第12章

Ifdifferentcommoditiesarequotedat15s。,20s。and36s。respectivelyinapricelist,theninacomparisonoftheirvalueboththesilvercontentoftheshillinganditsnameareindeedquiteirrelevant。Everythingisnowexpressedinthenumericalrelationsof15,20and36,andthenumeralonehasbecomethesoleunitofmeasure。Thepurelyabstractexpressionofaproportionisafterallonlytheabstractnumericalproportion。Inordertobeconsistent,Steuartthereforehadtoabandonnotonlygoldandsilverbutalsotheirlegaldesignations。Butsincehedoesnotunderstandhowthemeasureofvalueistransformedintothestandardofprice,henaturallythinksthattheparticularquantityofgoldwhichservesasaunitofmeasureis,asameasure,relatedtovaluesassuch,andnottootherquantitiesofgold。Becausecommoditiesappeartobemagnitudesofthesamedenominationasaresultoftheconversionoftheirexchange—valuesintoprices,Steuartdeniestheexistenceofthecharacteristicfeatureofthemeasurewhichreducescommoditiestothesamedenomination,andsinceinthiscomparisonofdifferentquantitiesofgoldthequantityofgoldwhichservesasastandardisconventionallyestablished,hedeniesthatitmustbeestablishedatall。Insteadofcallinga360thpartofacircleadegree,hemightcalla180thpartadegree;therightanglewouldthenmeasurenot90degreesbut45,andthemeasurementsofacuteandobtuseangleswouldchangecorrespondingly。Nevertheless,themeasureoftheanglewouldremainfirstlyaqualitativelydeterminedmathematicalfigure,thecircle,andsecondlyaquantitativelydeterminedsectionofthecircle。AsforSteuart"seconomicexamplesoneofthesedisproveshisownassertions,theotherprovesnothingatall。ThemoneyoftheBankofAmsterdamwasinfactonlythenameofaccountforSpanishdoubloons,whichretainedtheirstandardweightbecausetheylayidleinthevaultsofthebank,whilethecoinswhichbusilycirculatedlostweightasaresultofintensivefrictionwiththeirenvironment。AsfortheAfricanidealists,wemustleavethemtotheirfateuntilreliableaccountsoftravellersprovidefurtherinformationaboutthem。[5]OnemightsaythattheFrenchassignat——"Nationalproperty,Assignmentof100francs"——isnearlyidealmoneyinSteuart"ssense。Theuse—valuewhichtheassignatwassupposedtorepresent,i。e。,confiscatedland,wasindeedspecified,butthequantitativedefinitionoftheunitofmeasurehadbeenomitted,and"franc"wasthereforeameaninglessword。Howmuchorlittlelandthisfrancrepresenteddependedontheoutcomeofpublicauctions。Butinpracticetheassignatcirculatedasatokenrepresentingsilvermoney,anditsdepreciationwasconsequentlymeasuredintermsofthissilverstandard。

TheperiodwhentheBankofEnglandsuspendedcashpaymentswashardlymoreprolificofwarbulletinsthanofmonetarytheories。Thedepreciationofbank—notesandtheriseofthemarket—priceofgoldaboveitsmint—pricecausedsomedefendersoftheBanktorevivethedoctrineoftheidealmeasureofmoney。LordCastlereaghfoundtheclassicallyconfusedexpressionforthisconfusednotionwhenhedeclaredthatthestandardofmoneyis"asenseofvalueinreferencetocurrencyascomparedwithcommodities"。

AfewyearsaftertheTreatyofPariswhenthesituationpermittedtheresumptionofcashpayments,theproblemwhichLowndeshadbroachedduringthereignofWilliamIIIaroseagaininpracticallythesameform。Ahugenationaldebtandamassofprivatedebts,fixedobligations,etc。,whichhadaccumulatedinthecourseofover20years,wereincurredindepreciatedbank—notes。Shouldtheyberepaidinbank—notes£4,672

10s。ofwhichrepresented,notinnamebutinfact,100lbs。of22—caratgold？ThomasAttwood,aBirminghambanker,actedlikearesurrectedLowndes。Headvocatedthatasmanyshillingsshouldbereturnedtothecreditorsastheyhadnominallylent,butwhereasaccordingtotheoldmonetarystandard,say,1/78ofanounceofgoldwasknownasashilling,nowperhaps1/90ofanounceshouldbecalledashilling。Attwood"ssupportersareknownastheBirminghamschoolof"littleshillingmen"。Thequarrelabouttheidealstandardofmoney,whichbeganin1819,wasstillcarriedonin1845bySirRobertPeelandAttwood,whosewisdominsofarasitconcernsthefunctionofmoneyasameasureisfullysummarisedinthefollowingquotation:

