1 Henry III., most Christian king of France, robbed cloisters of their relics, and turned them into money. It is well known what part the despoiling of the Delphic Temple, by the Phocians, played in the history of Greece. Temples with the ancients served as the dwellings of the gods of commodities.. They were "sacred banks. " With the Phoenicians, a trading people par excellence, money was the transmuted shape of everything. It was, therefore, quite in order that the virgins, who, at the feast of the Goddess of Love, gave themselves up to strangers, should offer to the goddess the piece of money they received.
2 " Gold, yellow, glittering, precious gold!
Thus much of this, will make black white; foul, fair; Wrong right; base, noble; old, young; coward, valiant...What this, you gods? Why, this Will lug your priests and servants from your sides; Pluck stout men's pillows from below their heads; This yellow slave Will knit and break religions; bless the accurs'd; Make the hoar leprosy ador'd; place thieves.
And give them title, knee and approbation, With senators on the bench; this is it, That makes the wappen'd widow wed again: Come damned earth, Thou common whore of mankind."
(Shakespeare: Timon of -Athers.)
Money, or the Circulation of Commodities, 109 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.^ Modern society, which, soon after its birth, pulled Plutus by the hair of his head from the bowels of the earth, ^ 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 there- fore 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 con- sequence of a variation in its own value, at another, in consequence of a change in the values of commodities. But this, on the one hand, does not prevent 200 ounces of gold from still containing more value than 100 ounces, nor, on the other hand, does it hinder the actual metallic form of this article from continuing to be the universal equivalent form of all other commodities, and the immediate social incarnation of all human labour. The desire after hoarding is in its very nature unsatiable. In its qualitative aspect, or formally considered, money has no bounds to its efficacy, i.e.^ it is the universal re- presentative 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 (Sophocles, Antigone).
' " 'EX-ri^ova-rif riji ^Xiovt^ias dvd^nv Ix, rav f/.v^uv rrji yijs avrov rov Uy.ovruvct" (Athen. Deipnos.)
no Capitalist Prodtiction.
of purchasing, has only a limited efficacy. This antagonism between the quantitative limits of money and its qualitative boundlessness, continually acts as a spur to the hoarder in his Sisyphus-like labour of accumulating. It is with him as it is with a conqueror who sees in every new country annexed, only a new boundary.
In order that gold may be held as money, and made to form a hoard, it must be prevented from circulating, or from trans- forming 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. ^ By the side of the gross form of a hoard, we find also its aesthetic form in the possession of gold and silver articles. This grows with the wealth of civil society. *' Soyons riches ou paraissons riches " (Diderot). In this way there is created, on the one hand, a constantly extending market for gold and silver, unconnected with their functions as money, and, on the other hand, a latent source of supply, to which recourse is had principally in times of crisis and social disturbance.
Hoarding serves various purposes in the economy of the metallic circulation. Its first function arises out of the conditions to which the currency of gold and silver coins is subject. We have seen how, along with the continual fluctuations in the extent and rapidity of the circulation of commodities and in their prices, the quantity of money current unceasingly ebbs and flows. This mass must, therefore, be capable of expansion and contraction. At one time money must be attracted in order to act as circulating coin, at another, circulating coin must be repelled in order to act again as more or less stagnant money.
1 "Accrescere quanto piu si puo il numero de' venditori d'ogni merce, diminuere quanto pid si puo il numero dei compratori, questi sono i cardini sui quail si raggirano tutte le operazioni di economia politica." (Verri, l.c. p. 52.)
Money ^ or the Circulation of Commodities, 1 1 1 In order that the mass of money, actually current, may con- stantly 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. ^ h. Means of Payment h. 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, condi- tions 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 ^ 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 1 " There is required for carrying on the trade of the nation a determinate sum of •specifick money, which varies, and is sometimes more, sometimes less, as the circum- stances we are in require...This ebbing and flowing of money supplies and accommodates itself, without any aid of Politicians...The buckets work alternately; when money is scarce, bullion is coined; when bullion is scarce, money is melted." (Sir D. North, 1. c. Postscript, p. 3.) John Stuart Mill, who for a long time was an oflBcial of the East India Company, confirms the fact that in India silver orna- ments still continue to perform directly the functions of a hoard. The silver ornaments are brought out and coined when there is a high rate of interest, and go back again when the rate of interest falls. (J. S. Mill's Evidence. " Reports on Bank Acts," 1857, 2084.) According to a Parliamentary document of 1864, on the gold And silver import and export of India, the import of gold and silver in 1863 exceeded the export by £19,367,764. During the 8 years immediately preceding 1864, the excess of imports over exports of the precious metals amounted to £109,652,917. During this century far more than £200,000,000 has been coined in India.
