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。