Chapter II: Money or Simple Circulation (3)

Relatively worthless things, such as _paper_, can consequently perform the function of symbols of gold money. That subsidiary currency consists of metal tokens, such as silver, copper, etc., is mainly due to the fact that in most countries the less valuable metals such as silver in England, copper in ancient Rome, Sweden, Scotland, etc., had circulated as money before they were degraded by the process of circulation to the rank of small change and replaced by a more precious metal. Besides, it is natural that the money symbol which grows directly out of metallic circulation, should itself be a metal. Just as that portion of gold which would always have to circulate as small change, is replaced by metal tokens; so can the other portion of gold which is constantly absorbed as coin by circulation in the interior of the country and, therefore, must continually circulate, be replaced with worthless tokens. The level below which the mass of circulating coin never sinks is determined in each country by experience. Thus, the originally imperceptible difference between the nominal weight and the metallic weight of a metal coin can grow apace until it reaches the point of absolute separation. The mint name of money parts company with its substance and exists outside of it in worthless slips of paper. Just as the exchange value of commodities is crystallized by their process of exchange into gold money, so is gold money sublimated in its currency into its own symbol first in the form of worn coin, then in the form of subsidiary metal currency, and finally in the form of a worthless token, paper, mere _sign of value_.

Gold coin has produced its substitutes, first metallic and then paper, only because in spite of its loss of metallic weight it continued to perform the function of coin. It did not circulate because of its wear and tear; on the contrary, it wore out to a symbol because it continued to circulate. Only in so far as gold money becomes simply a token of its own value in the process of circulation, can mere tokens of value take its place.

In so far as the movement C―M―C represents a dynamic unity of two processes C―M and M―C which pass directly one into the other, or in so far as a commodity passes through the complete process of its metamorphosis, it express its exchange value in price and in money only to discard that form at once and to become again a commodity or, rather, a use-value. That is to say, it develops _only an apparent assertion of the independence_ of its exchange value. On the other hand, we have seen that gold, in so far as it performs the function of coin or in so far as it continually circulates, actually forms only a connecting link between the metamorphoses of commodities and constitutes _but their transitory money form_; furthermore, that it realizes the price of one set of commodities only in order to realize that of another, but in no case does it constitute a stable form of exchange value or appear itself as a commodity in a state of rest. The reality which the exchange value of commodities acquires in the process and which is represented by gold in its circulation, is the reality of an electric spark. Although real gold, it plays the part of fictitious gold, and can, therefore, be replaced in this function by a token of itself.

The token of value, say paper, which plays the part of coin, is the token of a quantity of gold expressed in its currency name, i. e., it is a gold token. Just as a certain quantity of gold does not in itself express a value ratio, so is that true of the token which takes its place. In so far as a certain quantity of gold, as embodied labor-time, has a value of a certain magnitude, the gold token represents value. But the magnitude of the value which it represents depends all the time on the value of the quantity of gold for which it stands. As regards commodities the token of value expresses _the reality of their price_, it is _signum pretii_ and sign of their value only because their value is expressed in their price. In the process C―M―C, in so far as it represents the dynamic unity or direct alternation of the two metamorphoses―and that is the aspect it assumes in the sphere of circulation in which the token of value discharges its function―the exchange value of commodities acquires in price only an ideal expression and in money only an imaginary symbolic existence. Exchange value thus acquires _only_ an imaginary though material expression, but it has no real existence except in the commodities themselves, in so far as a certain quantity of labor-time is embodied in them. It _appears_, therefore, that the token of value represents _directly_ the value of commodities, by figuring not as a token of gold but as a token of the value which exists in the commodity alone and is only expressed in price. But it is a false appearance. The token of value is directly only _a token of price_, i. e., a _token of gold_, and only indirectly a token of value of a commodity. Unlike Peter Shlemihl, gold has not sold its shadow, but buys with its shadow. The token of value operates only in so far as it represents the price of one commodity as against that of another within the sphere of circulation, or in so far as it _represents gold_ to every owner of commodities. A certain comparatively worthless object such as a piece of leather, a slip of paper, etc., becomes by force of custom a token of money material, but maintains its existence in that capacity only so long as its character as a symbol of money is guaranteed by the general acquiescence of the owners of commodities, i. e., so long as it enjoys a legally established conventional existence and compulsory circulation. Paper money issued by the state and circulating as legal tender is the perfected form of the token of value, and the only form of paper money, which has its immediate origin in metallic circulation or even in the simple circulation of commodities. _Credit money_ belongs to a higher sphere of the social process of production and is governed by entirely different laws. Symbolic paper money does not in fact, differ in the least from subsidiary metal coin, except that it reaches wider spheres of circulation. We have seen that the mere technical development of the standard of price or of the mint price and later the shaping of gold bullion into coin have called forth the interference of the state; this circumstance brought about a visible separation of national circulation from the world circulation of commodities: this separation is completed by the evolution of coin into a token of value. As a mere medium of circulation money can assume an independent existence only within the sphere of national circulation.[80]

