i.e. as the circulation of gold. The social movement is for the 
commodity owners, on the one hand, an external necessity and, 
on the other, merely a formal intermediary process enabling each 
individual to obtain different use values of the same total value as 
that of the use value which he has thrown into circulation. The 
commodity begins to function as a use value when it leaves the 
sphere of circulation, whereas the use value of money as a means 
of circulation consists in its very circulation. The movement of the 
commodity in the sphere of circulation is only an insignificant 
factor, whereas perpetual rotation within this sphere becomes the 
function of money. The specific function which it fulfils within 
circulation gives money as the medium of circulation a new and 
distinctive aspect, which now has to be analysed in more detail. 

First of all, it is evident that the circulation of money is an 
infinitely divided movement, for it reflects the infinite fragmenta- 
tion of the process of circulation into purchases and sales, and the 
complete separation of the complementary phases of the metamor- 
phosis of commodities. It is true that a recurrent movement, real 
circular motion, takes place in the small circuits of money in which 
the point of departure and the point of return are identical; but in 
the first place, there are as many points of departure as there are 
commodities, and their indefinite multitude balks any attempt to 
check, measure and compute these circuits. The time which passes 
between the departure from and the return to the starting point is 
equally uncertain. It is, moreover, quite irrelevant whether or not 
such a circuit is described in a particular case. No economic fact is 
more widely known than that somebody may spend money 
without receiving it back. Money starts its circuit from an endless 
multitude of points and returns to an endiess multitude of points, 
but the coincidence of the point of departure and the point of 
return is fortuitous, because the movement C—-M—C does not 
necessarily imply that the buyer becomes a seller again. It would 
be even less correct to depict the circulation of money as a 
movement which radiates from one centre to all points of the 
periphery and returns from all the peripheral points to the same 
centre. The so-called circuit of money, as people imagine it, simply 
amounts to the fact that the appearance of money and its 
disappearance, its perpetual movement from one place to another, 
is everywhere visible. When considering a more advanced form of 
money used to mediate circulation, e.g. bank notes, we shall find 
that the conditions governing the issue of money determine also 
its reflux. But as regards simple money circulation it is a matter of 
chance whether a particular buyer becomes a seller once again. 

338 A Contribution to the Critique of Political Economy 

Where actual circular motions are taking place continuously in the 
sphere of simple money circulation, they merely reflect the more 
fundamental processes of production, for instance, with the money 
which the manufacturer receives from his banker on Friday he 
pays his workers on Saturday, they immediately hand over the 
larger part of it to retailers, etc., and the latter return it to the 
banker on Monday. 

We have seen that money simultaneously realises a given sum of 
prices comprising the motley purchases and sales which coexist in 
space, and that it changes places with each commodity only once. 
But, on the other hand, in so far as the movements of complete 
metamorphoses of commodities and the concatenation of these 
metamorphoses are reflected in the movement of money, the same 
coin realises the prices of various commodities and thus makes a 
larger or smaller number of circuits. Hence, if we consider the 
process of circulation in a country during a definite period, for 
instance a day, then the amount of gold required for the 
realisation of prices and accordingly for the circulation of 
commodities is determined by two factors: on the one hand, .the 
sum total of prices and, on the other hand, the average number of 
circuits which the individual gold coins make. The number of 
circuits or the velocity of money circulation is in its turn 
determined by, or simply reflects, the average velocity of the 
commodities passing through the various phases of their 
metamorphoses, the speed with which the metamorphoses con- 
stituting a chain follow one another, and the speed with which 
new commodities are thrown into circulation to replace those that 
have completed their metamorphoses. Whereas during the deter- 
mination of prices the exchange value of all commodities is 
nominally turned into a quantity of gold of the same value and in 
the two separate transactions, M—C and C—M, the same value 
exists twice, on the one hand, in the shape of commodities and, on 
the other, in the form of gold; yet gold as a medium of circulation 
is determined not by its isolated relation to individual static 
commodities, but by its dynamic existence in the fluid world of 
commodities. The function of gold is to represent the transforma- 
tion of commodities by its changes of place, in other words, to 
indicate the speed of their transformation by the speed with which 
it moves from one point to another. Its function in the process as 
a whole thus determines the actual amount of gold in circulation, 
or the actual quantity which circulates. 

