<Assignats. National Property. Assignat of 100 frs. legal tender They are distinguished from all other notes in not even professing to represent any specified thing. The words national property meant that their value could be obtained by buying confiscated properties with them at the continuous auctions of the latter. But no reason why this value called 100 fr. It depended on the comparative quality of the property so purchasable and the number of assignats issued. (78, 79, Nassau W. Senior, Three Lectures on the Cost of Obtaining Money etc., London, 1830.) The livre de compte, introduced by Charlemagne, almost never represented by a real equivalent coin, retained its name, as well as its divisions into sous and deniers, until the end of the eighteenth century, while real coins have varied infinitely in form, size, value, not only with every change of government, but even under the same reign. The value of the livre de compte nevertheless underwent enormous diminutions but this always an act of force. (p. 76, Vol. I. Garnier, loc. cit.) All coins in antiquity originally weights. (loc. cit. p. 125.) Money is in the first place the universally marketable commodity, or that in which every one deals for the purpose of procuring other commodities. (Bailey: Money and its Vicissitudes etc., London, 1837, p. 1.) It is the great medial commodity. (loc. cit. p. 2.) It is the general commodity of contracts, or that in which the majority of bargains about property, to be completed at a future time, are made. (p. 3.) Finally, it is the measure of value Now, as all articles are exchanged for money, the mutual values of A and B are necessarily shown by their values in money or their prices as the comparative weight of substances are seen by their weight in relation to water, or their specific gravities. (p. 4.) The first essential requisite is that money should be uniform in its physical qualities, so that equal quantities should be so far identical as to present no ground for preferring one to the other For example, grain and cattle already for this reason not useful, because an equal quantity of grain and equal numbers of cattle are not always alike in the qualities for which they are preferred. (p. 5, 6.) The steadiness of value is so desirable in money as medial commodity and a commodity of contract; it is quite unessential to it in its capacity of the measure of value. (p. 9.) Money may continually vary in value, and yet be as good a measure of value as if it remained perfectly stationary. Suppose e.g., it is reduced in value and the reduction in value implies a reduction of value in relation to some one or more commodities, suppose it is reduced in value in relation to corn and labour. Before the reduction, a guinea would purchase three bushels of wheat, or six days labour; subsequently, it would purchase only two bushels of wheat or four days labour. In both cases, the relations of wheat and labour to money being given, their mutual relations can be inferred; in other words, we can ascertain that a bushel of wheat is worth two days labour. This, which is all that measuring value implies, is as readily done after the reduction as before. The excellence of any thing as a measure of value is altogether independent of its own variableness in value One confuses invariableness of value with invariableness in fineness and weight The command of quantity being that which constitutes value, a definite quantity of a substance of some uniform commodity must be used as a unit to measure value; and it is this definite quantity of a substance of uniform quality which must be invariable. (p. 11.) In all money contracts the issue at stake is the quantity of the gold and silver to be lent, not its value. (p. 103.) If someone were to insist that it be a contract for a specified value, he is bound to show in relation to what commodity: thus, he would be maintaining that a pecuniary contract does not relate to a quantity of money as expressed on the face of it, but to a quantity of some commodity of which no mention is made. (p. 104.) It is not necessary to restrict this to contracts where actual money is lent. It holds for all obligations for the future payment of money, whether for articles of any kind sold on credit, or for services, or as rent of land or houses; they are precisely in the same condition as pure loans of the medial commodity. If A sells a ton of iron to B for ten pounds, at twelve months credit, it is just the same in effect as lending the ten pounds for a year and the intents of both contracting parties will in the same way be affected by changes in currency. (p. 110, 111.) The confusion of giving names to specified and unchangeable fractional parts of the money substance which is to serve as unit of measure confusing the denomination of it with fixing the price of money is also displayed, among others, by the high-flown romanticist of political economy, Mr Adam M ller. He says, among other things: Every one can see how much depends on the true determination of the mint price, above all in a country like England, where the government, with generous liberality (i.e. at the country s expense and the profit of the Bank of England bullion dealers) mints without charge, collects no mintage etc., and thus, if it set the mint price significantly higher than the market price, if, instead of paying an ounce of gold at 3 17s. 10 1/2d., as now, it set 3 19s. as the mint price of one ounce of gold, then all gold would flow towards the mint, all the silver there would be changed into the cheap gold here, and thus be brought to the mint anew, and the currency system would become disordered. (p. 280, 281, Vol. II. Die Elemente der Staatskunst, Berlin, 1809.) Herr M ller does not know, then, that pence and shillings here are only names for fractional parts of a gold ounce. Because silver and copper coins which, notabene, are not minted according to the proportion of silver and copper to gold, but are issued as markers for the equivalent parts of gold, and hence need be accepted in payment only in very small amounts circulate under the names of shillings and pence, he imagines that an ounce of gold is divided into pieces of gold, of silver, and of copper (thus triple standard of value). A couple of steps later he suddenly remembers again that there is no double standard in England, hence even less a triple one. Herr M ller s lack of clarity about the common economic relations is the real foundation of his higher conception. From the general law that the total price of commodities in circulation determines the mass of the circulating medium at a given stage of the velocity of circulation, it follows that at a given stage of growth of the values thrown into circulation, the more precious metal the metal of greater specific value, i.e. which contains more labour time in a smaller amount takes the place of the less precious as the predominant medium of circulation; hence, copper, silver, gold, each one replacing the previous one as the predominant medium of circulation. The same aggregate sum of prices can be circulated e.g. with 14 times as few gold coins as silver coins. Copper or even iron coin as predominant medium of circulation supposes weak circulation. Just as the more powerful but more valuable means of transport and means of circulation takes the place of the less valuable to the degree that the mass of circulating commodities, and circulation generally, grows. On the other side it is clear that the small retail traffic of everyday life requires exchange on a very diminutive scale the smaller, the poorer the country and the weaker is circulation as such. It is in this retail traffic, where very small amounts of commodities on the one side, hence also very small values circulate, that money appears in the most proper sense of the word merely as vanishing medium of circulation, and does not congeal as realized price. Consequently, a subsidiary medium of circulation enters for this traffic, which is merely the symbol of the fractional parts of the predominant media of circulation. These are silver and copper markers, which are therefore not minted in the relation of the value of their substance to the value of e.g. gold. Here money appears still only as symbol, even if itself still in a relatively valuable substance. Gold e.g. would have to be divided into excessively small fractions to serve as equivalent of the division of commodities required by this retail traffic. This is why these subsidiary media of circulation need be accepted in payment, by law, in only very small amounts, so that they can never solidify as realization of price. For example, in England, copper in the amount of 6d., silver in the amount of 20s. The more developed circulation is generally, the greater the mass of prices of the commodities entering into circulation, the more does their wholesale exchange separate off from their retail exchange, and they require different sorts of coin for their circulation. The velocity of the circulation of these markers is inversely related to the magnitude of their value. In the early stage of society, when nations are poor, and their payments trifling, copper has frequently been known to answer all the purposes of currency and it is coined into pieces of very low denominations in