During"therecentdiscussionbetweenSirRobertPeelandtheBirminghamChamberofCommerce……TheMinisterwasquitesatisfiedwithaskingthequestion,"Whatwillyourpoundnoterepresent？"……Whatistobeunderstoodbythepresentstandardofvalue？Is£317s。

101/2d。anounceofgold,orisitonlyofthevalueofanounceofgold？

If£317s。101/2d。beanounceofgold,whynotcallthingsbytheirpropernames,and,droppingthetermspounds,shillingsandpence,sayounces,penny—weightsandgrains？……Ifweadoptthetermsounces,pennyweightsandgrainsofgold,asourmonetarysystem,weshouldpursueadirectsystemofbarter……Butifgoldbeestimatedasofthevalueof£317s。

101/2d。perounce……howisthis……thatmuchdifficultyhasbeenexperiencedatdifferentperiodstocheckgoldfromrisingto£54s。perounce,andwenownoticethatgoldisquotedat£317s。9d。perounce？……

Theexpressionpoundhasreferencetovalue,butnotafixedstandardvalue……

Thetermpoundistheidealunit……Labouristheparentofcostandgivestherelativevaluetogoldoriron。Whateverdenominationofwordsareusedtoexpressthedailyorweeklylabourofaman,suchwordsexpressthecostofthecommodityproduced。"[6]

Thehazynotionabouttheidealmeasureofmoneyfadesawayinthelastwordsanditsrealmentalcontentbecomesclear。Pound,shilling,etc。,thenamesofaccountofgold,aresaidtobenamesrepresentingdefinitequantitiesoflabour—time。Sincelabour—timeisthesubstanceandtheinherentmeasureofvalue,thenamesthusindeedexpressthevaluerelationsthemselves。

Inotherwordsitisassertedthatlabour—timeistherealstandardofmoney。HereweleavetheBirminghamschoolandmerelynoteinpassingthatthedoctrineoftheidealmeasureofmoneyhasgainednewimportanceinconnectionwiththecontroversyovertheconvertibilityornon—convertibilityofbank—notes。Whilethedenominationofpaperisbasedongoldorsilver,theconvertibilityofthenote,i。e。,itsexchangeabilityforgoldorsilver,remainsaneconomiclawregardlessofwhatjuridicallawmaysay。Forinstance,aPrussianpaperthaler,althoughlegallyinconvertible,wouldimmediatelydepreciateifineverydaycommerceitwereworthlessthanasilverthaler,thatisifitwerenotconvertibleinpractice。TheconsistentadvocatesofinconvertiblepapermoneyinBritain,therefore,hadrecoursetotheidealstandardofmoney。Ifthedenominationsofmoney,pound,shillingandsoon,arenamesforadeterminateamountofparticlesofvalue,ofwhichsometimesmore,sometimeslessareeitherabsorbedorlostbyacommoditywhenitisexchangedforothercommodities,thenthevalueofanEnglish£5note,forinstance,isjustaslittleaffectedbyitsrelationtogoldasbyitsrelationtoironandcotton。Sinceitsdesignationwouldnolongerequatethebank—noteintheorytoadeterminatequantityofgoldorofanyothercommodity,itsveryconceptwouldprecludethedemandforitsconvertibility,thatisforitsequationinpracticewithadeterminatequantityofaspecificthing。

JohnGraywasthefirsttosetforththetheorythatlabour—timeisthedirectmeasureofmoneyinasystematicway。[7]Heproposesthatanationalcentralbankshouldascertainthroughitsbranchesthelabour—timeexpendedintheproductionofvariouscommodities。Inexchangeforthecommodity,theproducerwouldreceiveanofficialcertificateofitsvalue,i。e。,areceiptforasmuchlabour—timeashiscommoditycontains,[8]andthisbank—noteofonelabourweek,onelabourday,onelabourhour,etc。,wouldserveatthesametimeasanordertothebanktohandoveranequivalentinanyoftheothercommoditiesstoredinitswarehouses。[9]Thisisthebasicprinciple,whichisscrupulouslyworkedoutindetailandmodelledthroughoutonexistingEnglishinstitutions。Graysaysthatunderthissystem"tosellformoneymayberendered,atalltimes,preciselyaseasyasitnowistobuywithmoney,……productionwouldbecometheuniformandnever—failingcauseofdemand"。