Commodity circulation is the prerequisite of money circulation; 
money, moreover, circulates commodities which have prices, that is 

Chapter Two. Money or Simple Circulation 339 

commodities which have already been equated nominally with 
definite quantities of gold. The determination of the prices of 
commodities presupposes that the value of the quantity of gold 
which serves as the standard measure or the value of gold, is 
given. According to this assumption, the quantity of gold required 
for circulation is in the first place determined therefore by the 
sum of the commodity prices to be realised. This sum, however, is 
in its turn determined by the following factors: 1. the price level, 
the relative magnitude of the exchange values of commodities in 
terms of gold, and 2. the quantity of commodities circulating at 
definite prices, that is the number of purchases and sales at given 
prices.* If a quarter of wheat costs 60s., then twice as much gold is 
required to circulate it or to realise its price as would be required 
if it cost only 30s. Twice as much gold is needed to circulate 500 
quarters at 60s. as is needed to circulate 250 quarters at 60s. 
Finally only half as much gold is needed to circulate 10 quarters at 
100s. as is needed to circulate 40 quarters at 50s. It follows therefo- 
re that the quantity of gold required for the circulation of 
commodities can fall despite rising prices, if the mass of 
commodities in circulation decreases faster than the total sum of 
prices increases, and conversely the amount of means of circula- 
tion can increase while the mass of commodities in circulation 
decreases provided their aggregate prices rise to an even greater 
extent. Thus excellent investigations carried out in great detail by 
Englishmen have shown that in England, for instance, the amount 
of money in circulation grows during the early stages of a grain 
shortage, because the aggregate price of the smaller supply of 
grain is larger than was the aggregate price of the bigger supply 
of grain, and for some time the other commodities continue to 
circulate as before at their old prices. The amount of money in 
circulation decreases, however, at a later stage of the grain 
shortage, because along with the grain either fewer commodities 
are sold at their old prices, or the same amount of commodities is 
sold at lower prices. 

* 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 
détail de la France, p.209. [Marx quotes in French.] “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, p. 80. 

340 A Contribution to the Critique of Political Economy 

But the quantity of money in circulation is, as we have seen, 
determined not only by the sum of commodity prices to be 
realised, but also by the velocity with which money circulates, i.e. 
the speed with which this realisation of prices is accomplished 
during a given period. If in one day one and the same sovereign 
makes ten purchases, each consisting of a commodity worth one 
sovereign, so that it changes hands ten times, it transacts the same 
amount of business as ten sovereigns each of which makes only 
one circuit a day.* The velocity of circulation of gold can thus 
make up for its quantity: in other words, the stock of gold in 
circulation is determined not only by gold functioning as an 
equivalent alongside commodities, but also by the function it fulfils 
in the movement of the metamorphoses of commodities. But the 
velocity of currency can make up for its quantity only to a certain 
extent, for an endless number of separate purchases and sales take 
place simultaneously at any given moment. 

If the aggregate prices of the commodities in circulation rise, 
but to a smaller extent than the velocity of currency increases, 
then the volume of money in circulation will decrease. If, on the 
contrary, the velocity of circulation decreases at a faster rate than 
the total price of the commodities in circulation, then the volume 
of money in circulation will grow. A general fall in prices 
accompanied by an increase in the quantity of the medium of 
circulation and a general rise in prices accompanied by a decrease 
in the quantity of the medium of circulation are among the best 
documented phenomena in the history of prices. But the causes 
occasioning a rise in the level of prices and at the same time an 
even larger rise in the velocity of currency, as also the converse 
development, lie outside the scope of an investigation into simple 
circulation. We may mention by way of illustration that in periods 
of expanding credit the velocity of currency increases faster than 
the prices of commodities, whereas in periods of contracting credit 
the velocity of currency declines faster than the prices of 
commodities. It is a sign of the superficial and formal character of 
simple money circulation that the quantity of means of circulation 
is determined by factors—such as the amount of commodities in 
circulation, prices, increases or decreases of prices, the number of 
purchases and sales taking place simultaneously, and the velocity 
of currency—all of which are contingent on the metamorphosis 

* “It is the velocity of the circulation of money and not the quantity of the 
metals, that causes the amount of money to be large or small” (Galiani, l.c., p. 99). 
[Marx quotes in Italian.] 

