The Economic Doctrines of Karl Marx

2. Money

(1) Price

The first function of money consists in serving as a measure of value, and providing the world of commodities with the material wherein value is expressed.

It is not through the medium of money that commodities become similar and comparable. It is because, as values, they are materialised human labour, and to that extent are similar, that they can be commonly measured in the same specific commodity, which they thereby transform into their common measure of value or into money. Money as the measure of value is the necessary phenomenal form of the measure of value inherent in commodities, viz., labour-time.

The expression of value of a commodity in the money commodity is its money form or its price. For instance 1 coat = 10 grammes of gold.

The price of the commodity is something quite distinct from its natural properties. It cannot be seen or felt in the commodity. The commodity owner must convey this information to the purchaser. But in order to express the value of a commodity in the gold commodity, that is to fix its price, real gold is not necessary. The tailor need have no gold in his pocket to be able to explain that the price of the coat which he offers amounts to 10 grammes of gold. Consequently, in measuring value, only imaginary money is used.

Nevertheless, price depends upon the actual money commodity. Apart from all disturbing incidental circumstances, the tailor may fix the price of his coat at 10 grammes of gold, if as much socially necessary labour is embodied in such a quantity of gold as in the coat. If the tailor expresses the value of his coat, not in gold, but in silver or copper, the price expression will be different.

Where two different commodities function as the measure of value, for example, gold and silver, all commodities possess two different price expressions, gold and silver prices. Every change in the value-relation of gold to silver causes price disturbances. The duplication of the measure of value is in fact an absurdity, a contradiction of the function of money as the measure of value. Whenever efforts have been made legally to fix two commodities as measures of value, it has always been one which has in fact functioned as the measure of value.

In several countries gold and silver have been legally prescribed as co-existing measures of value. But experience has always shown this legislation to be absurd. Like every other commodity, gold and silver are exposed to constant fluctuations in value; if both are placed on an equal footing by the law, if payment may be made in one or the other metal according to choice, payment would be made in the metal whose value was falling, and the metal whose value was rising would be sold where it could be sold advantageously, abroad. In countries where the double currency prevails, the so-called Bimetallism, only one of the money commodities functions in reality as the measure of value, and that is the one whose value is falling. The other, whose value is rising, measures its price, like any other commodity, in the over-estimated metal and functions as a commodity, not as a measure of value. The greater the discrepancies in the value relation between gold and silver, the more clearly the absurdity of Bimetallism comes to light.

For the sake of simplicity, Marx, in Capital, assumes gold to be the only money commodity. As a matter of fact, gold tends to become the money commodity in all capitalist countries. [1]

In the price expression each commodity is imagined as a specific quantity of gold. It is, of course, necessary to measure with each other the various quantities of gold which represent the various prices, to establish a standard of price. The metals possess such a natural standard in their weights. The weight names of the metal, pound, livre (in France), talent (in ancient Greece), ala (among the Romans), etc., consequently form the original names of the units of the standard of price.

By the side of its function as the measure of value, we shall now become acquainted with a second function of money: that of being a standard of price. As a measure of value, money transforms the values of commodities into certain imaginary quantities of gold. As a standard of price it measures the various quantities of gold with a certain quantity of gold which is accepted as a unit, for example a pound of gold.

The distinction between the measure of value and the standard of price is clear, when we observe the effect produced on each by an alteration in value.

Let us assume that the unit of measure of the standard of price is 10 grammes of gold. Whatever the value of gold may now be, 20 grammes of gold will always be worth twice as much as 10 grammes. A rise or fall in the value of gold has therefore no effect upon the standard of price.

Let us, however, assume that gold is the measure of values. But the value of gold fluctuates; one day it may happen that twice as much gold as previously will be produced in the same socially-necessary labour-time. In the productivity of tailoring, however, no alteration has taken place. What happens? The price of a coat now amounts to 20 grammes of gold. The change in the value of gold therefore expresses itself perceptibly in so far as it functions as the measure of value.

The standard of price may be arbitrarily fixed, just like, for example, the measurement of length. On the other hand, this standard requires general validity. In the first place it is conventional and given by the traditional weight divisions. Eventually it is fixed by law. The various aliquot parts of the precious metal receive official baptismal names which differ from their weights. Prices are now not expressed in gold weights, but in the legally valid reckoning names of the gold standard.