Thepreciousmetalswouldlosetheir"privileged"positionincomparisonwithothercommoditiesand"taketheirproperplaceinthemarketbesidebutterandeggs,andclothandcalico,andthenthevalueofthepreciousmetalswillconcernusjustaslittle……asthevalueofthediamond"。

"Shallweretainourfictitiousstandardofvalue,gold,andthuskeeptheproductiveresourcesofthecountryinbondage？

or,shallweresorttothenaturalstandardofvalue,labour,andtherebysetourproductiveresourcesfree？"

Sincelabour—timeistheintrinsicmeasureofvalue,whyuseanotherextraneousstandardaswell？Whyisexchange—valuetransformedintoprice？

Whyisthevalueofallcommoditiescomputedintermsofanexclusivecommodity,whichthusbecomestheadequateexpressionofexchange—value,i。e。,money？

ThiswastheproblemwhichGrayhadtosolve。Butinsteadofsolvingit,heassumedthatcommoditiescouldbedirectlycomparedwithoneanotherasproductsofsociallabour。Buttheyareonlycomparableasthethingstheyare。Commoditiesarethedirectproductsofisolatedindependentindividualkindsoflabour,andthroughtheiralienationinthecourseofindividualexchangetheymustprovethattheyaregeneralsociallabour,inotherwords,onthebasisofcommodityproduction,labourbecomessociallabouronlyasaresultoftheuniversalalienationofindividualkindsoflabour。ButasGraypresupposesthatthelabour—timecontainedincommoditiesisimmediatelysociallabour—time,hepresupposesthatitiscommunallabour—timeorlabour—timeofdirectlyassociatedindividuals。Inthatcase,itwouldindeedbeimpossibleforaspecificcommodity,suchasgoldorsilver,toconfrontothercommoditiesastheincarnationofuniversallabourandexchange—valuewouldnotbeturnedintoprice;butneitherwoulduse—valuebeturnedintoexchange—valueandtheproductintoacommodity,andthustheverybasisofbourgeoisproductionwouldbeabolished。ButthisisbynomeanswhatGrayhadinmind——goodsaretobeproducedascommoditiesbutnotexchangedascommodities。Grayentruststherealisationofthispiouswishtoanationalbank。Ontheonehand,societyintheshapeofthebankmakestheindividualsindependentoftheconditionsofprivateexchange,and,ontheotherhand,itcausesthemtocontinuetoproduceonthebasisofprivateexchange。AlthoughGraymerelywants"toreform"themoneyevolvedbycommodityexchange,heiscompelledbytheintrinsiclogicofthesubject—mattertorepudiateoneconditionofbourgeoisproductionafteranother。Thusheturnscapitalintonationalcapital,[10]andlandintonationalproperty[11]andifhisbankisexaminedcarefullyitwillbeseenthatitnotonlyreceivescommoditieswithonehandandissuescertificatesforlaboursuppliedwiththeother,butthatitdirectsproductionitself。Inhislastwork,LecturesonMoney,inwhichGrayseekstimidlytopresenthislabourmoneyasapurelybourgeoisreform,hegetstangledupinevenmoreflagrantabsurdities。

Everycommodityisimmediatelymoney;thisisGray"sthesiswhichhederivesfromhisincompleteandhenceincorrectanalysisofcommodities。

The"organic"projectof"labourmoney"and"nationalbank"and"warehouses"

ismerelyafantasyinwhichadogmaismadetoappearasalawofuniversalvalidity。Thedogmathatacommodityisimmediatelymoneyorthattheparticularlabourofaprivateindividualcontainedinitisimmediatelysociallabour,doesnotofcoursebecometruebecauseabankbelievesinitandconductsitsoperationsinaccordancewiththisdogma。