Chapter Two. Money or Simple Circulation 341 

proceeding in the world of commodities, which is in turn 
contingent on the general nature of the mode of production, the 
size of the population, the relation of town and countryside, the 
development of the means of transport, the more or less advanced 
division of labour, credit, etc., in short on circumstances which lie 
outside the framework of simple money circulation and are merely 
mirrored in it. 

If the velocity of circulation is given, then the quantity of the 
means of circulation is simply determined by the prices of 
commodities. Prices are thus high or low not because more or less 
money is in circulation, but there is more or less money in 
circulation because prices are high or low. This is one of the 
principal economic laws, and the detailed substantiation of it based 
on the history of prices is perhaps the only achievement of the 
post-Ricardian English political economy. Empirical data show 
that, despite temporary fluctuations, and sometimes very intense 
fluctuations,* over longer periods the level of metallic currency or 
the volume of gold and silver in circulation in a particular country 
may remain on the whole stable, deviations from the average level 
amounting merely to small oscillations. This phenomenon is 
simply due to the contradictory nature of the factors determining 
the volume of money in circulation. Changes occurring simultane- 
ously 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 

* An example of a remarkable fall of the metallic currency below its average 
level occurred in England in 1858 as 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 1855: £9,245,000; 1856: £6,476,000; 1857: £5,293,858. 
During 1858 the mint had scarcely anything to do.” Economist, July 10, 1858. [Marx 
quotes in English.] But at the same time about eighteen million pounds sterling 
were lying in the bank vaults. 

342 A Contribution to the Critique of Political Economy 

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, 14 to 15 times 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 price 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, as means of circulation, must sometimes be put into 
circulation and sometimes withdrawn from it. We shall see later 
how these conditions are realised in the process of circulation. 

c. Coins. Tokens of Value 

Money 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 cir- 
cumscribed by the boundaries of a given community and 
separated from the universal circulation of the world of com- 
modities. 

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 

Chapter Two. Money or Simple Circulation 343 

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 100 pounds or 1,200 ounces troy of 22-carat 
gold one receives £4,672'/. or 4,672'/, gold sovereigns from the 
English mint, and if one puts these sovereigns on one side of a 
pair of scales and 100 pounds of gold bars on the other, the two 
will balance. This proves that the sovereign is simply a quantity of 
gold—with a specific shape and a specific imprint—the weight of 
which is denoted by this name in the English monetary scale. The 
4,672'/ gold sovereigns are thrown into circulation at different 
points and, once in the current, they make a certain number of 
moves each day, some sovereigns more and others less. If the 
average number of moves made by one ounce of gold during a 
day were ten, then the 1,200 ounces of gold would realise a total 
of commodity prices amounting to 12,000 ounces or 46,725 
sovereigns. An ounce of gold, no matter how one may twist and 
turn it, will never weigh ten ounces. But here in the process of 
circulation, one ounce does indeed amount to ten ounces. In the 
process of circulation a coin is equal to the quantity of gold 
contained in it multiplied by the number of moves it makes. In 
addition to its actual existence as an individual piece of gold of a 
certain weight, the coin thus acquires a nominal existence which 
arises from the function it performs. But whether the sovereign 
makes one or ten moves, in each particular purchase or sale it 
nevertheless acts merely as a single sovereign. The effect is the 
same as in the case of a general who on the day of battle replaces 
ten generals by appearing at ten different places at the crucial 
time, but remains the same general at each point. The nominalisa- 
tion of the medium of circulation, which arises as a result of the 
replacement of quantity by velocity, concerns only the functioning 
of coins within the process of circulation but does not affect the 
status of the individual coins. 