112 Capitalist Production.
repeated between the same persons, the conditions of sale are regulated in accordance with the conditions of production. On the other hand, the use of a given commodity, of a house, for instance, is sold (in common parlance, let) for a definite period. Here, it is only at the end of the term that the buyer has actually received the use-value of the commodity. He there- fore buys it before he pays for it. The vendor sells an exist- ing 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 metamor- phosis 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.^ 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 dis- placed 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 simulta- 1 The following shows the debtor and creditor relations existing between English traders at the beginning of the 18th century. " Such a spirit of cruelty reigns here in England among the men of trade, that is not to be met with in any other society of men, nor in any other kingdom of the world." ("An Essay on Credit and the Bankrupt Act," Lond., 1707, p. 2.)
Money ^ or the Circulation of Commodities, 113 neous. 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 com- modities, money, is therefore now the end and aim of a sale, and that owing to a social necessity springing out of the process of circulation itself.
The buyer converts money back into commodities before he has turned commodities into money: in other words, he achieves the second metamorphosis of commodities before the first. The seller's commodity circulates, and realises its price, but only in the shape of a legal claim upon money. It is converted into a use-value before it has been converted into money. The completion of its first metamorphosis follows only at a later period.^ 1 It will be seen from the following quotation from my book which appeared ia 1859, why I take no notice in the text of an opposite form: * 'Contrariwise, in the pro- cess M — C, the money can be alienated as a real means of purchase, and in that way, the price of the commodity can be realised before the use-value of the money is realised and the commodity actually delivered. This occurs constantly under the every-day form of pre-payments. And it is under this form, that the EnglisL H 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 be- tween debtors and creditors form a sort of chain, in such a way that A, when he receives money from his debtor B, straight- way 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 re- placed 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 concen- trated, 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 government purchases opium from the ryots of India...In these cases, however, the money always acts as a means of purchase...Of course capital also is ad- vanced in the shape of money...This point of view, however, does not fall within the horizon of simple circulation." ("Zur Kj-itik." &c., pp. 119, 120.)
Money, or the Circulation of Commodities. 115 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 circu- lating 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.^ 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 immedi- ately 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 water, so pants his soul after money, the only wealth.^ In a crisis, the antithesis between commodities and their value-form, money, becomes heightened into an absolute contradiction. Hence, in such events, the form under which money appears is of no import- 1 The monetary crisis referred to in the text, being a phase of every crisis, must be clearly distinguished from that particular form of crisis, which also is called a mone- tary crisis, but which may be produced by itself as an independent phenomenon in such a way as to react only indirectly on industry and commerce. The pivot of these crises is to be found in moneyed capital, and their sphere of direct action is there- fore the sphere of that capital, viz., banking, the stock exchange, and finance.
2 ' ' The sudden reversion from a system of credit to a system of hard cash heaps theoretical fright on top of the practical panic; and the dealers by whose agency circulation is affected, shudder before the impenetrable mystery in which their own economical relations are involved " (Karl Marx, 1. c. p. 126). "The poor stand still, be- cause the rich have no money to emjjloy them, though they have the same land and hands to provide victuals and clothes, as ever they had;,.. which is the true Riches of a Nation, and not the money." (John Bellers: " Proposals for raising a Colledge of Industry," Lond. 1695. p. 3.)