Price is the money-name of the magnitude of value of a commodity. But at the same time it is the expression of the exchange-ratio of the commodity with the money-commodity, with gold. The value of a commodity can never become manifest as an isolated phenomenon, for itself alone, but always only in the exchange-ratio with another commodity. This ratio, however, is subject to the influence of other circumstances than the magnitude of value alone, and this fact provides the opportunity for a deviation of price from the magnitude of value.

If the tailor says that the price of his coat is 10 grammes of gold, or 30s., he means that he is prepared at any time to yield up his coat for 10 grammes of gold. But he would be very premature if he intended to convey that everybody was immediately willing to give him 10 grammes of gold for his coat. The transformation of the coat into gold is indeed essential if it is to fulfil its purpose as a Commodity. The commodity pants for money; prices are the ardent love shafts aimed at the glittering cavalier. But the course of love runs differently in the commodity market from what it does in novels. They do not always reciprocate. The wooing gold passes by many commodities, who are obliged to lead a joyless existence in shop windows.

Let us look at the adventure of the commodity in its intercourse with gold somewhat more closely.

(2) Buying and Selling

Let us accompany our old acquaintance the tailor to the market. He exchanges the coat he has made for 30s. With this sum he buys a bottle of wine. Here we have two diametrically opposed transformations: first the conversion of commodity into money; then the re-conversion of money into commodity. But the commodity at the end of the whole process is a different commodity from that at the commencement thereof. The former was a non-use-value for its owner, the latter is a use-value for him. The usefulness of the former to him consisted in its property as a value, as the product of general human labour; in its exchangeability with another product of general human labour, with gold. The usefulness of the other commodity, the wine, consists for him in its material properties, not as the product of general human labour, but of a definite form of labour, of vintage, etc.

The form of the elementary circulation of commodities runs: Commodity–Money–Commodity; that is, to sell in order to buy.

Of the two metamorphoses, Commodity–Money and Money–Commodity, the first is, as we know, the most difficult. It is no trouble to buy when one has money, but it is incomparably more difficult to sell in order to obtain money. And money is necessary to every commodity owner under a system of commodity production. The more the social division of labour is developed, the more one-sided are its operations, the more manifold its needs become.

If the commodity is to effect its salto mortale, its conversion into money, it is above all things necessary that it is a use-value, that it satisfies a need. If this be the case, if it succeeds in converting itself into money, the first question that arises is how much money?

This question does not concern us very much for the moment. Its answer belongs to the analysis of the laws of prices. What interests us here is the metamorphosis Commodity-Money, irrespective of whether a gain or loss in magnitude of value is thereby involved.

The tailor parts with his coat and receives money therefor. Let us assume that he sells it to a countryman. What is a sale on the part of the tailor is a purchase on the part of the countryman. Every sale is a purchase and vice versa. Where, however, does the countryman’s money come from? He received it in exchange for corn. If we follow the track of the money commodity, the gold, from its source of production at the mines, passing from one commodity owner to another, we find that each of its changes of ownership has been the result of a sale.

The metamorphosis Coat–Money, forms, as we have seen, not one but two metamorphoses. The one is: Coat–Money–Wine. The other: Corn–Money–Coat. The beginning of the metamorphosis of one commodity is at the same time the close of the metamorphosis of another commodity, and vice versa.

Let us assume that the vintner buys a kettle and coals with the 30s. which he received for his wine. Then the metamorphosis, Money–Wine, is the last link in the series Coat–Money–Wine, and the first of two other series Wine–Money–Coal and Wine–Money–Kettle. Each of these metamorphoses forms a circuit, Commodity–Money–Commodity. It begins and ends with the commodity form. But every circuit of a commodity intersects the circuits of other commodities. The whole movement of these innumerable intersecting circuits forms the circulation of commodities.

The circulation of commodities is essentially different from the direct exchange of commodities or barter. The latter is brought about by the growth of the productive forces beyond the limits of primitive communism. Through the exchange of products the system of social labour is extended beyond the boundaries of a community, the effect being that various communities and the members of various communities work for each other. But the simple exchange of products on its part formed a further obstacle, as the productive forces were continually developing, and this obstacle was overcome by the circulation of commodities.

The simple exchange of products necessitates that I should take the product of the person who takes my product at the same time. This obstacle is removed in the circulation of commodities. Every sale is indeed at the time a purchase; the coat cannot be sold by the tailor unless it is bought by another, by the countryman. But it is not in the least necessary that the tailor should buy something else immediately. He may put the money in his purse and wait until it suits him to buy something. Nor is he at all obliged now or later to buy something from the countryman who bought the coat from him or to buy in the market where he sold. The time, local, and individual limits of the exchange of products, therefore, vanish with the circulation of commodities.