order to facilitate the inconsiderable exchanges which then take place. So in the early age of the Roman Republic and of Scotland. (p. 3.) (David Buchanan, Observations on the Subjects, treated of in Dr Smith s Inquiry etc., Edinburgh, 1814.) The general wealth of a country is very accurately measured by the nature of its payments and the state of its coin; and the decided prevalence of a coarse metal in its currency, joined to the use of coins of very low denomination, marks a rude state of society. (p. 4.) Later the business of currency becomes divided into two distinct departments; the duty of effecting the main payments for the more precious metals; the inferior metals by contrast retained for some trivial exchanges, and thus purely subservient to the main currency. Between the first introduction of a precious metal into the currency of a country, and its exclusive use in the main payments, a wide interval; and the payments of the retail trade must in the interval have become so considerable, owing to the increase of wealth, that at least in part they could be conveniently managed by the new and more valuable coin; since no coin can be used for the main payments (this is false, as the notes show) which is not suited, at the same time, to the transactions of the retail trade, since every trade ultimately obtains from the consumer the return of its capital Silver has maintained itself everywhere on the continent in the main payments In Britain the quantity of silver in circulation does not exceed what is necessary for the smaller payments in fact few payments to the amount of 20s. made in silver Before the reign of William III silver was brought in large bags to the treasury in payment of the national revenue. At this period the great change took place The exclusive introduction of gold in the main payments of England was a clear proof that the returns of the retail trade at this time were made mainly in gold; this possible without a single payment ever exceeding or even equalling any of the gold coins; because, in the general abundance of gold, and scarcity of silver, gold coins naturally offered for small sums and a balance of silver demanded in return; so that gold, by thus assisting in the retail trade and in economizing the use of silver, even for the small payments, would prevent its accumulation by the retail trader At the same time, as in England gold was substituted for silver (1695) for the main payments, silver for copper in Sweden Clear, that the coin used for the larger payments can only pass current at its intrinsic worth But intrinsic worth not necessary for a subsidiary currency In Rome, so long as copper the prevailing coin, current only for its intrinsic value 5 years before the beginning of the first Punic war, silver introduced, little by little displaced copper in the main payments 62 years after the silver, gold, but it never seems to have excluded silver from the main payments In India, copper not a subsidiary currency; passes therefore for its intrinsic worth. The rupee, a silver coin of 2s. 3d., is the money of account; in relation to which the mohour, a gold coin, and the pice, a copper coin, are allowed to find their value in the market; the number of pice currently exchanged for a rupee constantly varies with the weight and value of the coin, while here 24 halfpence always = 1s. without reference to their weight. In India the retail dealer must still take considerable quantities of copper for his goods, and he cannot afford to take it therefore but for its intrinsic value In the currencies of Europe, copper passes for whatever value is fixed upon it, without examination of its weight and fineness. (p. 4 18.) In England an excess of copper spent 1798 by private traders; and although copper only legal payment for 6d., found its way (the surplus) to the retail traders; they sought to put it in circulation again; but ultimately returned to them. When this currency was stopped, copper accumulated with the retail traders in sums of 20, 30, even 50, which they finally had to sell at their intrinsic value. (p. 31.) In the subsidiary currency, the medium of circulation takes on a particular form as such, as a merely vanishing medium, alongside the medium of circulation which is at the same time equivalent, which realizes prices, and accumulates as independent value. Thus, here, pure symbol. Thus it may be issued only in the quantity absolutely required for the small retail trade, so that it can never thereby accumulate. The quantity must be determined by the mass of prices which it circulates, divided by its velocity. Because the mass of the circulating medium, of a certain value, is determined by prices, it follows automatically that if a greater quantity than required by circulation itself were artificially thrown into it and could not run off (which is not the case here, because, as medium of circulation, it is above its intrinsic worth), then it would be depreciated; not because the quantity determines prices, but because prices determine the quantity, and hence only a specific amount can remain in circulation at a specific value. Thus, if there are no openings by which circulation can throw out the superfluous quantity, if the circulating medium cannot change from that form into the form of value for itself, then the value of the medium of circulation must fall. But this can only take place, apart from artificial hindrances, prohibition of melting-down, of export etc., if the circulating medium is merely a symbol, and does not itself possess a real value corresponding to its nominal value, hence cannot make the transition from the form of circulating medium into that of the commodity in general, and shed its stamp; if it is imprisoned in its existence as coin. It follows on the other side that the symbol, the money marker, can circulate at the nominal value of the gold it represents without possessing any value whatever of its own in so far as it represents the medium of circulation only in that quantity in which it would itself circulate. But then [it becomes] at the same time a condition either that it is itself then on hand only in such a small quantity that it circulates only in the subsidiary form, hence does not cease for an instant to be a medium of circulation (where it constantly serves partly in the exchange with small amounts of commodities, partly merely to make exchange for the real medium of circulation), hence can never accumulate; or it must possess no value whatever, so that its nominal value can never be compared with its intrinsic value. In the latter case it is posited as mere symbol, which, by means of itself, points to value as something existing outside itself. In the other case it never comes to a comparison between its intrinsic value and its nominal value. Which is why counterfeits of money show an effect immediately; while total destruction of its value does not damage it. It might otherwise appear paradoxical that money can be replaced by worthless paper; but that the slightest alloying of its metallic content depreciates it. The double function of money in circulation contradicts itself as such; to serve as mere medium of circulation, where it is a vanishing mediation; and at the same time as realization of prices, in which form it accumulates and turns into its third character as money. As medium of circulation it is worn out; thus does not contain the metal content which makes it into objectified labour in a fixed amount. Its correspondence to its value hence always more or less illusory. One example to be presented. It is important to bring in the determination of quantity already at this point in the chapter on money, but deduced in just the opposite way to the usual doctrine. Money can be replaced because its quantity is determined by the prices it circulates. In so far as it, itself, has value as in the subsidiary medium of circulation its quantity must be so determined that it can never accumulate as an equivalent, and in fact always figures as an auxiliary cog of the medium of circulation proper. In so far, however, as it is to replace the latter, it must have no value whatsoever, i.e. its value must exist apart from itself. The variations in circulation determined by the amount and number of transactions. (Economist.) Circulation may rise, prices remaining equal, by increase in the amount of commodities; if the amount remains constant, by increase of their prices; by both together. With the proposition that prices regulate the quantity of currency and not the quantity of currency prices, or in other words that trade regulates currency (the quantity of the medium of circulation), and currency does not regulate trade, [it] is, of course, as our deduction has shown, supposed that price is only value translated into another language. Value, and value determined by labour time, is the presupposition. It is clear, therefore, that this law is not equally applicable to the fluctuations of prices in all epochs; e.g. in antiquity, e.g. in Rome, where the circulating medium does not itself arise from circulation, from exchange, but from pillage, plunder etc. No country may consequently have more than one standard; more than one standard for the measure of value; for this standard must be uniform and unchanging. No article has a uniform and unchanging value relative to others: it only has such with itself. A piece of gold is constantly of the same value as the other, of exactly the same fineness, the same weight and in the same place; but this cannot be said of gold and any other article, e.g. silver. (Econ. Vol. I p. 771.)  