Onthecontrary,bankruptcywouldinsuchacasefulfilthefunctionofpracticalcriticism。Thefactthatlabourmoneyisapseudo—economicterm,whichdenotesthepiouswishtogetridofmoney,andtogetherwithmoneytogetridofexchange—value,andwithexchange—valuetogetridofcommodities,andwithcommoditiestogetridofthebourgeoismodeofproduction,——

thisfact,whichremainsconcealedinGray"sworkandofwhichGrayhimselfwasnotaware,hasbeenbluntlyexpressedbyseveralBritishsocialists,someofwhomwroteearlierthanGrayandotherslater。[12]ButitwaslefttoM。Proudhonandhisschooltodeclareseriouslythatthedegradationofmoneyandtheexaltationofcommoditieswastheessenceofsocialismandtherebytoreducesocialismtoanelementarymisunderstandingoftheinevitablecorrelationexistingbetweencommoditiesandmoney。[13]

FOOTNOTES1。Lockesaysinteralia:"……callthataCrownnow,whichbefore……wasbutapartofaCrown……whereinanequalquantityofSilverisalwaysthesameValuewithanequalquantityofSilver……Foriftheabating1/20ofthequantityofSilverofanyCoindoesnotlessenitsValue,theabating19/20ofthequantityoftheSilverofanyCoinwillnotabateitsValue。Andso……asinglePenny,beingcalledaCrown,willbuyasmuchSpice,orSilk,oranyotherCommodity,asaCrown—Piece,whichcontains[20or]60timesasmuchSilver。"Allyoucandoistoraise"yourMoney,……givingalessquantityofSilvertheStampandDenominationofagreater",but""tisSilverandnotNamesthatpayDebtsandpurchaseCommodities"。

"Theraisingbeingbutgivingofnamesatpleasuretoaliquotpartsofanypiece,viz。thatnowthesixtiethpartofanouncestillbecalledapenny,maybedonewithwhatincreaseyouplease。"InreplytoLowndes"sarguments,Lockedeclaresthattheriseofthemarket—priceabovethemint—pricewasnotbroughtaboutbyanincreaseinthevalueofsilver,butbyadecreaseintheweightofcoins。Seventy—sevenclippedshillingsdidnotweighmorethan62shillingsofstandardweight。FinallyLockeisquitecorrectinemphasisingthat,irrespectiveofthelossofsilversufferedbythecoinsincirculation,acertainriseinthemarket—priceofsilverbullionoverthemint—pricemightoccurinEngland,becausetheexportofsilverbullionwaspermittedwhereasthatofsilvercoinwasprohibited（seeop。cit。,pp。54—116passim）。LocketakesgoodcaretoavoidthevitalissueoftheNationalDebt,justasheequallyprudentlyrefrainsfromdiscussinganotherticklisheconomicproblem,i。e。,thataccordingtotheevidenceofboththeexchangerateandtheratioofsilverbulliontosilvercoin,thedepreciationofthemoneyincirculationwasbynomeansproportionaltotheamountofsilveritlost。Weshallreturntothisquestioninitsgeneralforminthesectiondealingwiththemediumofcirculation。InAdiscourseConcerningCoiningtheNewMoneyLighter,inAnswertoMr。Locke"sConsiderations,London,1696,NicholasBarbonvainlysoughttoenticeLockeontodifficultground。

2。Steuart,op。cit。,Vol。II,p。156。

3。TheQuerist,loc。cit。Incidentally,thesection"QueriesonMoney"

isratherwitty。AmongotherthingsitcontainsthetrueobservationthatthedevelopmentoftheNorthAmericancolonies"makesitplainasdaylight,thatgoldandsilverarenotsonecessaryforthewealthofanation,asthevulgarofallranksimagine"。

4。Steuart,op。cit。,Vol。II,pp。102—07。

5。InconnectionwiththelastcommercialcrisisacertainfactioninEnglandardentlypraisedtheidealAfricanmoneyaftermovingitslocationonthisoccasionfromthecoastintotheinteriorofBarbary。Itwasdeclaredthatbecausetheirbarsconstitutedanidealmeasure,theBerbershadnocommercialandindustrialcrises。Woulditnothavebeensimplertosaythatcommerceandindustryaretheconditiosinequanonforcommercialandindustrialcrises？

6。TheCurrencyQuestion,theGeminiLetters,London,1844,pp。266—72

passim。

7。JohnGray,TheSocialSystem。ATreatiseonthePrincipleofExchange,Edinburgh,1831。Cf。thesameauthor"sLecturesontheNatureandUseofMoney,Edinburgh,1848。AftertheFebruaryRevolution,GraysentamemorandumtotheFrenchProvisionalGovernmentinwhichheexplainsthatFrancedidnotneedan"organisationoflabour"butan"organisationofexchange",theplanforwhichwasfullyworkedoutintheMonetarySystemhehadinvented。TheworthyJohnhadnoinklingthatsixteenyearsafterthepublicationofTheSocialSystem,theingeniousProudhonwouldbetakingoutapatentforthesameinvention。