Yet another distinction between barter and the circulation of commodities must be recorded. The simple exchange of products consists in the alienation of superfluous products, and at first leaves unaffected the forms of production of primitive communism, forms of production which were under the direct control of the participants.

The development of the circulation of commodities, on the other hand, renders the relations of production ever more complicated and more uncontrollable. The simple producers become increasingly independent of each other, but they are more than ever dependent upon social ramifications which they are no longer able to control, as was the case under primitive communism. Consequently the social powers assume the shape of blindly-working natural forces which, if impeded in their activity or disturbed in their equilibrium, assert themselves in catastrophes similar to storms and earthquakes.

And the seeds of such catastrophes are developed with the circulation of commodities. The possibility which it offers of being able to sell without being immediately obliged to buy contains the possibility of congested markets, of crises. But the productive forces must develop beyond the limit of simple commodity production before the possibility becomes a reality.

(3) The Currency of Money

Let us recall the commodity circuits which we followed in the last section: Corn–Money–Coat–Money–Wine–Money–Coal, etc. The progress of these circuits also imparts a movement to the money, but this is not a circuit. The money which came out of the countryman’s pockets moves farther and farther away from him.

The movement imparted to money by the circulation of commodities constantly sends it farther from its starting-point, in order to make it pass without ceasing from one hand to another. This it is which is called the course of money, or its currency.

The currency of money is the consequence of the movements of commodities, not, as is often assumed, their cause. At the stage of the simple circulation of commodities where we are now remaining in our investigation, where as yet there is no mention of ordinary commerce and re-selling, that is to say, at the first stage of its course, the commodity as a use-value soon falls out of circulation, in order to be swallowed up in consumption, and its place in the circuit is taken by a new use-value or an equivalent commodity-value. In the circuit Corn–Money–Coat, corn disappears from circulation after the first metamorphosis Corn–Money, but various use-values return to the seller of corn: Money–Coat. Money as the medium of circulation does not drop out of circulation, but constantly revolves in its sphere.

The question now arises, how much money does the circulation of commodities require?

We know already that every commodity is equivalent to a certain quantity of money, and that, therefore, its price is fixed before it comes into contact with the real money. Consequently, the price to be realised for every single commodity and the total of the prices of all commodities are settled beforehand - assuming the value of gold to remain constant. The total prices of commodities are a definite imaginary amount of gold. If the commodities are to circulate, it must be possible to transform the imaginary sum of gold into a real sum of gold; the quantity of the circulating gold is therefore determined by the total prices of the circulating commodities. (It must be kept in mind that we are still within the sphere of the simple circulation of commodities, where credit money, the adjustments of payments, etc., are as yet unknown.) Assuming that prices do not vary, this sum total of prices fluctuates with the quantity of the circulating commodities; if the quantity of commodities remains constant, it varies with their prices, irrespective of whether such price changes are caused by a fluctuation in market prices, or through a change in the value of gold or of commodities; irrespective of whether all or only a few commodities are affected thereby.

But the sales of commodities are not always partial, nor do they all proceed simultaneously.

Let us revert to our former example. We have the series of metamorphoses: 5 bushels of Corn–30s.–1 Coat–30s.–40 litres of Wine-30s.–2 tons of Coal–30s. The sum total of the prices of these commodities amounts to 120s., but to effect the four sales 30s. alone are sufficient, which change their place four times, and thus execute four moves one after another. If we assume that these sales all take place within one day, this gives us the amount of money functioning during one day as a medium of circulation within a certain sphere of circulation as

120 / 4 = 30s.,

or as commonly expressed

Total Commodity-prices / Times the money changes hands during a definite period = Total money in circulation.

The number of movements made by the various pieces of money in a country is of course a varying one; one coin may lie in a coffer for years, whilst another may execute thirty movements in a day. But its average velocity or movement is a definite magnitude.

The velocity of the movement of money is determined by the velocity of the movements of commodities. The quicker commodities disappear from circulation, in order to be consumed, and the more quickly they are replaced by new commodities, all the more rapid is the movement of money. The slower the movement of commodities, the slower is the movement of money, and the less money there is seen. People whose glance is only fixed on superficialities then believe that too little money is in existence, and that the shortage of money is the cause of the feebleness of circulation. While this contingency is possible, it hardly happens to-day for long periods.