Pound is nothing but a denomination in account, which has reference to a given and fixed quantity of gold of standard quality. (loc. cit.) To speak of making one ounce of gold worth 5 instead of 3 17s. 10 1/2d. is to say only that it ought henceforth to be minted in 5 sovereigns instead of in 3 420/480 sovereigns. We would not thereby alter the value of the gold, but only the weight and hence the value of the pound or sovereign. An ounce of gold would have the same value relative to wheat and all other commodities as before, but since a pound, although bearing the same name as before, would represent a smaller part of an ounce of gold, it would represent a correspondingly smaller quantity of wheat and other commodities. Just as if we had said that a quarter of wheat should no longer be divided into 8, but rather into 12 bushels; we could not thereby change the value of wheat, but merely diminish the quantity contained in a bushel, and hence the latter s value. (p. 772 loc. cit.) Whatever temporary or permanent change might take place, its price is always expressed in the same amount of money; an ounce of gold will remain 3 17s. 10 1/2d. of our money. The change in its value indicated by the greater or lesser quantity of the commodities it can purchase. (loc. cit. p. 890.)  The ideal bar to be compared e.g. with the ideal milrea in Buenos Aires (likewise the pound in England during the depreciation of notes etc.). What is fixed here is the name milrea; what fluctuates is the quantity of gold or silver it expresses. In Buenos Aires the currency is inconvertible paper money (paper dollars); these dollars originally = 4s. 6d. each; now approximately 3 3/4d. and has been as low as 1 1/2d. An ell of cloth formerly worth 2 dollars, now nominally 28 dollars in consequence of the depreciated paper. In Scotland, the medium of exchange, not to be confused with the standard of value, in the amount of 1 and upwards may be said to be exclusively paper, and gold does not circulate at all; yet gold is as much the standard of value as if nothing else circulated, because the paper is convertible into the same fixed quantity of that metal; and it circulates only on the faith of being so convertible. (p. 1275.)  Guineas are hoarded in times of distrust. (Thornton, p. 48.)  The hoarding principle, in which money functions as independent value, is, apart from the striking forms in which it appears, necessary as one moment of exchange resting on money circulation; since everyone, as A. Smith says, needs, beside his own commodity, the medial quantity, a certain proportion of the general commodity . The man in trade has property in trade. (loc. cit. p. 21.)> Exchangeable value is determined not by the absolute, but by the relative cost of production. If the cost of producing gold remained the same, while the cost of producing all other things doubled, then would gold have a less power of purchasing all other things than before; and its exchangeable value would fall one half; and this diminution in its exchange value precisely the same in effect as if the cost of producing all other things remained unaltered, while that of producing gold had been reduced one half. (p. 56, 57. Torrens, loc. cit.) This important for prices. For determination of value, absolutely not; mere tautology. The value of a commodity is determined by the amount of labour it contains; this means that it exchanges for the same quantity of labour in every other form of use value. It is therefore clear that, if the labour time necessary for the production of object A doubles, then now only 1/2 of it = its earlier equivalent, B. Since equivalence is determined by the equality of labour time or of the amount of labour, the difference of value is of course determined by the inequality of labour time, or, labour time is the measure of value. Abundant reason to believe that the practice of coining originated with individuals and carried on by them before it was seized on and monopolized by governments. Such long the case in Russia. (See Storch.) (loc. cit. p. 195 note.) Hodgskin is of a different opinion from the romantic M ller: The mint stamps only what individuals bring, most injudiciously charging them nothing for the labour of coining; and taxing the nation for the benefit of those who deal in money. (p. 194. Popular Polit. Econ. etc., London, 1827.) Thus e.g. if, as soon as the machine is introduced for 1,200 (50 labour capacities), an earlier expenditure of, say, 240 pounds for instruments of production ceases to be necessary, then the additional expenditure of capital amounts to only 960; the price of 40 workers a year. In this case then, if the remaining 50 workers together produce exactly as much surplus labour as did the 100 previously, then now 200 hours of surplus labour are produced with a capital of 2,160; before, with a capital of 2,400. The number of workers has decreased by half, absolute surplus labour has remained the same, 200 hours of labour as before; the capital invested in material of labour is also the same; but the relation of surplus labour to the invariable part of the capital has increased absolutely. Altogether 9,240. The relationship is this: Since the capital laid out in raw material has remained the same, and that laid out in machinery increased, but not in the same relation as that laid out in labour diminished; it follows that the total outlay of capital diminished; surplus labour remained the same, hence grown relative to the capital, not only at the rate at which surplus labour time must grow to remain the same with half as many workers, but by more than that; namely by the rate at which the [outlay] for the old means of production is deducted from the costs of the new. The introduction of machinery or a general increase in the force of production has objectified labour as its substratum, hence costs something; therefore, if a part of the capital previously laid out for labour is laid out as a component part of the part of the capital which enters into the production process as constant value, then the introduction of machinery can take place only if the rate of surplus labour time does not merely remain the same, i.e. grow relative to the living labour employed, but if it grows at a greater rate than the relation between the value of the machinery and the value of the dismissed workers. This can happen either because the entire expenditure incurred for the previous instrument of production must be deducted. In this case the total sum of the capital laid out diminishes, and, although the relation of the total sum of employed labour relative to the constant part of the capital has diminished, the surplus labour time has remained the same, and has hence grown not only relative to the capital laid out for labour, for necessary labour time, but also relative to the total capital, to the total value of the capital, because the latter has diminished. Or, the value for machinery may be as great as that previously laid out for living labour, which has now become superfluous; but the rate of surplus labour of the remaining capital has increased so that the 50 workers supply not only as much surplus labour as the 100 did before, but a greater amount. Say, e.g. instead of 4 hours each, 4 1/4 hours. But in this case a greater part of the capital is required for raw materials etc., in short, a greater total capital is required. If a capitalist who previously employed 100 workers for 2,400 annually, lets 50 go, and puts a machine costing 1,200 in their place, then this machine although it costs him as much as 50 workers did before is the product of fewer workers, because he pays the capitalist from whom he buys the machine not only the necessary labour, but also the surplus labour. Or, if he had his own workers build the machine, he would have used a part of them for necessary labour only. In the case of machinery, thus, increase of surplus labour with absolute decrease of necessary labour time. It may be accompanied both by absolute diminution of the employed capital, and by its growth. Thus all parts of the capital bear profit simultaneously, both the circulating part (laid out in wages and raw material etc.) and the part laid out in fixed capital. The capital can now reproduce itself either in the form of circulating capital or in the form of fixed capital. Since we saw earlier, in the examination of circulation, that its value returns in a different form depending on in which of these two forms it is presupposed, and since, from the standpoint of profit-producing capital, what returns is not simply the value, but rather the value of the capital plus the profit, value as itself and value as self-realizing, it follows that the capital will be posited as profit-bearing in a different form corresponding to each of these two forms. The circulating capital enters wholly into circulation, with its use value as vehicle of its exchange value; and thus exchanges for money. I.e. then, it is sold, entirely, although