Our presentation has shown that the coin form of gold as a token of value differentiated from the gold substance itself, has its direct origin in the process of circulation and not in any agreement or state interference. Russia offers a striking example of the natural origin of the token of value. At the time when hides and furs played there the part of money, the conflict between the perishable and bulky nature of the material and its function as a medium of circulation resulted in the custom of replacing it by small pieces of stamped leather which thus became a kind of draft payable in hides and furs. Later on they became under the name of copecs mere tokens for fractions of the silver rouble and remained in use in some parts until 1700, when Peter the Great ordered their withdrawal in exchange for small copper coins issued by the state. Ancient writers who could observe the phenomena of exclusively metallic circulation, already took the view of coin as a symbol or token of value. That is true both of _Plato_[81] and _Aristotle_.[82] In countries where credit is not developed, as e. g. in China, legal tender paper money is found at an early date[83]. Early advocates of paper money expressly point out the fact that metallic coin is transformed into a token of value in the very process of circulation. So Benjamin Franklin[84] and Bishop Berkeley.[85]

How many reams of paper cut up into bills can circulate as money? Put in that way, the question would be absurd. The worthless tokens are signs of value only in so far as they represent gold within the sphere of circulation and they represent it only to the extent to which it would itself be absorbed as coin by the process of circulation; this quantity is determined by its own value, the exchange values of the commodities and the rapidity of their metamorphoses being given. Bills of a denomination of £5 could circulate in a quantity five times less than those of £1 denomination, and if all payments were made in shilling bills, then twenty times as many shilling bills would have to be in circulation as are one pound bills. If the gold currency were represented by bills of different denominations, e. g. five pound, one pound and ten shilling bills, then the quantity of these different tokens of value would be determined not only by the quantity of gold necessary for circulation as a whole, but also by that required in the sphere of circulation of each kind of bills. If fourteen million pounds sterling (this is the provision of the English Bank Law, not for the entire currency but only for credit money) were the level below which the circulation of a country never sank, then fourteen million paper bills, each a token of value of one pound, could circulate. If the value of gold fell or rose because the labor-time necessary for its production had fallen or risen, then, the exchange value of the same volume of commodities remaining the same, the number of one pound bills in circulation would rise or fall in inverse ratio to the change in the value of gold. If gold were replaced by silver as a measure of value, the ratio of the respective values of silver and gold being 1:15, and if each bill were to represent now the same quantity of silver as it represented gold before, then there would be 210 million one pound bills in circulation instead of the previous fourteen million. The number of paper bills is thus determined by the quantity of gold money which they represent in circulation, and since they are tokens of value only in so far as they represent it, their value is simply determined by their _quantity_. Thus, while the quantity of gold in circulation is determined by the prices of commodities, the value of the paper bills in circulation, on the contrary, depends exclusively on their own quantity.