8。Gray,TheSocialSystem,p。63。"Moneyshouldbemerelyareceipt,anevidencethattheholderofithaseithercontributedacertainvaluetothenationalstockofwealth,orthathehasacquiredarighttothesaidvaluefromsomeonewhohascontributedtoit。"

9。"Anestimatedvaluebeingpreviouslyputuponproduce,letitbelodgedinabank,anddrawnoutagainwheneveritisrequired,merelystipulating,bycommonconsent,thathewholodgesanykindofpropertyintheNationalBank,maytakeoutofitanequalvalueofwhateveritmaycontain,insteadofbeingobligedtodrawouttheself—samethingthatheputin。"Op。cit。,pp。67—68。

10。"Thebusinessofeverynationoughttobeconductedonanationalcapital"（JohnGray,TheSocialSystem,p。171）。

11。

"Thelandtobetransformedintonationalproperty"（op。cit。,p。298。）

12。See,e。g。,W。Thompson,"AnInquiryintotheDistributionofWealth,London,1824;Bray,Labour"sWrongsandLabour"sRemedy,Leeds,1839。13。

AlfredDarimon,Delaréformedesbanques,Paris,1856,canberegardedasacompendiumofthismelodramaticmonetarytheory。

TheoriesoftheMediumofCirculationandofMoneyKarlMarx"sACONTRIBUTIONTOTHECRITIQUEOFPOLITICALECONOMY

C。TheoriesoftheMediumofCirculationandofMoneyJustasinthesixteenthandseventeenthcenturies,whenmodernbourgeoissocietywasinitsinfancy,nationsandprincesweredrivenbyageneraldesireformoneytoembarkoncrusadestodistantlandsinquestofthegoldengrail,sothefirstinterpretersofthemodernworld,theoriginatorsoftheMonetarySystem——theMercantileSystemismerelyavariantofit——declaredthatgoldandsilver,i。e。,money,aloneconstituteswealth。

Theyquitecorrectlystatedthatthevocationofbourgeoissocietywasthemakingofmoney,andhence,fromthestandpointofsimplecommodityproduction,theformationofpermanenthoardswhichneithermothsnorrustcoulddestroy。ItisnorefutationoftheMonetarySystemtopointoutthatatonofironwhosepriceis£3hasthesamevalueas£3

ingold。Thepointatissueisnotthemagnitudeoftheexchange—value,butitsadequateform。WithregardtothespecialattentionpaidbytheMonetaryandMercantilesystemstointernationaltradeandtoindividualbranchesofnationallabourthatleaddirectlytointernationaltrade,whichareregardedbythemastheonlyrealsourceofwealthorofmoney,onehastorememberthatinthosetimesnationalproductionwasforthemostpartstillcarriedonwithintheframeworkoffeudalformsandservedastheimmediatesourceofsubsistencefortheproducersthemselves。Mostproductsdidnotbecomecommodities;theywereaccordinglyneitherconvertedintomoneynorenteredatallintothegeneralprocessofthesocialmetabolism;

hencetheydidnotappearasmaterialisationofuniversalabstractlabouranddidnotindeedconstitutebourgeoiswealth。Moneyastheendandobjectofcirculationrepresentsexchange—valueorabstractwealth,notanyphysicalelementofwealth,asthedeterminingpurposeanddrivingmotiveofproduction。