each time only a part of it enters into circulation. In one turnover, however, it has entirely gone over into consumption (whether this be merely individual, or in turn productive) as product, and has completely reproduced itself as value. This value includes the surplus value, which now appears as profit. It is sold as use value, in order to be realized as exchange value. This, then, is sale at a profit. On the other side, we have seen that the fixed capital returns only in portions over the course of several years, of several cycles of the circulating capital, and, more specifically, enters into circulation as exchange value and returns as such only to the degree that it is used up (at that time, in the immediate act of production). However, the entry as well as the return of the exchange value is now posited as the entry and return not only of the value of the capital, but also at the same time of the profit, so that a fractional part of profit corresponds to the fractional part of capital. The capitalist expects an equal benefit from all parts of the capital he advances. (Malthus, Principles of Political Economy, 2nd ed. Lond., 1836, p. 267.) Where Wealth and Value are perhaps the most nearly connected, is in the necessity of the latter to the production of the former. (loc. cit. p. 301.) < The fixed capital (in the cotton factories) usually = 1:4 to the circulating, so that if a manufacturer has 50,000, he spends 40,000 in erecting his mill and filling it with machinery, and only 10,000 in the purchase of raw material (cotton, coals etc.) and the payment of wages. (Nassau W. Senior, Letters on the Factory Act etc., 1837, p. 12.) The fixed capital is subject to incessant deterioration, not only through wear and tear, but also through constant mechanical improvements (loc. cit.) Under present laws, no mill in which persons under 18 years of age are employed can be worked more than 11 1/2 hours by day, i.e. 12 hours for 5 days and 9 on Saturday. Now, the following analysis shows that, in a mill so worked, the whole net profit is derived from the last hour. Let a manufacturer invest 100,000 80,000 in his mill and machinery, and 20,000 in raw material and wages. As to the annual return of the mill, supposing the capital to be turned once a year, and gross profits to be 15%, his goods must be worth 115,000, produced by the constant conversion and reconversion of the 20,000 circulating capital, from money into goods and from goods into money (in fact the conversion and reconversion of surplus labour first into commodity and then again into necessary labour etc.) in periods of rather more than two months. Of these 115,000, each of the 23 half hours of work produces 5/115th or 1/23rd. Of the 23/23, constituting the whole 115,000, 20/23, i.e. 100,000 out of the 115,000, only replace the capital; 1/23 (or 5,000 out of the 115,000) makes up for deterioration of the mill and machinery. The remaining 2/23, i.e. the last 2 of the 23 half hours of every day, produce the net profit of 10%. If, therefore (prices remaining the same), the factory could be kept at work for 13 hours instead of 11 1/2, by an addition of about 2,600 to the circulating capital, the net profit would be more than doubled. (I.e. 2,600 would be worked up, without requiring relatively more fixed capital, and without payment to labour at all. The gross and net profit is = to the material which is worked up for the capitalist free of charge, and then of course one hour is = 100% more, if the surplus labour, as Mr Shit  falsely presupposes, is only = 1/12 day or only 2/23, as Senior says. On the other side, if the daily hours of work were reduced by 1 hour per day (prices remaining the same), net profit would be destroyed; if reduced by 1 1/2 hours, gross profit as well. The circulating capital would be replaced, but there would be no fund to compensate the progressive deterioration of the fixed capital. (12, 13.) (As false as Mr Senior s data, so important his illustration for our theory.) The relation of fixed capital to circulating grows constantly for two reasons: (1) the tendency of mechanical improvement to throw on machinery more and more the work of production (2) the improvement of the means of transport and the consequent diminution of the stock of raw material in the manufacturer s hands waiting for use. Formerly, when coals and cotton came by water, the incertainty and irregularity of supply forced him to keep on hand 2 or 3 months consumption. Now, a railway brings it to him week by week, or rather day by day, from the port or the mine. Under such circumstances, I fully anticipate that, in a very few years, the fixed capital, instead of its present proportion, will be as 6 or 7 or even 10 to 1 to the circulating; and, consequently, that the motives to long hours of work will become greater, as the only means by which a large proportion of fixed capital can be made profitable. When a labourer , said Mr Ashworth to me, lays down his spade, he renders useless, for that period, a capital worth 18d. When one of our people leaves the mill, he renders useless a capital that has cost 100. (13, 14.)> <This a very nice proof that, under the rule of capital, the application of machinery does not shorten labour; but rather prolongs it. What it abbreviates is necessary labour, not the labour necessary for the capitalist. Since fixed capital becomes devalued to the extent it is not used in production, its growth is linked with the tendency to make labour perpetual. As for the other point raised by Senior, the diminution of the circulating capital relative to the fixed capital would be as great as he assumes if prices remained constant. But if e.g. cotton, on the average, has fallen below its average price, then the manufacturer will purchase as great a supply as his floating capital permits, and vice versa. With coal, however, where production regular and no special circumstances give grounds for anticipating an extraordinary rise in demand, Senior s remark correct. We have seen that transport (and hence means of communication) do not determine circulation, in so far as they concern bringing the product to market or its transformation into commodity. For in this respect they are themselves included as part of the production phase. But they determine circulation in so far as they determine (1) the return; (2) the retransformation of the capital from the money form into that of the conditions of production. The more rapid and uninterrupted the supply of material and mati res instrumentales, the smaller a supply does the capitalist need to buy. He can therefore all the more often turn over or reproduce the same circulating capital in this form, instead of having it lie around as dormant capital. On the other side, as Sismondi already noted, this also has the effect that the retail merchant, the shopkeeper, can all the more rapidly restore his stock, thus also has less need to keep commodities in stock, because he can renew the supply at any instant. All this shows how with the development of production there is a relative decline of accumulation in the sense of hoarding; increases only in the form of fixed capital, while however continuous simultaneous labour (production) increases in regularity, in intensity, and in scope. The speed of the means of transport, together with their all-sidedness, increasingly transforms (with the exception of agriculture) the necessity of antecedent labour, as far as circulating capital is concerned, into that of simultaneous, mutually dependent, differentiated production. This observation important for the section on accumulation.> Our cotton factories, at their commencement, were kept going the whole 24 hours. The difficulty of cleaning and repairing the machinery, and the divided responsibility, arising from the necessity of employing a double staff of overlookers, book-keepers etc. have nearly put an end to this practice, but until Hobhouse s Act reduced them to 69, our factories generally worked from 70 to 80 hours per week. (p. 15, loc cit.) When profits fall, circulating capital is disposed to become to some extent fixed capital. When interest 5%, capital not used in making new roads, canals or railways, until these works yield a corresponding large percentage; but when interest only 4 or 3%, capital would be advanced for such improvements, if it obtained but a proportional lower percentage. Joint-stock companies, to accomplish great improvements, are the natural offspring of a falling rate of profit. It also induces individuals to fix their capital in the form of buildings and machinery. (p. 232. Hopkins (Th.), Great Britain for the last 40 Years etc., London, 1834.) McCulloch thus estimates the numbers and incomes of those engaged in the cotton manufacture: The increase of absolute labour time supposes the same or an increasing number of simultaneous working days; ditto the increase of the force of production by division of labour etc. In both cases the aggregate labour time remains the same or grows. With the employment of machinery, relative surplus labour time grows not only relative to necessary labour time and hence correlative with aggregate labour time; but rather the relation to necessary labour time grows while aggregate labour diminishes, i.e. the number of