The interference of the state which issues paper money as legal tender―and we are treating of paper money of that kind only―seems to do away with the economic law. The state which in its mint price gave a certain name to a piece of gold of certain weight, and in the act of coinage only impressed its stamp on gold, seems now to turn paper into gold by the magic of its stamp. Since paper bills are legal tender, no one can prevent the state from forcing as large a quantity of them as it desires into circulation and from impressing upon it any coin denomination, such as £1, £5, £20. The bills which have once gotten into circulation can not be removed, since on the one hand their course is hemmed in by the frontier posts of the country and on the other they lose all value, use-value, as well as exchange-value, outside of circulation. Take away from them their function and they become worthless rags of paper. Yet this power of the state is a mere fiction. It may throw into circulation any desired quantity of paper bills of whatever denomination, but with this mechanical act its control ceases. Once in the grip of circulation and the token of value or paper money becomes subject to its intrinsic laws.

If fourteen million pounds sterling were the quantity of gold required for the circulation of commodities and if the state were to put into circulation two hundred and ten million bills each of the denomination of £1, then these two hundred and ten millions would become the representatives of gold to the amount of fourteen million pounds sterling. It would be the same as if the state were to make the one pound bills represent a fifteen times less valuable metal or a fifteen times smaller weight of gold. Nothing would be changed but the nomenclature of the standard of price, which by its very nature is conventional, no matter whether such change takes place as a direct result of a change of the mint standard or indirectly owing to an increase of paper bills to an extent required by a new lower standard. Since the name £ would stand now for a fifteen times smaller quantity of gold, the prices of all commodities would increase fifteen times and two hundred and ten million one pound bills would now be actually as necessary as fourteen million had been before. To the same extent to which the combined quantity of tokens of value would increase now, the quantity of gold which each of them represents would decrease. The rise of prices would constitute but a reaction on the part of the process of circulation which forcibly equates the tokens of value to the quantity of gold which they are supposed to replace.

In the history of the debasement of money in England and France by their governments, we find repeatedly that prices had not risen in the same proportion in which the silver coinage had been debased. That was simply due to the fact that the proportion in which the currency was increased did not correspond to the proportion in which it had been debased; that is to say, because an inadequate quantity of coins of the poorer metallic composition was issued, if the exchange values of commodities were to be estimated in the future in the new coin as a measure of value and be realized in coins corresponding to this smaller unit of measure. This solves the difficulty left unsettled in the controversy between Locke and Lowndes. The ratio which a token of value, whether made of paper or of debased gold or silver, bears to certain weights of gold or silver estimated according to the mint price, depends not on its own composition but on the quantity in which it is found in circulation. The difficulty in understanding this is due to the fact that money in its two functions of a measure of value and a medium of circulation is subject to two not only opposite but apparently contradictory laws corresponding to the difference in the two functions. In the discharge of its function of a measure of value where money serves merely as money of account and gold only as ideal gold, everything depends on the natural substance of money. Estimated in silver or expressed in silver prices exchange values are naturally estimated quite differently than when measured in gold or as gold prices. On the contrary, in its function of a medium of circulation, where gold is not only imagined but is actually present side by side with other commodities, its substance is immaterial and everything depends on its quantity. For the unit of measure the determining factor is whether it consists of a pound of gold, silver or copper; while in the case of coin, no matter what its own composition is, it will become the embodiment of each of these units of measure in accordance with its quantity. But it goes against common sense that in the case of mere imaginary money everything should depend on its material substance, while in that of the palpably present coin all should be determined by an ideal ratio of numbers.

The rise or fall of prices of commodities following a rise or fall of the quantity of paper notes―the latter only where paper currency constitutes the exclusive medium of circulation―is thus nothing but an assertion through the process of circulation of a law mechanically violated from without; namely, that the quantity of gold in circulation is determined by the prices of commodities, and the quantity of tokens of value in circulation is determined by the quantity of gold coin which it represents. For that reason any desired number of paper notes will be absorbed and equally digested by the process of circulation, because the token of value, no matter with what gold title it may enter circulation, will be compressed within the latter to a token of that quantity of gold which could actually circulate in its place.