Itwasconsistentwiththerudimentarystageofbourgeoisproductionthatthosemisunderstoodprophetsshouldhaveclungtothesolid,palpableandglitteringformofexchange—value,toexchange—valueintheformoftheuniversalcommodityasdistinctfromallparticularcommodities。Thesphereofcommoditycirculationwasthestrictlybourgeoiseconomicsphereatthattime。Theythereforeanalysedthewholecomplexprocessofbourgeoisproductionfromthestandpointofthatbasicsphereandconfusedmoneywithcapital。TheunceasingfightofmoderneconomistsagainsttheMonetaryandMercantilesystemsismainlyprovokedbythefactthatthesecretofbourgeoisproduction,i。e。,thatitisdominatedbyexchange—value,isdivulgedinanaivelybrutalwaybythesesystems。Althoughdrawingthewrongconclusionsfromit,Ricardoobservessomewherethat,evenduringafamine,cornisimportedbecausethecorn—merchanttherebymakesmoney,andnotbecausethenationisstarving。PoliticaleconomyerrsinitscritiqueoftheMonetaryandMercantilesystemswhenitassailsthemasmereillusions,asutterlywrongtheories,andfailstonoticethattheycontaininaprimitiveformitsownbasicpresuppositions。Thesesystems,moreover,remainnotonlyhistoricallyvalidbutretaintheirfullvaliditywithincertainspheresofthemoderneconomy。Ateverystageofthebourgeoisprocessofproductionwhenwealthassumestheelementaryformofcommodities,exchange—valueassumestheelementaryformofmoney,andinallphasesoftheproductiveprocesswealthforaninstantrevertsagaintotheuniversalelementaryformofcommodities。Thefunctionsofgoldandsilverasmoney,incontradistinctiontotheirfunctionsasmeansofcirculationandincontrastwithallothercommodities,arenotabolishedeveninthemostadvancedbourgeoiseconomy,butmerelyrestricted;theMonetaryandMercantilesystemsaccordinglyremainvalid。Thecatholicfactthatgoldandsilverasthedirectembodimentofsociallabour,andthereforeastheexpressionofabstractwealth,confrontotherprofanecommodities,hasofcourseviolatedtheprotestantcodeofhonourofbourgeoiseconomists,andfromfearoftheprejudicesoftheMonetarySystem,theylostforsometimeanysenseofdiscriminationtowardsthephenomenaofmoneycirculation,asthefollowingaccountwillshow。

Itwasquitenaturalthat,bycontrastwiththeMonetaryandMercantilesystems,whichknewmoneyonlyasacrystallineproductofcirculation,classicalpoliticaleconomyinthefirstinstanceshouldhaveunderstoodthefluidformofmoney,thatistheformofexchange—valuewhicharisesandvanisheswithinthemetamorphosisofcommodities。BecausecommoditycirculationislookedatexclusivelyintheformC——M——C,andthisinitsturnsolelyasthedynamicunityofsaleandpurchase,thespecificaspectofmoneyasmeansofcirculationisupheldagainstitsspecificaspectasmoney。Ifthefunctionofmeansofcirculationinservingascoinisisolated,then,aswehaveseen,itbecomesavalue—token。Butsinceclassicalpoliticaleconomywasatfirstconfrontedwithmetalliccurrencyasthepredominantformofcurrency,itregardedmetallicmoneyascoin,andcoinasameretokenofvalue。Inaccordancewiththelawrelatingtothecirculationofvalue—tokens,thepropositionisthenadvancedthatthepricesofcommoditiesdependonthevolumeofmoneyincirculation,andnotthatthevolumeofmoneyincirculationdependsonthepricesofcommodities。ThisviewismoreorlessclearlyoutlinedbyItalianeconomistsoftheseventeenthcentury;itissometimesaccepted,sometimesrepudiatedbyLocke,andfirmlysetforthintheSpectator（intheissueofOctober19,1711）aswellasintheworksofMontesquieuandHume。SinceHumeisbyfarthemostimportantexponentofthistheoryintheeighteenthcentury,weshallbeginoursurveywithhim。

Undercertainconditions,anincreaseordecreaseinthequantityofeitherspecieincirculation,ortokensofvalueincirculation,seemstohaveasimilareffectuponcommodity—prices。Ifthereisafallorriseinthevalueofgoldandsilver,inwhichtheexchange—valueofcommoditiesismeasuredasprice,thenpricesriseorfallbecauseachangehastakenplaceintheirstandardofvalue;andanincreasedordiminishedamountofgoldandsilverisincirculationascoinbecausethepriceshaverisenorfallen。Theobservablephenomenon,however,isthatwithanincreasingordiminishingvolumeofmeansofcirculation,priceschangewhiletheexchange—valueofcommoditiesremainsconstant。

If,ontheotherhand,theamountofvalue—tokensincirculationfallsbelowtherequisitelevel,orrisesaboveit,thenitisforciblyreducedtothatlevelbyafallorriseofcommodity—prices。Theeffectinbothcasesappearstobebroughtaboutbythesamecause,andHumeholdsfasttothisappearance。