simultaneous working days diminishes (relative to surplus labour time). A Glasgow manufacturer gave Symons (J.C.), author of Arts and Artisans at Home and Abroad, Edinb., 1839, the following pieces of information (we cite several of them here in order to have examples for the relation of fixed capital, circulating, the part of the capital laid out in wages, etc.): Thus if we take 5% interest on machinery, then the gross profit 1,700 + 900 = 2,600. The capital laid out in wages amounts, however, to only 7,500. Thus profit relates to wages = 26:75 = 5 1/5:15, hence = 34 2/3%. (Thus assuming floating capital of 7,000, since 1,500 5% on 30,000.) The produce of the mill taken at 10,000 lb. weekly. (234 loc. cit.) Here, then, profit = 1,150 + 1,500 = 2,650:5,400 (wages) = 1:2 2/53, = 49 8/108%. Hence gross profit = 2,400; wages 3,800; 2,400:3,800 = 24:38 = 12:19 = 63 3/19%. In the first case 34 2/3%; in the second 49 8/108% and in the last 63 3/19%. In the first case, wages 1/6 of the total price of the product; in the second more than 1/4; in the last, more than 1/6. But in the first case wages related to the value of the capital as = 1:4 8/15; in the second case = 1:5 15/27; in the third = 1:7 2/19. At the same rate as the total ratio of the part of the capital laid out in wages declines relative to the part laid out in machinery and circulating capital (this, together, 34,000 in the first case; 30,000 in the second; 28,000 in the third), the profit on the part laid out in wages must naturally rise, to allow the percentage of profit to remain the same. The absolute decrease of aggregate labour, i.e. of the working day multiplied by the number of simultaneous working days, can appear doubly. In the first-cited form, that one part of the hitherto employed workers is dismissed in consequence of the use of fixed capital (machinery). Or, that the introduction of machinery will diminish the increase of the working days employed, even though productivity grows and, indeed, at a greater rate (of course) than it diminishes in consequence of the value of the newly introduced machinery. In so far as the fixed capital has value, it does not magnify, but rather diminishes the productivity of labour. The surplus hands would enable the manufacturers to lessen the rate of wages; but the certainty that any considerable reduction would be followed by immediate immense losses from turnouts, extended stoppages, and various other impediments which would be thrown in their way, makes them prefer the slower process of mechanical improvement, by which, though they may triple production, they require no new men. (Gaskell, Artisans and Machinery, London, 1836.) (p. 314.) When the improvements not quite displace the workmen, they will render one man capable of producing, or rather superintending, the production of quantity now requiring ten or twenty labourers. (315, loc. cit.) Machines have been invented which enable 1 man to produce as much yarn as 250, or 300 even, could have produced 70 years ago: which enable 1 man and 1 boy to print as many goods as a 100 men and a 100 boys could have printed formerly. The 150,000 workmen in the spinning mills produce as much yarn as 40 millions with the one-thread wheel could have produced. (316, loc. cit.) The immediate market for capital, or field for capital, may be said to be labour. The amount of capital which can be invested at a given moment, in a given country, or the world, so as to return not less than a given rate of profits, seems principally to depend on the quantity of labour, which it is possible, by laying out that capital, to induce the then existing number of human beings to perform. (p. 20. An Inquiry into those Principles respecting the Nature of Demand etc., London, 1821.) (By a Ricardian against Malthus s Principles etc.) The worker s propertylessness, and the ownership of living labour by objectified labour, or the appropriation of alien labour by capital both merely expressions of the same relation from opposite poles are fundamental conditions of the bourgeois mode of production, in no way accidents irrelevant to it. These modes of distribution are the relations of production themselves, but sub specie distributionis. It is therefore highly absurd when e.g. J. St. Mill says (Principles of Political Economy, 2nd ed., London, 1849, Vol. I, p. 240): The laws and conditions of the production of wealth partake of the character of physical truths It is not so with the distribution of wealth. That is a matter of human institutions solely. (p. 239, 240.) The laws and conditions of the production of wealth and the laws of the distribution of wealth are the same laws under different forms, and both change, undergo the same historic process; are as such only moments of a historic process. It requires no great penetration to grasp that, where e.g. free labour or wage labour arising out of the dissolution of bondage is the point of departure, there machines can only arise in antithesis to living labour, as property alien to it, and as power hostile to it; i.e. that they must confront it as capital. But it is just as easy to perceive that machines will not cease to be agencies of social production when they become e.g. property of the associated workers. In the first case, however, their distribution, i.e. that they do not belong to the worker, is just as much a condition of the mode of production founded on wage labour. In the second case the changed distribution would start from a changed foundation of production, a new foundation first created by the process of history. <The money prevalent among the Mexicans (more with barter and oriental landed property), a regulated currency of different values. This consisted of transparent quills of gold dust; of bits of tin, cut in the form of a T; and of bags of cocoa, containing a specified number of grains. O felicem monetam , says Peter Martyr (de Orbe novo), quae suavem utilemque praebet humano generi potum, et a tartarea peste avaritiae suos immunes servat possessores, quod suffodi aut diu servari nequeat . (Prescott.)  Eschwege (1823) estimates the total value of the diamond workings in 80 years at a sum hardly exceeding 18 months produce of sugar or coffee in Brazil. (Merivale.)  The first (British) settlers (in North America) cultivated the cleared ground about their villages in common this custom prevails until 1619 in Virginia etc. (Merivale, Vol. I. p. 91.) (Notebook, p. 52.) ( In 1593 the Cortes made the following representation to Philip II: The Cortes of Valladolid of the year 48 begged Your Majesty to cease to permit the entry into the kingdom of candles, mirrors, jewellery, knives and similar things from the exterior, these articles, so useless to human life, being exchanged for gold, as if Spaniards were Indians . (Semp r .))  In densely peopled colonies the labourer, although free, is naturally dependent on the capitalist; in thinly peopled ones the want of this natural dependence must be supplied by artificial restrictions. (Merivale, 314, Vol. II. Lectures on Colonization etc., London, 1841, 1842.)> Usury originally unrestricted in Rome. The law of the 12 tables (303 A.U.C.) had fixed the interest on money at 1% per year (Niebuhr says 10).  These laws promptly violated. Duilius (398 A.U.C.) again reduced the interest on money to 1%, unciario faenore.  Reduced to 1/2% in 408; in 413, lending at interest was absolutely forbidden by a plebiscite engineered by the tribune, Genucius. It is not surprising that, in a republic where industry, where commerce either wholesale or retail were prohibited to citizens, there was also a prohibition against commerce in money. (p. 260, 261 Vol. II, loc. cit.) This situation lasted 3 years, until the capture of Carthage. 12%, then: 6% the average annual rate of interest. (261 loc. cit.) Justinian fixed interest at 4%; usura quincunx  under Trajan the legal interest is 5%. Commercial interest in Egypt, 146 years B.C., was 12%. (loc. cit. p. 263.) The involuntary alienation of feudal landed property develops with usury and with money: The introduction of money which buys all things, and hence the advantage for the creditor, who lends money to the land owner, brings in the necessity of legal alienation for the advance. (124. John Dalrymple, An Essay towards a General History of Feudal Property in Great Britain, 4th ed., Lond., 1759.) In medieval Europe: Payments in gold customary with only a few articles of commerce, mostly with precious goods. Most prevalent outside the mercantile sphere, with gifts by the great, certain high obligations, heavy fines, purchase of landed estates. Unminted gold was not infrequently measured to suit in pounds or marks (half pounds) 8 ounces = 1 mark; one [ounce] hence = 2 pennyweight or 3 carats. Of minted gold until the Crusades, familiar only with the Byzantine solidus, the Italian Tari and the Arabian maurabotini (afterwards maravedi). (H llmann, St dtewesen des Mittelalters, 1st Part, Bonn, 1826.) (p. 402 4.) In Frankish laws, the solidus also as mere money of account, in which the value of agricultural products to be paid as fines was expressed. E.g. among the Saxons, a solidus a yearling ox in usual autumn condition In Ripuarian law, a healthy cow represented one solidus 12 denars = 1 gold solidus. (405, 406.) 