarily draws to itself a sum sufficient to fill it, and never admits any more. ? (--Wealth of Nations. ? Bk. IV. , ch. 1. ) In like manner, ex officio, he opens his work with an apotheosis on the division of labour. Afterwards, in the last book which treats of the sources of public revenue, he occasionally repeats the denunciations of the division of labour made by his teacher, A. Ferguson.
32 --The prices of things will certainly rise in every nation, as the gold and silver increase amongst the people, and consequently, where the gold and silver decrease in any nation, the prices of all things must fall proportionately to such decrease of money. ? (Jacob Vanderlint: --Money Answers all Things. ? Lond. 1734, p. 5. ) A careful comparison of thus book with Hume's --Essays,? proves to my mind without doubt that Hume was acquainted with and made use of Vanderlint's work, which is certainly an important one. The opinion that prices are determined by the quantity of the circulating medium, was also held by Barbon and other much earlier writers. --No inconvenience,? says Vanderlint, --can arise by an unrestrained trade, but very great advantage; since, if the cash of the nation be decreased by it, which prohibitions are designed to prevent, those nations that get the cash will certainly find everything advance in price, as the cash increases amongst them. And . . . our manufactures, and everything else, will soon become so moderate as to turn the balance of trade in our favour, and thereby fetch the money back again. ? (l. c. . pp. 43, 44. )
33 That the price of each single kind of commodity forms a pan of the sum of the prices of all the commodities in circulation, is a self-evident proposition. But how use-values which are incommensurable with regard to each other, are to be exchanged, en masse for the total sum of gold and silver in a country, is quite incomprehensible. If we start from the notion that all commodities together form one single commodity, of which each is but an aliquot part, we get the following beautiful result: The total commodity = x cwt. of gold; commodity A = an aliquot part of the total commodity = the same aliquot part of x cwt. of gold. This is stated in all seriousness by Montesquieu: --Si l'on compare la masse de l'or et de l'argent qui est dans le monde avec la somme des marchandises qui s'y vend il est certain que chaque denre? e ou marchandise, en particulier, pourra e^tre compare? e a` une certaine portion de la masse entie`re. Supposons qu'il n'y ait qu'une seule denre? e ou marchandise dans le monde, ou qu'il n'y ait qu'une seule qui s'ache`te, et qu'elle se divise comme l'argent: Cette partie de cette marchandise re? pondra a` une partie de la masse de l'argent; la moitie? du total de l'une a` la moitie? du total de l'autre, &c. . . . L'e? tablissement du prix des choses de? pend toujours fondamentalement de la raison du total des choses au total des signes. ? [--If one compares the amount of gold and silver in the world with the sum of the commodities available, it is certain that each product or commodity, taken in isolation, could be compared with a certain portion of the total amount
? ? 95 Chapter 3
of money. Let us suppose that there is only one product, or commodity, in the world, or only one that can be purchased, and that it can be divided in the same way as money: a certain part of this commodity would then correspond to a part of the total amount of money; half the total of the one would correspond to half the total of the other &. . . . the determination of the prices of things always depends, fundamentally, on the relation between the total amount of things and the total amount of their monetary symbols? ] (Montesquieu, l. c. t. III, pp. 12, 13. ) As to the further development of this theory by Ricardo and his disciples, James Mill, Lord Overstone, and others, see --Zur Kritik, &c. ,? pp. 140-146, and p. 150, sqq. John Stuart Mill, with his usual eclectic logic, understands how to hold at the same time the view of his father, James Mill, and the opposite view. On a comparison of the text of his compendium, --Principles of Pol. Econ. ,? with his preface to the first edition, in which preface he announces himself as the Adam Smith of his day -- we do not know whether to admire more the simplicity of the man, or that of the public, who took him, in good faith, for the Adam Smith he announced himself to be, although he bears about as much resemblance to Adam Smith as say General Williams, of Kars, to the Duke of Wellington. The original researches of Mr. J. S. Mill which are neither extensive nor profound, in the domain of Political Economy, will be found mustered in rank and file in his little work, --Some Unsettled Questions of Political Economy,? which appeared in 1844. Locke asserts point blank the connexion between the absence of value in gold and silver, and the determination of their values by quantity alone. --Mankind having consented to put an imaginary value upon gold and silver . . . the intrinsic value, regarded in these metals, is nothing but the quantity. " (--Some Considerations,? &c. , 1691, Works Ed. 1777, Vol. II. , p. 15. )
34 It lies of course, entirely beyond my purpose to take into consideration such details as the s
eigniorage on minting. I will, however, cite for the benefit of the romantic sycophant, Adam Muller, who admires the --generous liberality? with which the English Government coins gratuitously, the following opinion of Sir Dudley North: --Silver and gold, like other commodities, have their ebbings and flowings. Upon the arrival of quantities from Spain . . . it is carried into the Tower, and coined. Not long after there will come a demand for bullion to be exported again. If there is none, but all happens to be in coin, what then? Melt it down again; there's no loss in it, for the coining costs the owner nothing. Thus the nation has been abused, and made to pay for the twisting of straw for asses to eat. If the merchant were made to pay the price of the coinage, he would not have sent his silver to the Tower without consideration, and coined money would always keep a value above uncoined silver. ? (North, l. c. , p. 18. ) North was himself one of the foremost merchants in the reign of Charles II.
35 --If silver never exceed what is wanted for the smaller payments it cannot be collected in sufficient quantities for the larger payments . . . the use of gold in the main payments necessarily implies also Its use in the retail trade: those who have gold coin offering them for small purchases, and receiving with the commodity purchased a balance of silver in return; by which means the surplus of silver that would otherwise encumber the retail dealer, is drawn off and dispersed into general circulation. But if there is as much silver as will transact the small payments independent of gold, the retail trader must then receive silver for small purchases ; and it must of necessity accumulate in his hands. ?