(4) Coins: Paper Money

It was of course a great inconvenience for intercourse when the quality and weight of every piece of money metal which changed hands at every purchase and sale had to be tested. This operation was dispensed with as soon as a generally recognised authority guaranteed the correct weight and the correct quality of every piece of money. Thus metal coins were minted by the State from bars of metal.

The coin-shape of money sprang from its function as a medium of circulation. But once money was minted into coins, the latter were soon invested with an existence in the sphere of the circulation process independent of their quality as coins. The guarantee of the State that a coin contained a certain amount of gold or was equal to it, soon sufficed, under certain circumstances, to cause the coins to function as a means of circulation quite as well as the full and real quantity of gold.

This is brought about by the currency of pieces of money themselves. The longer a coin is in circulation, the more it gets used up, the more its face and intrinsic values deviate from each other. An old coin is lighter than one just come from the Mint - yet, under certain circumstances, both may represent equal values as a medium of circulation.

The distinction between face and real values is shown even more plainly in the coining of inferior metals. Inferior metals, such as copper, very often constitute the first form of money, which is later supplanted by precious metals. Copper and, after the introduction of the gold standard, silver cease to be the measure of value, but the copper and silver coins continue to function as a means of circulation in petty transactions. They now correspond to definite aliquot parts of gold; the value they represent varies in the same ratio as that of gold; it remains unaffected by the fluctuations of the value of silver and copper. It is manifest that under certain circumstances their intrinsic value as metals has no influence upon their function as coins, and that it may be arbitrarily determined by legislation what quantity of gold shall be represented by a silver or copper coin. It needed only a step to substitute a paper token for a metal token, legally to equate a valueless paper chit with a certain quantity of gold.

Thus State paper money arose, which is not to be confused with credit money, which grew out of another function of money.

Paper money may replace gold money only as a means of circulation, not as a measure of value; it can only replace it in so far as it represents certain quantities of gold. Paper money as a means of circulation is subject to the same laws that govern the metallic money into whose place it steps. Paper money can never replace a larger amount of gold than can be absorbed by the circulation of commodities. If the circulation of commodities in a country requires gold amounting to £5,000,000, and the State puts into circulation £10,000,000 in notes, the result would be that I should be able to buy, with two pound notes only as much as with a golden sovereign. In this case, the prices expressed in paper money are twice as high as the gold prices. Paper money is depreciated by its excessive issue.

This took place to a very considerable extent during the world war in all the war-making States, as this method of war finance was more convenient than the imposition of taxes. Eventually, however, the excessive issue of paper money represented nothing less than a particularly brutal form of indirect taxation, as, by continuously throwing fresh quantities of paper money into circulation, the State was constantly forcing up prices, and thereby confiscating for its own benefit a portion of the purchasing power of all income receivers, especially those sections living upon fixed sums of money, such as rentiers, mortgagees and so on, but also the workers and officials, whose incomes exhibit a certain consistency.

At the same time, however, the State destroys its own sources of revenue, as the taxes and duties are paid to it in money that is continuously depreciating. It is therefore never able to cover its expenditure, and is ever and again obliged to resort to the printing press. This can be observed with special distinctness in the States in which the War and the Revolution have administered severe shocks to the national economy.

Most immense was the issue of paper money in Germany. Whereas in the year 1914, the note currency amounted to 2.41 milliards of gold marks, it amounted in January, 1923, to 1280.09 milliards, and in November even to 524,330,557 milliards, to which uncounted milliards of “emergency money” in various kinds must be added. The gold value of these astronomical figures, however, was astonishingly small. It was estimated that all these various kinds of paper money and emergency money together represented a value of 300.3 millions of gold marks, whereas the total value of the various kinds of money (gold, silver, and banknotes) circulating in the year 1913 was valued at 6,070 millions of gold marks. The value of the means of circulation in October, 1923, therefore, represented only 4.95 per cent. of the corresponding figure in the year 1913.

From these comparative figures two things emerge firstly, the fact that the velocity of circulation was enormously accelerated, as everybody endeavoured to get rid of the money whose value was melting away in his hands at the earliest possible moment, so that the smaller amount is compensated for by accelerated circulation, and secondly, that there has been a reduction in the quantity of commodities in circulation, which has considerably diminished the total price of these commodities, reckoned in gold.