4 Tari = 1 Byzantine solidus Since the thirteenth century, various gold coins minted in Europe. Augustales (of the emperor Frederick II in Sicily: Brundisium and Messina); florentini or floreni (Florence 1252); ducats or zecchini (Venice since 1285). (409 11, loc. cit.) Larger gold coins minted also in Hungary, Germany and the Netherlands since the fourteenth century; in Germany, were simply called Gulden. (loc. cit. 413.) With payments in silver, the prevailing custom in all larger payments was weighing, usually in marks Even minted silver weighed for such payments, since the coin still of almost wholly pure silver, hence weight the only question. Hence the name pound (livre, lire) * and mark, partly the name of imaginary or accounting coins, partly passed over to real silver coins. Silver coins: denari or kreuzer In Germany these denari were called Pfennige (Penig, Penning, Phennig) since as early as the ninth century. Originally Pending, Penthing, Pfentini from pf ndig, in the old form pf nding the same as full-weighted: hence pf ndige denari, abbreviated pf ndinge Another name for the denari, from the beginning of the twelfth century in France, Germany, Netherlands, England, from the star pictured on them in place of the cross: sternlinge, sterlinge, starlinge Denari sterlings = pfennig sterlings In the fourteenth century, 320 of the Netherlands sterlings made a pound, 20 to the ounce In the earlier Middle Ages, silver solidi not real coins, but rather inclusive name for 12 denari 1 gold solidus = 12 sterling denari, for this was the median relation of gold and silver Oboli, half pfennigs, having circulated as small change With the increasing spread of petty trade, more and more of the small commercial cities and petty princes obtained the right to strike their own local coin, thus for the most part small change. Alloyed it with copper, in increasing proportions Thick pennies, gros deniers, grossi, groschen, groten, first minted in Tours before the middle of the thirteenth century. These groschen originally double pfennigs. (415 33.) The ecclesiastical assessments levied by the popes on nearly all Catholic countries contributed in no small measure, firstly, to the development of the entire money system in commercially active Europe, and then, as a consequence, to the rise of a variety of efforts to circumvent the ecclesiastical prohibition (of interest). The pope made use of the Lombards in the collection of official dues and other obligations from the archbishoprics. These, the chief usurers and pawnbrokers, under papal protection. Already generally known since the middle of the twelfth century. Especially from Siena. Public usurarii. In England they called themselves Roman Pontifical Money-Dealers . Some bishops in Basle and elsewhere pawned the episcopal ring, silken robes, all the ecclesiastical vessels at low rates with Jews, and paid interest. But bishops, abbots, priests themselves also practised usury with the church vessels by lending them for a share of the gain to Tuscan money dealers from Florence, Siena and other cities. etc. (see loc. cit. Notebook, p. 39.)  Because money is the general equivalent, the general power of purchasing, everything can be bought, everything may be transformed into money. But it can be transformed into money only by being alienated [alieniert], by its owner divesting himself of it. Everything is therefore alienable, or indifferent for the individual, external to him. Thus the so-called inalienable, eternal possessions, and the immovable, solid property relations corresponding to them, break down in the face of money. Furthermore, since money itself exists only in circulation, and exchanges in turn for articles of consumption etc. for values which may all ultimately be reduced to purely individual pleasures, it follows that everything is valuable only in so far as it exists for the individual. With that, the independent value of things, except in so far as it consists in their mere being for others, in their relativity, exchangeability, the absolute value of all things and relations, is dissolved. Everything sacrificed to egotistic pleasure. For, just as everything is alienable for money, everything is also obtainable by money. Everything is to be had for hard cash , which, as itself something existing external to the individual, is to be catched [sic] by fraud, violence etc. Thus everything is appropriable by everyone, and it depends on chance what the individual can appropriate and what not, since it depends on the money in his possession. With that, the individual is posited, as such, as lord of all things. There are no absolute values, since, for money, value as such is relative. There is nothing inalienable, since everything alienable for money. There is no higher or holier, since everything appropriable by money. The res sacrae and religiosae , which may be in nullius bonis , nec aestimationem recipere, nec obligari alienarique posse , which are exempt from the commercio hominum ,  do not exist for money just as all men are equal before God. Beautiful that the Roman church in the Middle Ages itself the chief propagandist of money. Since the ecclesiastical law against usury had long lost all significance, in 1425 Martin formally annulled it. (H llmann, part II, loc. cit. Bonn, 1827, p. 55.) No country in the Middle Ages a general rate of interest. Firstly, the priests strict. Uncertainty of the juridical arrangements for securing the loan. Accordingly higher rates in individual cases. The small circulation of money, the necessity to make most payments in cash, since the brokerage business still undeveloped. Hence great variety of views about interest and concepts of usury. In Charlemagne s time it was considered usurious only when 100% was taken. At Lindau on Lake Constance, in 1344, local citizens took 216 2/3%. In Zurich the Council fixed the legal interest at 43 1/3% In Italy, 40% had to be paid during some periods, although from the twelfth to the fourteenth century the usual rate does not exceed 20% Frederick II in his decree 10%, but this only for Jews. He did not wish to speak for the Christians 10% was already usual in the thirteenth century in the Rhineland of Germany. (55 7 loc. cit.) To sell for money shall at all times be made so easy as it is now to buy with money, and production would become the uniform and never failing cause of demand. (John Gray, The Social System etc., Edinburgh, 1831.) (p. 16.) After land, capital, labour, the fourth necessary condition of production is: instant power of exchanging. (loc. cit. 18.) To be able to exchange is for the man in society as important as it was to Robinson Crusoe to be able to produce. (loc. cit. 21.) According to Say, credit only transfers capital, but does not create any. This true only in the one case of a loan to an industrialist by a capitalist but not of credit between producers in their mutual advances. What one producer advances to another is not capital; it is products, commodities. These products, these commodities, can and undoubtedly will become active capital in the hands of the borrower, i.e. instruments of labour, but at the time they are nothing but products for sale in the hands of their owner, and everywhere inactive One must distinguish between product and commodity and instrument of labour and productive capital As long as a product remains in the hands of its producer, it is only a commodity, or, if you like, inactive, inert capital. Far from being of benefit for the industrialist who holds it, it is a burden for him, a ceaseless cause of trouble, of faux frais and of losses: storage costs, maintenance costs, protection costs, interest on capital etc., without counting the waste and spoiling which nearly all commodities suffer when they are inactive for long Thus, if he sells this, his commodity, on credit, to another industrialist who can use the commodities for the kind of work for which they are fit, then, from having been inert commodities, they have become, for the latter, active capital. In this case, therefore, there will be an increase of productive capital on one side without any diminution on the other. Even more: if one takes note that the seller, while furnishing his commodity on credit, has received in exchange a bill which he has the right to negotiate on the spot, is it not clear that by that very fact he too has obtained the means to renew his raw materials and his instruments of labour so as to begin work again? Thus there is here a double growth of productive capital, in other words, a power acquired on both sides. (Charles Coquelin, Du Cr dit et des Banques dans l Industrie , Revue des deux mondes, Vol. 31, 1842, p. 799 seq.) Let the whole mass of commodities for sale pass rapidly from the state of inert product into that of active capital, without delays and obstacles: the country will be filled with so much new activity! this rapid transformation is precisely the advantage which credit allows to be realized This is the activity of circulation Thus credit may increase the industrialists business tenfold In a given period of time, the dealer or producer renews his materials and his products ten times instead of once Credit brings this about by increasing everyone s purchasing power. Instead of reserving this power to those who