In the case of the circulation of tokens of value all laws pertaining to the circulation of real money appear to be reversed and standing on their heads. While gold circulates because it has value, paper has value because it circulates. While with a given exchange value of commodities, the quantity of gold in circulation depends on its own value, the value of paper depends on its own quantity in circulation. While the quantity of gold in circulation rises or falls with the rise or fall of prices of commodities, the prices of commodities seem to rise or fall with the change in the quantity of paper in circulation. While the circulation of commodities can absorb only a definite quantity of gold coin and as a result of that the alternating contraction and expansion of the currency appears as a necessary law, paper money seems to enter circulation in any desired amount. While the state is guilty of debasing gold and silver coin and of disturbing their function of a medium of circulation, if it turns out a coin, only 1-100 of a grain below its nominal weight; it performs a perfectly proper operation by issuing absolutely worthless paper notes which contain nothing of the metal except its mint denomination. While gold coin apparently represents the value of commodities only in so far as that value is itself estimated in gold or is expressed in price, the token of value seems to represent directly the value of commodities. It is, therefore, clear why students who examined one-sidedly the phenomena of circulation of money by confining their observations to the circulation of legal tender paper money, should have failed to grasp the intrinsic laws governing the circulation of money. As a matter of fact, these laws appear not only reversed but extinct in the circulation of tokens of value, since paper currency, if issued in the right quantity, goes through certain movements which are not in its nature as a token of value, while its proper movement instead of growing directly out of the metamorphosis of commodities, springs from the violation of its proper proportion to gold.

3. MONEY.

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

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

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

Let us now consider for a moment the commodity gold when it is in a state of rest, and plays the part of money in its relation to other commodities. All commodities represent in their prices a certain quantity of gold, that is to say, they are merely imaginary gold or imaginary money, representatives of gold, just as, on the other hand, money in the form of a token of value appeared as a mere representative of prices of commodities.[86] Since all commodities are thus but imaginary money, money is the only real commodity. Contrary to commodities, which only represent the independently existing exchange value, i. e., universal social labor, or abstract wealth, gold is the _material form of abstract wealth_. Through its use-value, every commodity, by its relation to some particular want, expresses only one aspect of material wealth, but one side of wealth. Money, however, satisfies every want since it can be directly converted into the object of any want. Its own use-value is realized in the endless series of use-values which form its equivalents. In its virgin metallic state it holds locked up all the material wealth which lies unfolded in the world of commodities. Thus, while commodities represent in their prices the universal equivalent or abstract wealth, viz., gold, the latter represents in its use-value the use-values of all commodities. Gold is, therefore, _the bodily representative of material wealth_. It is the “precis de toutes les choses” (Boisguillebert), the compendium of the wealth of society. At one and the same time, it is the direct incarnation of universal labor in its form, and the aggregate of all concrete labor in its substance. It is universal wealth individualized.[87] As a medium of circulation it underwent all kinds of injury, was clipped, and even reduced to the condition of a mere symbolic paper rag. As money it is restored to its golden glory.[88] From a serve it becomes a lord. From a mere understrapper it rises to the position of Lord of commodities.[89]

a. HOARDING.

