The purely technical movements that money undergoes in the circulation process of industrial capital, and, we can now add, also that of commodity-dealing, commercial capital (since this takes over part of the circulation movement of industrial capital as its own specific movement) – these movements, having acquired autonomy as the function of a special capital which practises them, and them alone, as its specific operations, transform this capital into money-dealing capital. A part of the industrial capital, and more directly also of the commercial capital, exists throughout not only in the money form, as money capital in general, but as money capital in the process of these technical functions. A definite part of the total capital now separates off and becomes autonomous in the form of money capital, its capitalist function consisting exclusively in that it performs these operations for the entire class of industrial and commercial capitalists. Just as, in the case of commercial capital, a part of the industrial capital present in the circulation process in the form of money capital separates off and performs these operations of the reproduction process for the whole of the remaining capital. The movements of this money capital are thus again simply movements of a now independent part of the industrial capital in the course of its reproduction process.
It is only where capital is newly invested – which is also the case with accumulation – that capital in its money form appears as the starting-point and finishing-point of the movement. For any capital that is already in its process, both starting-point and finishing-point appear as simply points of transition. In as much as industrial capital, between its emergence from the production sphere and its re-entry into it, has to undergo the metamorphosis C′–M–C, M is in fact, as was already shown in connection with simple commodity circulation, simply the end result of one phase in this metamorphosis, only to be the starting-point of its opposite, complementary phase. And even though, as far as commercial capital is concerned, the industrial capital’s C–M always presents itself as M–C–M, yet for it too, as soon as it is actually in operation, the actual process is also a continuous one of C–M–C. Commercial capital, however, goes through the acts C-M and M-C simultaneously. That is, it is not just that one capital is in the C-M stage while the other is in the stage M-C, but rather that the same capital is always buying and selling at the same time on account of the continuity of the production process; it is always in both stages simultaneously. While one part of the capital is being transformed into money, so as later to be transformed back into commodities, the other part is simultaneously being transformed into commodities, so as later to be transformed back into money.
Whether the money functions here as means of circulation or means of payment depends on the form of the commodity exchange. In both cases, the capitalist always has to make payments to many people and receive money in payment from many people. This merely technical operation of monetary payment and receipt itself constitutes work, and, in so far as the money functions as means of payment, it makes it necessary for accounts to be drawn up and balanced. This work is a cost of circulation and not value-creating labour. It is cut down by being undertaken for the capitalist class as a whole by a special department of agents or capitalists.
A certain section of capital must always exist as a hoard, as potential money capital: a reserve of means of purchase and payment, of unoccupied capital in the money form, waiting to be utilized; part of the capital constantly returns in this form. On top of the taking-in and paying-out of money, and book-keeping, the hoard itself has to be looked after, which is again a special operation. In point of fact, the hoard is constantly dissolved into means of circulation and payment, and reformed from money received from sales and from payments falling due; and it is this constant movement of the section of capital that exists as money dissociated from the capital function itself, this purely technical operation, that gives rise to special work and costs – costs of circulation.
The division of labour brings it about that these technical operations required by the functions of capital are performed as far as possible for the capitalist class as a whole by a particular division of agents or capitalists, as their exclusive functions, or are concentrated in their hands. There is here a double division of labour, just as with commercial capital. It becomes a special business, and because it is performed as a special business for the monetary mechanism of the entire class, it is concentrated and undertaken on a large scale; so that we find a further division of labour within this special business, both a division into various branches independent of one another, and the development of the workplace within these branches (large offices, numerous bookkeepers and cashiers, highly developed division of labour). The payment and receipt of money, settlement of balances, keeping of current accounts, storage of money, etc., in separation from the acts that make these technical operations necessary, make the capital advanced in these functions into money-dealing capital.
The various operations whose achievement of an autonomous position as special businesses gives rise to the money trade arise out of the various characteristics of money itself and its functions, which capital therefore also has to perform in the form of money capital.
I have already indicated earlier how money in general developed originally in the exchange of products between different communities.42
Dealing in money, therefore, i.e. trade in the money commodity, first develops out of international trade. As soon as various national coinages exist, merchants who buy abroad have to convert their own national coin into the local coinage and vice versa, or else convert coins of various kinds into uncoined pure silver or gold as world money. Hence the exchange business, which should be viewed as one of the spontaneous bases of the modern money trade.43 From this there developed exchange banks, in which silver (or gold) functions as world money – known as bank or commercial money – as distinct from currency. Exchange transactions, if only involving notes for payment to travellers from a money-changer in one country to one in another, were already developed in Rome and Greece out of the actual business of money-changing.
Trade in gold and silver as commodities (raw materials for the production of luxury goods) forms the spontaneous basis of the bullion trade, the trade that mediates the functions of money as world money. These functions, as previously explained (Volume 1, Chapter 3, 3, c), are of two kinds: circulation back and forth between the various national spheres of circulation, for the settlement of international payments, as well as the movement of capital lent at interest; and the movement from the sources of precious metal production across the world market, and distribution of this supply between the various national spheres of circulation. In England, goldsmiths still functioned as bankers for the greater part of the seventeenth century. We shall completely ignore for the moment the way that the settlement of international payments develops further in the exchange business, etc., together with everything related to dealings in securities, in short, all the specific forms of the credit system, which we are not yet concerned with here.
As world money, national money discards its local character; one national money is expressed in another, and in this way they are all reduced to their gold or silver content. Since both these commodities circulate as world money, they have to be reduced in turn to their mutual value ratio, which is constantly changing. The money-dealer makes it his own special business to carry on this intermediary function. Money-changing and the bullion trade are thus the original forms of the money business and arise from the double function of money: as national coin and as world money.
The capitalist production process, and trade in general, even on the basis of pre-capitalist modes of production, lead to the following results.
