This phenomenon is simply due to the contradictory nature of the factors determining the volume of money in circulation.Changes occurring simultaneously in these factors neutralise their effects and everything remains as it was.
The law that,if the speed of circulation of money and the sum total of the commodity-prices are given,the amount of the medium of circulation is determined,can also be expressed in the following way:if the exchange-values of commodities and the average speed of their metamorphoses are given,then the quantity of gold in circulation depends on its own value.Thus,if the value of gold,i.e.the labour-time required for its production,were to increase or to decrease,then the prices of commodities would rise or fall in inverse proportion and,provided the velocity remained unchanged,this general rise or fall in prices would necessitate a larger or smaller amount of gold for the circulation of the same amount of commodities.The result would be similar if the previous standard of value were to be replaced by a more valuable or a less valuable metal.For instance,when,in deference to its creditors and impelled by fear of the effect the discovery of gold in California and Australia might have,Holland replaced gold currency by silver currency,14to 15times more silver was required than formerly was required of gold to circulate the same volume of commodities.
Since the quantity of gold in circulation depends upon two variable factors,the total amount of commodity-prices and the velocity of circulation,it follows that it must be possible to reduce and expand the quantity of metallic currency;in short,in accordance with the requirements of the process of circulation,gold must sometimes be put into circulation and sometimes withdrawn from it.We shall see later how these conditions are realized in the process of circulation.
FOOTNOTES
1.A commodity may be several times bought and sold again.It circulates,in this case,not as a mere commodity,but fulfils a function which does not yet exist from the standpoint of simple circulation and of the simple antithesis of commodity and money.
2.The amount of money is a matter of indifference "provided there is enough of it to maintain the prices determined by the commodities."Boisguillebert,Le detail de la France ,p.209.
"If the circulation of commodities of four hundred millions required a currency of forty millions,and ...this proportion of one-tenth was the due level ...then,if the value of commodities to be circulated increased to four hundred and fifty millions,from natural causes ...the currency,in order to continue at its level,must be increased to forty-five millions."William Blake,Observations on the Effects Produced by the Expenditure of Government ,etc.,London,1823,pp.80,81.
3..
"It is due to the velocity of the circulation of money and not to the quantity of the metal,that much or little money appears to be available"(Galiani,op.cit.,p.99).
4.An example of a remarkable fall of the metallic currency below its average level occurred in England in 1858as the following passage from the London Economist shows:"From the nature of the case"(i.e.,owing to the fragmentation of simple circulation)"very exact data cannot be procured as to the amount of cash that is fluctuating in the market,and in the hands of the not banking classes.But,perhaps,the activity or the inactivity of the mints of the great commercial nations is one of the most likely indications in the variations of that amount.Much will be manufactured when it is wanted;and little when little is wanted....
At the English mint the coinage was in 18559,245,0001856,6,476,000;1857,5,293,858.During 1858the mint had scarcely anything to do."Economist ,July 10,1858.But at the same time about eighteen million pounds sterling were lying in the bank vaults.
Coins and Tokens of Value Karl Marx's A CONTRIBUTION TO THE CRITIQUE OF POLITICAL ECONOMYc.Coins and Tokens of Value Gold functioning as a medium of circulation assumes a specific shape,it becomes a coin.In order to prevent its circulation from being hampered by technical difficulties,gold is minted according to the standard of the money of account.Coins are pieces of gold whose shape and imprint signify that they contain weights of gold as indicated by the names of the money of account,such as pound sterling,shilling,etc.Both the establishing of the mint-price and the technical work of minting devolve upon the State.
Coined money assumes a local and political character,it uses different national languages and wears different national uniforms,just as does money of account.Coined money circulates therefore in the internal sphere of circulation of commodities,which is circumscribed by the boundaries of a given community and separated from the universal circulation of the world of commodities.
But the only difference between gold in the form of bullion and gold in the form of coin is that between the denomination of the coin and denomination of its metal weight.What appears as a difference of denomination in the latter case,appears as a difference of shape in the former.Gold coins can be thrown into the crucible and thus turned again into gold sans phrase,just as conversely gold bars have only to be sent to the mint to be transformed into coin.The conversion and reconversion of one form into the other appears as a purely technical operation.
In exchange for 100pounds or 1,200ounces troy of 22-carat gold one receives £4,6721/2or 4,6721/2gold sovereigns from the English mint,and if one puts these sovereigns on one side of a pair of scales and 100pounds of gold bars on the other,the two will balance.