Gold separates itself as money from the process of circulation whenever a commodity interrupts the process of its metamorphosis and remains in its form of a gold chrysalis. This occurs every time a sale is not immediately followed by purchase. The independent isolation of gold as money is, thus, a material expression of the disintegration of the process of circulation, or of the metamorphosis of commodities, into two separate acts independent of each other. The coin itself becomes money as soon as its course is interrupted. In the hands of the seller who takes it in exchange for his commodity, it is money and not coin; as soon as it passes out of his hands it is again coin. Everybody is a seller of the one commodity which he produces, but a buyer of all other commodities which he needs for his existence in society. While his selling is determined by the labor-time required for the production of his commodity, his buying is determined by the continual renewal of the wants of life. In order to be able to buy without having sold anything, he must sell without buying. In fact, the circulation process C―M―C is a dynamic unity of sale and purchase only in so far as it constitutes at the same time the constant process of its separation. In order that money should flow continuously as coin, coin must constantly coagulate as money. The continuous flow of coin depends on its constant accumulations in the form of reserve-funds of coin which spring up throughout the sphere of circulation and form sources of supply; the formation, distribution, disappearance, and reformation of these reserve funds is constantly changing, their existence constantly disappears, their disappearance constantly exists. Adam Smith expressed this never-ceasing transformation of coin into money and of money into coin by saying that every owner of commodities must always keep in supply besides the particular commodity which he sells, a certain quantity of the universal commodity with which he buys. We saw, that in the process C―M―C the second member M―C splits up into a series of purchases which do not take place at once, but at intervals of time, so that one part of M circulates as money while the other rests as money. Money is in that case only _suspended coin_ and the separate parts of the circulating mass of coins appear now in one form, now in another, constantly changing. This first transformation of the medium of circulation into money represents, therefore, but a technical aspect of money circulation.[90]

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

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

The owner of commodities can receive money from circulation only in return for a commodity which he gives to it. Constant selling, continual throwing of commodities into circulation is, therefore, the first condition of hoarding from the standpoint of the circulation of commodities. On the other hand, money as a medium of circulation constantly disappears in the very process of circulation by being realized all the time in use-values and becoming dissolved in fleeting pleasures. It must, therefore, be taken out of the all-consuming stream of circulation or the commodity must be kept up in its first metamorphosis, so that money is prevented from performing its function of a means of purchase. The commodity owner who has now become a hoarder, must sell as much as possible and buy as little as possible, as old Cato had taught: “patrem familias vendacem, non emacem esse.” While industry constitutes the positive condition of hoarding, saving forms the negative one. The less the equivalent of a commodity is withdrawn from circulation in the form of particular commodities or use-values, the more it is withdrawn in the shape of money or exchange value.[91] The acquisition of wealth in its universal form thus requires abstinence from wealth in its material reality. Thus the stimulating impulse for hoarding is _greed_, the objects of which are not commodities as use-values, but exchange value as commodity. In order to get possession of the surplus in its universal form, the particular wants must be treated as so much luxury and excess. Thus the Cortes presented a report to Philipp II., in 1593, in which, among other things, was said: “The Cortes of Valladolid in the year 1586 petitioned Your Majesty not to allow the further importation into the Kingdom of candles, glassware, jewelry, knives and similar articles; these things useless to human life come from abroad to be exchanged for gold, as though the Spaniards were Indians.” The hoarder despises the worldly, temporary and transitory enjoyments in his hunt after the eternal treasure, which neither moth nor rust can eat, which is perfectly celestial and earthly at the same time. “The general remote cause of our want of money is the great excess of this Kingdom in consuming the Commodities of Forreine Countries, which prove to us discommodities, in hindering us of so much treasure, which otherwise would bee brought in, in lieu of those toyes.... Wee ... consume amongst us, that great abundance of the Wines of Spaine, of France, of the Rhene, of the Levant ... the Raisins of Spaine, the Corints of the Levant, the Lawnes and Cambricks of Hannaults ... the Silkes of Italie, the Sugers and Tobaco of the West Indies, the Spices of the East Indies: All which are of no necessetie unto us and yet are bought with ready mony.”[92]