Anyscholarlyinvestigationoftherelationbetweenthevolumeofmeansofcirculationandmovementsincommodity—pricesmustassumethatthevalueofthemonetarymaterialisgiven。Hume,however,considersexclusivelyperiodswhenrevolutionarychangesinthevalueofthepreciousmetalstakeplace,thatisrevolutionsinthestandardofvalue。Theriseincommodity—pricesthatoccurredsimultaneouslywiththeincreaseintheamountofspecieconsequentuponthediscoveryoftheAmericanminesformsthehistoricalbackgroundofhistheory,anditspracticalmotivewasthepolemicthathewagedagainsttheMonetaryandMercantilesystems。Itis,ofcourse,quitepossibletoincreasethesupplyofpreciousmetalswhiletheircostsofproductionremainunchanged。Ontheotherhand,adecreaseintheirvalue,thatisinthelabour—timerequiredtoproducethem,willinthefirstplacebeattestedonlybyanincreaseintheirsupply。Hume"sdisciplesaccordinglystatedsubsequentlythatthediminishedvalueofthepreciousmetalswasreflectedinthegrowingvolumeofmeansofcirculation,andthegrowingvolumeofthemeansofcirculationwasreflectedinincreasedcommodity—prices。Butthereisinrealityanincreaseonlyinthepricesofexportedcommoditieswhichareexchangedforgoldandsilverascommoditiesandnotasmeansofcirculation。Thepriceofthosecommodities,whicharemeasureingoldandsilverofreducedvalue,thusrisesinrelationtoallothercommoditieswhoseexchange—valuecontinuestobemeasuredingoldandsilverinaccordancewiththescaleoftheirformercostsofproduction。Suchadualevaluationofexchange—valuesofcommoditiesinagivencountrycanofcourseoccuronlytemporarily;goldandsilverpricesmustbeadjustedtocorrespondwiththeexchange—valuesthemselves,sothatfinallytheexchange—valuesofallcommoditiesareassessedinaccordancewiththenewvalueofmonetarymaterial。Thisisnottheplaceforeitheradescriptionofthisprocessoranexaminationofthewaysinwhichtheexchange—valueofcommoditiesprevailswithinthefluctuationsofmarket—prices。Recentcriticalinvestigationsofthemovementofcommodity—pricesduringthesixteenthcenturyhaveconclusivelydemonstratedthatintheearlystagesoftheevolutionofthebourgeoismodeofproduction,suchadjustmentproceedsonlyverygradually,extendingoverlongperiods,anddoesnotbyanymeanskeepinstepwiththeincreaseofreadymoneyincirculation。[1]Quiteinappropriatearereferences——invogueamongHume"sdisciples——

torisingpricesinancientRomebroughtaboutbytheconquestofMacedonia,EgyptandAsiaMinor。Thesuddenandforcibletransferofhoardedmoneyfromonecountrytoanotherisaspecificfeatureoftheancientworld;

butthetemporaryloweringoftheproductioncostsofpreciousmetalsachievedinaparticularcountrybythesimplemethodofplunderdoesnotaffecttheinherentlawsofmonetarycirculation,anymorethan,forinstance,thedistributionofEgyptianandSiciliancornfreeofchargeinRomeaffectsthegenerallawwhichregulatescornprices。Foradetailedanalysisofthecirculationofmoney,Hume,likeallothereighteenth—centurywriters,lackedthenecessarymaterial,i。e。,ontheonehandareliablehistoryofcommodity—prices,andontheotherhand,officialandcontinuousstatisticsregardingtheexpansionandcontractionofthemediumofcirculation,theinfluxorwithdrawalofpreciousmetals,etc。,inotherwordsmaterialwhichonthewholeonlybecomesaccessiblewhenbankingisfullydeveloped。

ThefollowingpropositionssummariseHume"stheoryofcirculation。1。Commodity—pricesinagivencountryaredeterminedbytheamountofmoney（realortokenmoney）existingtherein。2。Themoneycirculatinginagivencountryrepresentsallcommoditieswhichareinthatcountry。Astheamountofmoneygrows,eachunitrepresentsacorrespondinglylargerorsmallerproportionofthethingsrepresented。3。Ifthevolumeofcommoditiesincreases,thentheirpricesfallorthevalueofmoneyrises。Iftheamountofmoneyincreases,then,onthecontrary,commodity—pricesriseandthevalueofmoneyfalls。