presently have the ability to pay, it gives it to all those people whose position and whose morality provide the guarantee of a future payment; it gives it to any person who is capable of utilizing these products through labour Hence the first benefit of credit is to increase, if not the sum of values a country possesses, yet at least the sum of active values. This is the immediate effect. Flowing out of it is the increase of the productive powers, hence also of the sum of values etc. (loc. cit.) Letting is a conditional sale, or sale of the use of a thing for a limited time. (Corbet, Th., An Inquiry into the Causes and Modes of the Wealth of Individuals etc., Lond., 1841, p. 81.) Transformations to which capital is subjected in the work of production. Capital, to become productive, must be consumed. (p. 80. S. P. Newman, Elements of Political Economy, Andover and New York, 1835.) Economic cycle the whole course of production, from the time that outlays are made, till returns are received. In agriculture, seed time is its commencement, and harvesting its ending . (81). The basis of the difference between fixed and circulating capital is that during every economic cycle, a part is partially, and another part totally consumed. (loc. cit.) Capital as directed to different employments. (loc. cit.) Belongs in the doctrine of competition. A Medium of Exchange: In undeveloped nations, whatever commodity constitutes the larger share of the wealth of the community, or from any cause becomes more frequently than others an object of exchange, is wont to be used as a circulating medium. So cattle a medium of exchange among pastoral tribes, dried fish in Newfoundland, sugar in the West Indies, tobacco in Virginia. Precious metals advantage : (a) sameness of quality in all parts of the world (b) admit of minute division and exact apportionment; (c) rarity and difficulty of attainment, (d) they admit of coinage. (100 loc. cit.) Money bearing compound interest increases at first slowly. But, the rate of increase being continually accelerated, it becomes in some time so rapid, as to mock all the powers of the imagination. One penny, put out at our Saviour s birth to 5% compound interest, would, before this time, have increased to a greater sum than would be obtained in a 150 millions of Earths, all solid gold. But if put out to simple interest, it would, in the same time, have amounted to no more than 7 shillings 4 1/2d. Our government has hitherto chosen to improve money in the last, rather than the first of these ways. (18, 19. Price, Richard, An Appeal to the Public on the Subject of the National Debt, London, 1772, 2nd ed.) (His secret: the government should borrow at simple interest, and lend out the borrowed money at compound interest.) In his Observations on Reversionary Payments etc., London, 1772, he flies even higher: A shilling put out to 6% compound interest at our Saviour s birth would have increased to a greater sum than the whole solar system could hold, supposing it a sphere equal in diameter to the diameter of Saturn s orbit. (loc. cit. XIII, note.) A state need never, therefore, be under any difficulties; for, with the smallest savings, it may, in as little time as its interest can require, pay off the largest debts. (p. xiv.) The good Price was simply dazzled by the enormous quantities resulting from geometrical progression of numbers. Since he regards capital as a self-acting thing, without any regard to the conditions of reproduction of labour, as a mere self-increasing number, he was able to believe that he had found the laws of its growth in that formula (see below). Pitt, 1792, in a speech where he proposed to increase the sum devoted to the sinking fund, takes Dr Price s mystification quite seriously. (S = C (1 + i)n.) McCulloch, in his Dictionary of Commerce, 1847, cites, as properties of metallic money: The material must be: (1) divisible into the smallest portions; (2) capable of being stored for an indefinite period without deterioration; (3) easily transportable from place to place owing to great value in small bulk; (4) a piece of money, of a certain denomination, always equal in size and quality to every other piece of the same denomination; (5) its value comparatively steady. (581.)  The following pretty demonstration by Mr Proudhon: Since value is nothing more than a proportion, and since all products are necessarily proportional to one another, it follows that from the social viewpoint products are always values and produced values: for society, the difference between capital and product does not exist. This difference is entirely subjective to individuals. (250.) The antithetical nature of capital, and the necessity for it of the propertyless worker, is na vely expressed in some earlier English economists, e.g. the Reverend Mr J. Townsend,  the father of population theory, by the fraudulent appropriation of which Malthus (a shameless plagiarist generally; thus e.g. his theory of rent is borrowed from the farmer, Anderson) made himself into a great man. Townsend says: It seems to be a law of nature that the poor should be to a certain degree improvident, that there may be always some to fulfil the most servile, the most sordid, and the most ignoble offices in the community. The stock of human happiness is thereby much increased. The more delicate ones are thereby freed from drudgery, and can pursue higher callings etc. undisturbed. (A Dissertation on the Poor-laws, edition of 1817, p. 39.) Legal constraint to labour is attended with too much trouble, violence, and noise, creates ill will etc., whereas hunger is not only a peaceable, silent, unremitted pressure, but, as the most natural motive to industry and labour, it calls forth the most powerful exertions. (15.) (This the answer to what labour is in fact more productive, the slave s or the free worker s. A. Smith could not raise the question, since the mode of production of capital presupposes free labour. On the other side, the developed relation of capital and labour confirms A. Smith in his distinction between productive and unproductive labours. Lord Brougham s stale jokes against it, and the objections, supposed to be serious, by Say, Storch, MacCulloch and tutti quanti do not make any impact on it. A. Smith misses the mark only by somewhat too crudely conceiving the objectification of labour as labour which fixates itself in a tangible [handgreiflich] object. But this is a secondary thing with him, a clumsiness in expression.) With Galiani, too, the workmen are supplied by a law of nature. Galiani published the book in 1750. God makes sure that the men who exercise occupations of primary utility are born in abundant numbers. (78. Della Moneta, Vol. III, Scrittori Classici Italiani di Economia Politica. Parte Moderna. Milano, 1803.) But he already has the correct concept of value: It is only toil which gives value to things. (74.) Of course, labour is distinct qualitatively as well, not only in so far as it [is performed] in different branches of production, but also more or less intensive etc. The way in which the equalization of these differences takes place, and all labour is reduced to unskilled simple labour, cannot of course be examined yet at this point. Suffice it that this reduction is in fact accomplished with the positing of products of all kinds of labour as values. As values, they are equivalents in certain proportions; the higher kinds of labour are themselves appraised in simple labour. This becomes clear at once if one considers that e.g. Californian gold is a product of simple labour. Nevertheless, every sort of labour is paid with it. Hence the qualitative difference is suspended, and the product of a higher sort of labour is in fact reduced to an amount of simple labour. Hence these computations of the different qualities of labour are completely a matter of indifference here, and do not violate the principle. Metals are used for money because they are valuable, they are not valuable because they are used for money. (loc. cit. 95.) It is the velocity of circulation of money, and not the quantity of metal, which makes more or less money appear. (99.) Money is of two kinds, ideal and real; and is adapted to two uses, to evaluate things and to purchase them. Ideal money is as good as, sometimes better than, real money for evaluating things the other use of money is to buy those things to which its value may be equal prices and contracts are valued in ideal money and executed in real. (p. 112 seq.) The metals have the peculiar and singular quality that in them alone all relations reduce themselves to one only, which is their quantity; nature did not endow them with a varying quality either in their internal constitution or in their external form and shape. (126, 127.) This is very important observation. Value supposes a common substance, and all differences, proportions etc. reduced to merely quantitative ones. This the case with precious metals, which thus appear as the natural substance of value. Money like a law which reduces all things to their necessary proportions is that which articulates all things in a single voice: price. (152.) Only this same ideal money is of account, which is to say, all things are stipulated, contracted and evaluated in it; which came about for the