In the form of gold and silver, wealth is indestructible, both because exchange value is preserved in the shape of indestructible metal, and, especially, because gold and silver are prevented from becoming, as mediums of circulation, mere vanishing money forms of the commodity. The destructible substance is thus sacrificed for the indestructible form. “If money be taken (by means of taxation) from him, who spendeth the same ... upon eating and drinking, or any other perishing Commodity; and the same transferred to one that bestoweth it on Cloaths; I say that even in this case the Commonwealth hath some little advantage; because Cloaths do not altogether perish so soon as Meats and Drinks. But if the same be spent in Furniture of Houses, the advantage is yet a little more; if in Building of Houses, yet more; if in improving of Lands, working of Mines, Fishing, etc., yet more; but most of all, in bringing Gold and Silver into the Country; because those things are not only not perishable, but are esteemed for Wealth at all times and everywhere; whereas other Commodities which are perishable, or whose value depends upon the Fashion; or which are contingently scarce and plentiful, are Wealth, but pro hic et nunc.”[93] The withdrawal of money from the stream of circulation and the saving of it from the social interchange of matter reaches its extreme form in the _burying_ of money, so that social wealth is brought as an underground indestructible treasure into a perfectly secret private relation with the owner of commodities. Dr. Bernier, who stayed for some time at the court of Aurenzeb at Delhi, tells us how the merchants, especially the Mohammedan heathens, who control nearly all the trade and all money, secretly bury their money deep in the ground, “being imbued with the faith that the gold and silver which they put away during their lives will serve them after death in the next world.”[94] However, in so far as the asceticism of the hoarder is combined with active industry, he is rather a Protestant by religion and still more a Puritan. “It can not be denied that buying and selling are necessary, that one can not get along without them, and that one can buy like a Christian especially things that serve in need and in honor; for the patriarchs had also bought and sold cattle, wool, grain, butter, milk and other goods. They are gifts of God which He gives out of the earth and divides among men. But foreign trade which brings over from Calcutta, India and other such places commodities consisting of costly silks, and gold ware, and spices which only serve for luxury and are of no use, draining the land and the people of their money, should not be tolerated if we but had a government of princes. Yet I do not wish to write of that now, for I believe it will have to stop of itself, when we have no money any longer; and so will luxury and gluttony; for no writing or teaching will help until want and poverty will force us.”[95]

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

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

Money is not only _an_ object of the passion for riches; it is _the_ object of that passion. The latter is essentially _auri sacra fames_. The passion for riches, contrary to that for special kinds of natural wealth or use-values, such as clothing, ornaments, herds, etc., is possible only when universal wealth has been individualized as such in a particular object and can, therefore, be retained in the form of a single commodity. Money appears then no less as an object than as a source of the passion for riches.[96] The underlying fact of the matter is that exchange value as such and with it its increase become the final aim. Greed holds the hoard fast by not allowing the money to become a medium of circulation, but the thirst for gold saves the money soul of the hoard by keeping up the lasting affinity of gold for circulation.

To sum up, the activity by which hoards are built up resolves itself into withdrawal of money from circulation by continually repeated sales, and simple hoarding or _accumulation_. In fact, it is only in the sphere of simple circulation and, especially, in the form of hoarding, that accumulation of wealth as such takes place, while, as we shall see later, in the case of other so-called forms of accumulation it is only a misnomer to call them by that name in mere recollection of the simple accumulation of money. All other commodities are hoarded either as use-values, in which case the manner of storing them up is determined by the peculiarities of their use-value: the storing of grain, e. g., requires special equipment; the accumulation of sheep makes one a shepherd; the accumulation of slaves and land creates relations of master and servant, etc.; the accumulation of particular kinds of wealth requires special processes different from the simple act of hoarding, and develops special individual traits. Or, wealth in the form of commodities is hoarded as exchange-value and in that case hoarding appears as a commercial or a specific economic operation. The one who carries on such operations becomes a dealer in corn, in cattle, etc. Gold and silver are money not through some activity of the individual who accumulates it, but as crystals of the process of circulation which goes on without any aid on his part. He has nothing to do but to put them aside, adding new weights of metal to his hoard, a perfectly senseless operation which, if applied to all other commodities, would deprive them of all value.[97]