Firstly, the accumulation of money as a hoard, in this case as the section of capital that must always exist in the money form, as a reserve fund of means of purchase and payment. This is the first form of the hoard, as it reappears in the capitalist mode of production and generally comes into being with the development of commercial capital, at least for the use of this capital. In both cases this applies as much to international circulation as to domestic. This hoard is in constant flux, constantly spilling out into circulation and returning from it. The second form of the hoard is that of idle capital temporarily unoccupied in the money form, together with newly accumulated money capital that has not yet been invested. The functions that this hoard formation itself makes necessary start with its storage, book-keeping, etc.
Secondly, however, and linked with this, is the expenditure of money in buying, and its receipt from selling, paying and the receipt of payments, settlement of payments, etc. To start with, the money-dealer does all this as a simple cashier for merchants and industrial capitalists.44
Money-dealing is fully developed, even if still in its first beginnings, as soon as the functions of lending and borrowing, and trade on credit, are combined with its other functions. We shall deal with this in the next Part, on interest-bearing capital.
The bullion trade itself, the transfer of gold or silver from one country to another, is simply the result of commodity trade, determined by the rate of exchange, which expresses the state of international payments and the rate of interest in various markets. The bullion dealer as such only transmits the results.
In considering money and how its movements and formal characteristics develop out of simple commodity circulation, we saw (Volume 1, Chapter 3) that the movement of the quantities of money circulating as means of purchase and payment is determined by the volume and speed of the metamorphosis of commodities; and this metamorphosis, as we know now, is itself simply an aspect of the reproduction process as a whole. As far as obtaining the money material (gold and silver) from its source of production is concerned, this is reducible to direct commodity exchange, exchange of gold or silver as a commodity against other commodities, and is thus just as much an aspect of commodity exchange as obtaining iron or other metals. As far as the movement of precious metals on the world market is concerned, however (we ignore here such movements as express the transfer of loan capital, a transfer which also takes place in the form of commodity capital), this is as completely determined by international commodity exchange as the movement of money as a means of domestic purchase and payment is determined by domestic commodity exchange. The export and import of precious metals from one national sphere of circulation to another, in as much as this is caused simply by the devaluation of a national currency, or by bi-metallism, lies outside monetary circulation proper and is merely a correction of aberrations brought about by arbitrary state decrees. As far as the formation of hoards is concerned, finally, in so far as this represents a reserve fund of means of purchase and payment, whether for domestic or for foreign trade, and is also merely a form of temporarily idle capital, in both cases this formation is simply a necessary precipitate of the circulation process.
Monetary circulation as a whole is a mere resultant of commodity circulation, in its volume, its forms and its movements, and from the capitalist standpoint commodity circulation itself represents simply the circulation process of capital (including the exchange of capital for revenue and of revenue for revenue, in so far as the expenditure of revenue is realized in retail trade). In the same way, it is completely self-evident that money-dealing does not just mediate the mere result and form of appearance of commodity circulation, i.e. the circulation of money. This monetary circulation itself, as a moment of commodity circulation, is given in advance for money-dealing. The latter’s mediatory role is rather confined to the technical operations of monetary circulation, which it concentrates, reduces and simplifies. Money-dealing does not form hoards, but it supplies the technical means for hoard formation, in so far as this is voluntary (and not the expression of unoccupied capital or of a disturbance in the reproduction process), thus reducing it to its economic minimum; for the reserve fund of means of purchase and payment, if managed on behalf of the capitalist class as a whole, does not need to be so great as if each capitalist had to keep his fund separately. The money trade does not buy precious metals, but only mediates their distribution after the commodity trade has bought them. Money-dealing mediates the settlement of accounts, in so far as money functions as means of payment, and by the mechanism it creates for these settlements it reduces the quantity of money these require; but it determines neither the relationship nor the volume of these mutual payments. The bills and cheques, for example, which are exchanged for one another in banks and clearing houses derive from completely independent businesses and are the results of already given operations, so that all that is involved here is a better technical settlement of these results. In so far as money circulates as means of purchase, the volume and number of purchases and sales is completely independent of money-dealing. This can only abbreviate the technical operations that accompany these transactions and thereby also reduce the quantity of ready cash needed for their turnover.
Money-dealing in the pure form in which we are considering it here, i.e. separate from the credit system, thus only bears on the technical side of one aspect of commodity circulation, i.e. monetary circulation and the various functions of money that arise from it.
This distinguishes money-dealing quite fundamentally from dealing in commodities, which mediates the metamorphosis of commodities and commodity exchange, even though it allows this process of commodity capital to appear as the process of a special capital separate from industrial capital. If therefore commodity-dealing commercial capital displays a special form of circulation, M–C–M, where it is the commodity that changes place twice and brings about the reflux of money, as opposed to C–M–C, where it is money that changes hands twice and mediates commodity exchange, no such special form can be seen in the case of money-dealing capital.
Where money capital is advanced by a special section of capitalists in this technical mediation of monetary circulation – this capital representing on a diminished scale the additional capital which the merchants and industrial capitalists would otherwise have to advance for this purpose themselves – there we also have the general form of capital M-M’. The advance of M means that the person advancing it receives M + Δ M. But the mediation between M and M’ involves only the technical aspects of the metamorphosis, and not its material aspects.
It is clear enough that the mass of money capital which the money dealers operate with is the circulating money capital of the merchants and industrialists, and that the operations the money dealers perform are simply the operations of the merchants and industrialists, mediated by the former.
It is equally clear that their profit is simply a deduction from surplus-value, since they are dealing only with values already realized (even if realized only in the form of claims for payment).
Just as with commodity trade, here too we find a duplication of functions. For one section of the technical operations connected with money circulation must be performed by the commodity dealers and producers themselves.