same reason that the moneys which are ideal today are the most ancient moneys of a nation, and all of them were once real, and, because they were real, they were used in accounting. (152.) (This also the formal clarification of Urquhart s ideal money etc. For the blacks etc. the iron bar was originally real money, then changed into ideal; but they tried at the same time to hold onto its previous value. Now, since the value of iron, as becomes apparent to them in commerce, fluctuates relative to gold etc., therefore the ideal bar, so as to preserve its original value, expresses varying proportions of real amounts of iron, a laborious calculation which does honour to these gentlemen s power of abstraction.) (In the debates caused by the Bullion Committee 1810, Castlereagh advanced similar confused notions.) A beautiful statement by Galiani: The infinity which (things) lack in progression, they find in circulation. (156.) About use value, Galiani nicely says: Price is a relation the price of things is their proportion relative to our need, which has as yet no fixed measure. But this will be found. I myself believe it to be man himself. ([159,] 162.) Spain, during the same period when it was the greatest as well as the richest power, counted in reales and in the tiniest maravedis. (172, 173.) It is, rather, he (man) who is the sole and true wealth. (188.) Wealth is a relation between two persons. (221.) When the price of a thing, or rather its proportion relative to others, changes proportionately to all of them, it is a clear sign that it is its value alone, and not that of all the others, which has changed. (154.) (The costs of preserving the capital, of repairing it, also have to be taken into account.) The positive limitation of quantity in paper money would accomplish the only useful purpose that cost of production does in the other. (Opdyke.)  The merely quantitative difference in the material of money: Money is returned in kind only (with loans); which fact distinguishes this agent from all other machinery indicates the nature of its service clearly proves the singleness of its office. (267.) With money in possession, we have but one exchange to make in order to secure the object of desire, while with other surplus products we have two, the first of which (securing the money) is infinitely more difficult than the second. (287, 288.) Banker differs from the old usurer that he lends to the rich and seldom or never to the poor. Hence he lends with less risk, and can afford to do it on cheaper terms; and for both reasons, he avoids the popular odium which attended the usurer. (44.) (Newman, F. W., Lectures on Political Economy, London, 1851.) Matter in its natural state is always without value Only through labour does it obtain exchange value, become element of wealth. (MacCulloch, Discours sur l origine de l conomie politique etc. transl. by Pr vost. Geneva and Paris, 1825. p. 57.) Commodities in exchange are each other s measure. (Storch. Cours d conomie Politique avec des notes etc. par J. B. Say, Paris, 1823, Vol. I, p. 81.) In the trade between Russia and China, silver is used to evaluate all commodities; nevertheless, this commerce is carried on by barter. (p. 88.) Just as labour is not the source of wealth, so is it not its measure. (p. 123 loc. cit.) Smith let himself be misled into the opinion that the same cause which made material things exist was also the source and the measure of value. (p. 124.) Interest the price one pays for the use of a capital. (p. 336.) Currency must have a direct value, but be founded on an artificial need. Its material must not be indispensable for human existence; because the whole amount of it which is used for currency cannot be used individually, and must always circulate. (Vol. II, p. 113, 114.) Money takes the place of anything. (p. 133.) T.V.  Consid rations sur la nature du revenu national, Paris, 1824: Reproductive consumption is not properly an expense, but only an advance, because it is reimbursed to him who makes it. (p. 54.) Is there not a manifest contradiction in this proposition that a people grows wealthy by its savings, or its privations, that is to say, by voluntarily condemning itself to poverty? (p. 176.) At the time when hides and pelts served as money in Russia, the inconvenience involved in circulating so voluminous and perishable a currency gave rise to the idea of replacing them by small pieces of stamped leather, which thereby became symbols payable in hides and pelts They kept up this usage until 1700 (namely, later, of representing the fractions of silver kopecks), at least in the city of Kaluga and its environs, until Peter I (1700) ordered them to be turned in and exchanged for small copper coins. (Vol. IV, p. 79.) An indication of the marvels of compound interest is already found in the great seventeenth-century champion of the fight against usury: in Jos. Child. Trait s sur le commerce etc. trad. de l anglois (English publication 1669, Amsterdam and Berlin, 1754.) (pp. 115 17.) In point of fact a commodity will always exchange for more labour than has produced it; and it is this excess that constitutes profits. (p. 221. McCulloch, The Principles of Political Economy, London, 1830.) Shows how well Mr McCulloch has understood the Ricardian principle. He distinguishes between exchange value and real value; the former (1) quantity of labour expended in its appropriation or production; (2) the second, buying power of certain quantities of labour of the other commodities. (p. 211.) Man is as much the produce of labour as any [of] the machines constructed by his agency; and it appears to us that in all economical investigations he ought to be considered in precisely the same point of view. (115 loc. cit.) Wages really consist of a part of the produce of the industry of the labourer. (p. 295.) The profits of capital are only another name for the wages of accumulated labour. (p. 291.) A periodical destruction of capital has become a necessary condition of any market rate of interest at all, and, considered in that point of view, these awful visitations, to which we are accustomed to look forward with so much disquiet and apprehension and which we are so anxious to avert, may be nothing more than the natural and necessary corrective of an overgrown and bloated opulence, the vis medicatrix by which our social system, as at present constituted, is enabled to relieve itself from time to time of an ever-recurring plethora which menaces its existence, and to regain a sound and wholesome state. (p. 165. Fullarton (John): On the Regulation of Currency etc. Lond., 1844.) Money General Power of Purchasing. (Chalmers.)  Capital services and commodities used in production. Money: the measure of value, the medium of exchange, and the universal equivalent; more practically: the means of obtaining capital; the only means of paying for capital previously obtained for credit; virtually security for obtaining its equivalent value in capital: Commerce is the exchange of capital for capital through the medium of money, and the contract being for the medium, money alone can satisfy the contract and discharge the debt. In selling, one kind of capital is disposed for money for obtaining its equivalent value in any kind of capital. Interest the consideration given for the loan of money. If the money is borrowed for the purpose of procuring capital, then the consideration given is a remuneration for the use of capital (raw materials, labour, merchandise etc.), which it obtains. If borrowed for the purpose of discharging a debt, for paying for capital previously obtained and used (contracted to be paid for in money), then the consideration given is for the use of money itself, and in this respect interest and discount are similar. Discount solely the remuneration for money itself, for converting credit money into real money. A good bill gives the same command over capital as bank notes, minus the charge for discount; and bills are discounted for the purpose of obtaining money of a more convenient denomination for wages and small cash payments, or to meet larger engagements falling due; and also for the advantage to be gained when ready money can be had by discounting at a lower rate than 5%, the usual allowance made for cash. The main object, however, in discounting depends fundamentally upon the supply and demand of legal tender money The rate of interest depends mainly on the demand and supply of capital, and the rate of discount entirely on the supply and demand of money. (13 March 58, Economist, letter to the editor.) Mr K. Arnd, quite in his proper place where he reasons about the dog tax ,  has made the following interesting discovery: In the natural course of the production of goods, there is only one phenomenon, which in wholly settled and cultivated countries seems destined to regulate the rate of interest to some extent; this is the rate at which the amount of timber in the European forests increases with their annual new growth this growth proceeds, quite independently of its exchange value, at the rate of 3 to 4 per cent. (p. 124, 125. Die naturgem sse Volkswirtschaft etc., Hanau, 1845.) This deserves to be called the forest-primeval [waldurspr ngliche] rate of interest.
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