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all this is applicable to the simple circulation of commodities alone, the only form that we are
now considering.
Every commodity, when it first steps into circulation, and undergoes its first change of form, does
so only to fall out of circulation again and to be replaced by other commodities. Money, on the
contrary, as the medium of circulation, keeps continually within the sphere of circulation, and
moves about in it. The question therefore arises, how much money this sphere constantly
absorbs?
In a given country there take place every day at the same time, but in different localities,
numerous one-sided metamorphoses of commodities, or, in other words, numerous sales and
numerous purchases. The commodities are equated beforehand in imagination, by their prices, to
definite quantities of money. And since, in the form of circulation now under consideration,
money and commodities always come bodily face to face, one at the positive pole of purchase,
the other at the negative pole of sale, it is clear that the amount of the means of circulation
required, is determined beforehand by the sum of the prices of all these commodities. As a matter
of fact, the money in reality represents the quantity or sum of gold ideally expressed beforehand
by the sum of the prices of the commodities. The equality of these two sums is therefore self-
evident. We know, however, that, the values of commodities remaining constant, their prices vary
with the value of gold (the material of money), rising in proportion as it falls, and falling in
proportion as it rises. Now if, in consequence of such a rise or fall in the value of gold, the sum of
the prices of commodities fall or rise, the quantity of money in currency must fall or rise to the
same extent. The change in the quantity of the circulating medium is, in this case, it is true,
caused by the money itself, yet not in virtue of its function as a medium of circulation, but of its
function as a measure of value. First, the price of the commodities varies inversely as the value of
the money, and then the quantity of the medium of circulation varies directly as the price of the
commodities. Exactly the same thing would happen if, for instance, instead of the value of gold
falling, gold were replaced by silver as the measure of value, or if, instead of the value of silver
rising, gold were to thrust silver out from being the measure of value. In the one case, more silver
would be current than gold was before; in the other case, less gold would be current than silver
was before. In each case the value of the material of money, i.e., the value of the commodity that
serves as the measure of value, would have undergone a change, and therefore so, too, would the
prices of commodities which express their values in money, and so, too, would the quantity of
money current whose function it is to realise those prices. We have already seen, that the sphere
of circulation has an opening through which gold (or the material of money generally) enters into
it as a commodity with a given value. Hence, when money enters on its functions as a measure of
value, when it expresses prices, its value is already determined. If now its value fall, this fact is
first evidenced by a change in the prices of those commodities that are directly bartered for the
precious metals at the sources of their production. The greater part of all other commodities,
especially in the imperfectly developed stages of civil society, will continue for a long time to be
estimated by the former antiquated and illusory value of the measure of value. Nevertheless, one
commodity infects another through their common value-relation, so that their prices, expressed in
gold or in silver, gradually settle down into the proportions determined by their comparative
values, until finally the values of all commodities are estimated in terms of the new value of the
metal that constitutes money. This process is accompanied by the continued increase in the
quantity of the precious metals, an increase caused by their streaming in to replace the articles
directly bartered for them at their sources of production. In proportion therefore as commodities
in general acquire their true prices, in proportion as their values become estimated according to
the fallen value of the precious metal, in the same proportion the quantity of that metal necessary
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for realising those new prices is provided beforehand. A one-sided observation of the results that
followed upon the discovery of fresh supplies of gold and silver, led some economists in the 17th,
and particularly in the 18th century, to the false conclusion, that the prices of commodities had
gone up in consequence of the increased quantity of gold and silver serving as means of
circulation. Henceforth we shall consider the value of gold to be given, as, in fact, it is
momentarily, whenever we estimate the price of a commodity.
On this supposition then, the quantity of the medium of circulation is determined by the sum of
the prices that have to be realised. If now we further suppose the price of each commodity to be
given, the sum of the prices clearly depends on the mass of commodities in circulation. It requires
but little racking of brains to comprehend that if one quarter of wheat costs £2,100 quarters will
cost £200, 200 quarters £400, and so on, that consequently the quantity of money that changes
place with the wheat, when sold, must increase with the quantity of that wheat.
If the mass of commodities remain constant, the quantity of circulating money varies with the
fluctuations in the prices of those commodities. It increases and diminishes because the sum of
the prices increases or diminishes in consequence of the change of price. To produce this effect, it
is by no means requisite that the prices of all commodities should rise or fall simultaneously. A
rise or a fall in the prices of a number of leading articles, is sufficient in the one case to increase,
in the other to diminish, the sum of the prices of all commodities, and, therefore, to put more or
less money in circulation. Whether the change in the price correspond to an actual change of
value in the commodities, or whether it be the result of mere fluctuations in market-prices, the
effect on the quantity of the medium of circulation remains the same. Suppose the following
articles to be sold or partially metamorphosed simultaneously in different localities: say, one
quarter of wheat, 20 yards of linen, one Bible, and 4 gallons of brandy. If the price of each article
be £2, and the sum of the prices to be realised be consequently £8, it follows that £8 in money
must go into circulation. If, on the other hand, these same articles are links in the following chain
of metamorphoses: 1 quarter of wheat – £2 – 20 yards of linen – £2 – 1 Bible – £2 – 4 gallons of
brandy – £2, a chain that is already well known to us, in that case the £2 cause the different
commodities to circulate one after the other, and after realising their prices successively, and
therefore the sum of those prices, £8, they come to rest at last in the pocket of the distiller. The £2
thus make four moves. This repeated change of place of the same pieces of money corresponds to
the double change in form of the commodities, to their motion in opposite directions through two
stages of circulation. and to the interlacing of the metamorphoses of different commodities.
29
These antithetic and complementary phases, of which the process of metamorphosis
consists, are
gone through, not simultaneously, but successively. Time is therefore required for the completion
of the series. Hence the velocity of the currency of money is measured by the number of moves
made by a given piece of money in a given time. Suppose the circulation of the 4 articles takes a
day. The sum of the prices to be realised in the day is £8, the number of moves of the two pieces
of money is four, and the quantity of money circulating is £2. Hence, for a given interval of time
during the process of circulation, we have the following relation: the quantity of money
functioning as the circulating medium is equal to the sum of the prices of the commodities
divided by the number of moves made by coins of the same denomination. This law holds
generally.
The total circulation of commodities in a given country during a given period is made up on the
one hand of numerous isolated and simultaneous partial metamorphoses, sales which are at the
same time purchases, in which each coin changes its place only once, or makes only one move;
on the other hand, of numerous distinct series of metamorphoses partly running side by side, and
partly coalescing with each other, in each of which series each coin makes a number of moves,