The total value of the means of circulation considerably increased immediately the stabilisation of the value of money diminished the velocity of circulation and increased the economic activity, thereby raising the total prices of the commodities in circulation. On the 30th November, 1923, the total means of circulation amounted to 1584.7 millions of gold marks, equal to 26.11 per cent. of the figure for the year 1913, for the 31st December, 1923, the corresponding figures were 2273.6 millions of gold marks and 37.48 per cent.

Compared with this measure of inflation, all the figures from other countries, even from Russia, Poland, and Austria, and from all other periods, such as from the Great French Revolution, seem insignificant; at that time 45,581 millions of francs of so-called “Assignats” were in circulation during seven years (1790 to March, 1797).

The great fluctuations in the value of paper money, which in particularly severe cases lead to its total devaluation and its replacement by a stable foreign currency, seem to render it inexpedient for the State to issue paper money. Almost always after currency catastrophes of this kind, the State is legally prohibited from issuing paper money. In view, however, of the reluctance to forego the economies which the circulation of paper money offers in comparison with the pure gold currency, the issue of paper currency is transferred to a bank infested with special privileges and duties. The most important provision among all the statutes of these banks is the obligation at any time to redeem the money tokens issued by them for gold. This redemption obligation distinguishes the banknote from State paper money, and places it on an equal footing with paper money.

(5) Additional Functions of Money.

We have followed the spread of simple commodity circulation, and seen how it is accompanied by an increase in the functions of money as a measure of value and means of circulation. But money is not limited to these functions.

In the course of the circulation of commodities both the necessity and the desire arise to retain and hoard the money commodity, gold. The peculiarities of money correspond to the peculiarities of commodity production just as the latter is a system wherein social production is carried on by independent private producers, so money is a social power. It is not, however, a power exercised by society, but may be the private property of any individual. The larger the amount of money in a person’s pockets, the greater the social power, the goods and enjoyments, the products of the labour of others, at his command. Gold can do everything. It is the sole commodity which everybody wants and everybody will take. Thus the greed for gold grew and grows with the circulation of commodities.

But in the course of the development of commodity production the accumulation of gold becomes not only a passion, but also a necessity. The more products become commodities, the less a producer creates goods for his own consumption, the more necessary is the possession of money to enable him to live at all. I must buy continually, and I must first of all have sold, in order to be able to buy; but the production of the commodities which I sell requires time, and their sale depends on chance. In order to keep commodity production in full swing, in order to be able to live during the work of producing, I must possess a supply of money. A deposit of money is also necessary to relieve congestions in circulation. We have seen above that the quantity of the circulating money is dependent upon the prices of commodities, their quantity, and the velocity of their movements. Each of these factors is continually changing, and consequently the amount of circulating money is in a state of constant fluctuation. Whence comes the money that is required, and whither goes the money that becomes superfluous?

Hoards of money which accumulate in the most diverse places form conduits which serve now to absorb, now to release money, thus neutralising disturbances in the process of circulation.

In the beginnings of commodity circulation two commodities are always directly exchanged, as in the case of barter, but with this difference, that now one of the commodities is always the general equivalent, the money commodity. With the development of commodity circulation, however, conditions arise by virtue of which the alienation of a commodity becomes separated in point of time from the receipt of the sum of money corresponding to its price. Circumstances now arise which cause a commodity to be paid for before it is received, or, which is oftener the case, to be paid for later. An example may be given to elucidate this point.

Let us take the case of an Italian silk weaver of about the thirteenth century. He obtains the silk which he weaves in his neighbourhood. But the woven product is destined for Germany, and three to four months must elapse before it can arrive at the place where it is to be sold, and before the purchase money can be received in Italy. The silk weaver has finished a piece of silk goods at the same time as his neighbour, the silk spinner, has spun a certain quantity of silk. The silk spinner apparently sells his commodity to the silk weaver, but the latter does not receive the proceeds of his sale until four months later. What happens? The weaver buys the silk, but does not pay for it until four months have elapsed. Buyer and seller now appear in another light. The seller becomes a creditor, the buyer a debtor. Money also is now invested with a new function. In the present case it does not effect the circulation of the commodity; it brings the movement to a close as an independent factor.

In this function it is not a means of circulation, but a means of payment, a means of fulfilling an obligation to supply a certain quantity of values. Such an obligation does not necessarily arise from the process of the circulation of commodities. The more commodity production develops, the greater are the efforts to convert supplies of particular use-values into a supply of money, the form of general money. Dues in kind to the State are converted into money taxes, and dues in kind to officials into money salaries. The function of money as a means of payment now extends beyond the circulation of commodities.