ance. The money famine continues, whether payments have to be made in gold or in credit money such as bank-notes/ If we now consider the sum total of the money current dur- ing a given period, we shall find that, given the rapidity of currency of the circulating medium and of the means of pay- ment, 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 com- modities circulating during a given period, such as a day, no longer correspond. Money that represents commodities long withdrawn from circulation, continues to be current. Com- modities circulate, whose equivalent in money will not appear on the scene till some future day. Moreover, the debts con- tracted each day, and the payments falling due on the same day, are quite incommensurable quantities.^ Credit-money springs directly out of the function of money as a means of payment. Certificates of the debts owing for the 1 The following shows how such times are exploited by the "amis du commerce." ' ' On one occasion (1839) an old grasping banker (in the city) in his private room raised the lid of the desk he sat over, and displayed to a friend rolls of banknotes, saying with intense glee there were £000,000 of them, they were held to make money tight, and would all be let our after three o'clock on the same day." ("The Theory of Exchanges. The Bank Charter Act of 1844." Lond. 1864. p. 81.) The Obsei-ver, a semi-official government organ, contained the following paragraph on 24th April, 1864: ' * Some very curious rumours are current of the means which have been resorted to in order to create a scarcity of Banknotes Questionable as it would seem, to suppose that any trick of the kind would be adopted, the report has been so universal that it really deserves mention."
2 ' ' The amount of purchases or contracts entered upon during the course of any given day, will not affect the quantity of money afloat on that particular day, but, in the vast majority of cases, will resolve themselves into multifarious drafts upon the quantity of money which may be afloat at subsequent dates more or less distant...The bills granted or credits opened, to-day, need have no resemblance whatever, cither in quantity, amount, or duration, to those granted or entered upon to-morrow or next day; nay, many of to-day's bills, and credits, when due, fall in with a mass of liabilities whose origins traverse a range of antecedent dates altogether indefinite, bills at 12, 6, 3 months or 1 often aggregating together to swell the common liabilities of one particular day..." (" The Currency Theory Keviewed; a letter to the Sc(fttish people." By a Banker in England. Edinburgh, 1845, pp. 29, 30 passim.)
Mo7tey^ or the Circulation of Co7n7nodities, \\^ 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.^ When the production of commodities has sufficiently ex- tended 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.^ Eents, 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 Eoman Empire twice failed in its attempt to levy all contributions in money. The unspeakable misery of the French agricultural population under Louis XI Y., a misery so eloquently denounced by Boisguillebert, Marshal Vauban, and others, was due not only to the weight of the taxes, but also 1 As an example of how little ready money is required in true commercial opera- tions, I give below a statement by one of the largest London houses of its yearly receipts and payments. Its transactions during the year 1856, extending to many millions of pounds sterling, are here reduced to the scale of one million.
Receipts.
Paymrnts.
Bankers' and Merchants' Bills Bills payable after date.
payable after date, Cheques on London Bankers, Cheques on Bankers, Bank of England Notes, l^ayable on demand, - Country Notes, Silver and Copper, Bank of England Notes, Silver and Copper, Post Office Orders, Total, Total, •' Report from the Select Committee on the Bank Acts, July, 1858," p. Ixxi.
2 "The course of trade being thus turned, from exchanging of goods for goods, or delivering and taking, to selling and paying, all the bargains...are now stated upon the foot of a Price in money." (" An Essay upon Publick Credit." 3rd Ed.
to the conversion of taxevS in kind into money taxes.^ 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 con- servation 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 pay- ments. These dates depend, apart from other revolutions in the wheel of reproduction, on conditions clcsely 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 re- quisite 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.^ From the law of the rapidity of currency of the means of 1 " L'argent...est devenu le bourreau de toutes choses." Finance is the " alambic, qui a fait evaporer nne quantite effroyable de biens et de denrees pour faire ce fatal precis." "L'argent declare la guerre k tout le genre humain." (Boisguillebert: " Dissertation sur la nature des richesses, de l'argent et des tributs." Edit. Daire» Economistes financiers. Paris, 1843, t. i., pp. 413, 419, 417. ) 2 " On Whitsuntide, 1824," says Mr Craig before the Commons' Committee of 182G, "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." Lend: 1844, p. 85 note). In explanation it should be stated, that in Scotland, at the date of FuUarton's work, notes and not cheques were used to withdraw deposits.
Money ^ 07"" the Circtdation of Commodities. 119 payment, it follows that the quantity of the means of pay- ment required for all periodical payments, whatever their source, is in inverse proportion to the length of their periods. The development of money into a medium of payment makes it necessary to accumulate money against the dates lixed 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 pay- ment grows with that progress.
c. Universal Money.