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

Quite apart from their aesthetic properties, silver and gold commodities are convertible into money, since the material of which they are made is a money material; and, inversely, gold money and gold bullion can be converted into commodities. Because gold and silver constitute the material of abstract wealth, the greatest display of wealth consists of the utilization of these metals as concrete use-values, and if the owner of commodities hides his treasure at certain stages of production, he is very anxious to appear before other owners of commodities as _rico hombre_ whenever he can do so with safety. He gilds himself and his house.[98] In Asia, especially in India, where, unlike under the capitalist system, the hoarding of wealth appears not as a subordinate function of the system of production, but as an end in itself, gold and silver commodities are practically but aesthetic forms of hoards. In mediaeval England gold and silver commodities were considered before the law as mere forms of treasure, since their value was but slightly increased by the crude labor spent upon them. They were destined to re-enter circulation and their fineness was therefore prescribed in the same manner as that of coin. The increasing use of gold and silver as objects of luxury with the growth of wealth is such a simple matter that it was perfectly clear to the ancients,[99] while modern economists have advanced the erroneous proposition that the use of silver and gold articles increases not in proportion to the growth of wealth, but in proportion to the fall in value of the precious metals. Their otherwise accurate references to the use of Californian and Australian gold are inconclusive, since the increased consumption of gold as a raw material does not find justification, according to their theory, in any corresponding decline in its value. From 1810 to 1830, in consequence of the struggle of the American colonies against Spain and the interruption of mining caused by revolutions, the annual average production of precious metals declined by more than one-half. The decline of coin in circulation in Europe amounted to nearly one-sixth, comparing the years 1829 and 1809. Although the quantity produced had thus declined and the cost of production, if it had changed at all, had increased, yet the consumption of precious metals as objects of luxury increased to an extraordinary extent in England during the very war and on the continent after the Peace of Paris. The consumption increased with the general growth of wealth.[100] It may be stated as a general law that the conversion of gold and silver money into articles of luxury prevails in times of peace, while their reconversion into bullion or even coin takes place in stormy periods.[101] How considerable the proportion is of the gold and silver treasure in the form of articles of luxury to the quantity of precious metals serving as money may be seen from the fact that in 1829 the proportion in England, according to Jacob, was two to one, and in entire Europe and America the precious metals in the form of articles of luxury exceeded those in the form of money by one-fourth.

We have seen that the circulation of money is but the manifestation of the metamorphoses of commodities, or of the form under which the social interchange of matter takes place. With the change in the total price of commodities in circulation or in the volume of their simultaneous metamorphoses, the rapidity of their change of form in each case being given, the total quantity of gold in circulation must always expand or contract. That is possible only under the condition that the total quantity of money in the country continually bear a varying ratio to the quantity of money in circulation. This condition is met by the process of hoarding. With a fall in prices or rise in the rapidity of circulation, the hoard-reservoirs absorb that part of money which is thrown out of circulation; with a rise in price or a decline in the rapidity of circulation, the hoards open up and return a part of their contents to the stream of circulation. The solidification of circulating money into hoards and the outpouring of hoards into circulation is a constantly oscillating movement in which the prevalence of the one or the other tendency is determined exclusively by fluctuations in the circulation of commodities. Hoards thus serve as conduits for the supply and withdrawal of money to or from circulation, so that every time only that quantity of money circulates as coin which is required by the immediate needs of circulation. If the volume of the entire circulation suddenly expands and the fluent unity of sale and purchase assumes such dimensions that the total sum of prices to be realized increases more rapidly than the rapidity of the circulation of money, the hoards decrease perceptibly; but when the combined movement slackens to an unusual extent, or the movement of buying and selling steadies itself, the medium of circulation solidifies into money in large measure, and the treasure reservoirs fill up far above their average level. In countries with an exclusively metallic circulation or where production is at a low stage of development, the hoards are endlessly split up and scattered all over the land, while in countries where the capitalist system is developed they are concentrated in bank reservoirs. Hoards are not to be confounded with coin reservoirs, which form a constituent part of the total supply of money in circulation, while the interaction between hoards and currency implies the decline or rise of its total supply. Gold and silver commodities form, as we have seen, both conduits for the withdrawal of precious metals, as well as sources of their supply. In ordinary times only their former function is of importance to the economy of metallic circulation.[102]

b. MEANS OF PAYMENT.

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

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