Let us return to our silk weaver. He buys silk from the silk spinner without being able immediately to pay for it. But there is no sentiment in money matters. The silk spinner reflects: What one has in black and white may be safely taken home. He therefore obtains from the silk weaver a document, in which the latter promises to pay a sum of money corresponding to the price of the purchased silk after four months. But the silk spinner, on his side, has payments to meet before the four months have elapsed. As he does not possess cash, he pays with the document of the silk weaver. Therefore this document now functions as money; a new kind of paper money comes into existence: credit money (Bills of Exchange, Cheques, etc.).

Yet another case may arise: The silk weaver bought silk to the amount of 25s. from the silk spinner, but the latter bought from the goldsmith a bangle costing 30s. for his wife. At the same time the goldsmith received from the silk weaver articles of silk to the value of 20s. The payments fall due simultaneously. All three, the spinner, the weaver, and the goldsmith, meet together. The first has to pay the last 30s., and at the same time to demand 25s. from the silk weaver. He pays the goldsmith 5s., and refers him to the silk weaver for the rest. The latter, however, has 24s. to receive from the goldsmith; consequently he pays him only 5s. Thus by means of mutual adjustment, three payments amounting in all to 75s. are effected with no more than 10s.

Of course, transactions are not effected in reality with the simplicity shown in our example. As a matter of fact, the payments of commodity sellers partly adjust themselves, and indeed to an ever-increasing extent with the development of the circulation of commodities. The concentration of payments at a few places and at definite times create proper institutions and methods for this adjustment, for example, the virements in medieval Lyons. The clearing houses which serve the same purpose are well known.

It is only payments which do not adjust each other that have to be made in cash.

The credit system causes hoarding as an independent form of enrichment to disappear. He who wants to retain his wealth need no longer hide his money in the earth or in cases and trunks, once the credit system has developed. He can lend out his money. On the other hand, the credit system necessitates temporary hoarding, the accumulation of sums of money, which serve to pay debts falling due on settlement day.

But it is not always possible to accumulate such a hoard. Let us recall our weaver. He promised to pay after four months because he hoped to have sold his commodities in the meantime. But suppose that he finds no buyers for his commodities, and therefore cannot pay. The silk spinner is counting on the payment, and in reliance thereon he has likewise contracted to make certain payments, perhaps to the goldsmith, and again the latter to another. We see that the incapacity to pay of one involves the incapacity to pay of others, and all this in a greater degree, the more the system of successive and simultaneous payments and their adjustment is developed. Let us now suppose that not one, but several producers are unable to sell their commodities owing to general over-production. Their incapacity to pay involves the incapacity to pay of others who have already sold their commodities. The promises to pay become valueless, as everybody is demanding cash, the general equivalent. A general shortage of money, a money crisis, arises, which at a certain stage in the development of credit becomes the inevitable accompaniment of every production and commercial crisis.

It shows most distinctly that under the system of commodity production money cannot be replaced by mere commodity certificates.

Money has two spheres of circulation: the internal market of the community State in question, and the world market. It is only inside a country that money assumes the form of coins and value tokens, not in the intercourse of one country with another. On the world market, it re-assumes its original shape as bars of precious metal, gold and silver. Hitherto both have served in the world market as a measure of value, whilst in the sphere of internal circulation only one commodity can really function as the measure of value.

Moreover, it may be said that since Marx wrote Capital, gold has shown an unmistakable tendency to become the sole money commodity, even in the world market.

The chief function of universal money is to serve as a means of payment, for the adjustment of international balances.

Further, payments from one country to another take place in consequence of excesses or deficits of imports as compared with exports of commodities, as well as in consequence of payments or revenue in the form of interest on and redemption of foreign loans, of emigration remittances, freight, bank and commercial expenses in international traffic (thus almost every country pays England large annual sums for the transport of their commodities in English ships and for the transaction of banking and commercial business by London banks and so on).

Note

[1] The value of the supplies of money (coins and bars) in the countries of the modern mode of production was estimated

Between 1880 and 1908, £1,500,000,000 worth of gold coins and £1,000,000,000 worth of silver coins were coined in the various currencies of the world

Between 1911 and 1922, the value of the gold production amounted to £1,026,950,000, whereas the value of the silver production in the same period only amounted to £386,000,000.

In course of time, therefore, the preponderance is being shifted more and more in favour of gold.