But the circulation of money is an external movement and the 
sovereign, although non olet,* keeps mixed company. The coin, 
which comes into contact with all sorts of hands, bags, purses, 
pouches, tills, chests and boxes, wears away, leaves a particle of 
gold here and another there, thus losing increasingly more of its 
intrinsic content as a result of abrasion sustained in the course of 
its worldly career. While in use it is getting used up. Let us 

4 It does not smell (Vespasian).— Ed. 

344 A Contribution to the Critique of Political Economy 

consider a sovereign at a moment when its original solid features 
are as yet hardly impaired. 

“A baker who receives a brand-new sovereign straight from the bank today, and 
pays it away to the miller tomorrow, does not pay the same veritable sovereign; it is 
lighter than when he received it...” * 

“It being obvious that the coinage, in the very nature of things, must be for 
ever, unit by unit, falling under depreciation by the mere action of ordinary and 
unavoidable abrasion. It is a physical impossibility at any ume, even for a single 
day, utterly to eliminate light coins from circulation.” ** 

Jacob estimates that of the £380 million which existed in Europe 
in 1809, £19 million had completely disappeared as a result of 
abrasion by 1829, that is in the course of 20 years.*** Whereas the 
commodity having taken its first step, bringing it into the sphere 
of circulation, drops out of it, the coin, after making a few steps in 
the sphere of circulation, represents a greater metal content than 
it actually possesses. The longer a coin circulates at a given 
velocity, or the more rapidly it circulates in a given period of time, 
the greater becomes the divergence between its existence as a coin 
and its existence as a piece of gold or silver. What remains is 
magni nominis umbra, the body of the coin is now merely a 
shadow. Whereas originally circulation made the coin heavier, it 
now makes it lighter, but in each individual purchase or sale it still 
passes for the original quantity of gold. As a pseudo-sovereign, or 
pseudo-gold, the sovereign continues to perform the function of a 
legal gold coin. Although friction with the external world causes 
other entities to lose their idealism, the coin becomes increasingly 
ideal as a result of practice, its golden or silver substance being 
reduced to a mere pseudo-existence. This second idealisation of 
metal currency, that is, the disparity between its nominal content 
and its real content, brought about by the process of circulation 
itself, has been taken advantage of both by governments and 
individual adventurers who debased the coinage in a variety of 
ways. The entire history of the monetary system from the early 

* Dodd, The Curiosities of Industry etc. London, 1854 [p. 16]. 

** The Currency Question Reviewed etc. By a Banker, Edinburgh, 1845, p. 69 etc. 
“If a slightly worn écu were to be considered to be worth somewhat less than a 
quite new one, circulation would be continually checked, and every payment would 
provide an occasion for dispute” (G. Garnier, Histoire de la monnaie, tome], p. 24). 
[Marx quotes in French.] 

*** W. Jacob, An Historical Inquiry into the Production and Consumption of the 

Precious Metals, London, 1831, Vol. II, Chapter XXVI {p. 322]. 

2 The mere shadow of a mighty name (Lucanus, “De bello civili”, Pharsalia, 1, 
135).— Ed. 

Chapter Two. Money or Simple Circulation 345 

Middle Ages until well into the eighteenth century is a history of 
such bilateral and antagonistic counterfeiting, and Custodi’s 
voluminous collection of works of Italian economists is largely 
concerned with this subject. 

But the “ideal” existence of gold within the confines of its 
function comes into conflict with its real existence. In the course 
of circulation some gold coins have lost more of their metal 
content, others less, and one sovereign is now indeed worth more 
than another. Since they are however equally valid while they 
function as coin—the sovereign that weighs a quarter of an ounce 
is valued no more highly than the sovereign which only represents 
a quarter of an ounce—some unscrupulous owners perform 
surgical operations on sovereigns of standard weight to achieve the 
same result artificially which circulation has brought about 
spontaneously in the case of lighter coins. Sovereigns are clipped 
and debased and the surplus gold goes into the melting pot. When 
4,672'/, gold sovereigns placed on the scales weigh on the average 
only 800 ounces instead of 1,200, they will buy only 800 ounces of 
gold on the gold market: in other words, the market price of gold 
has risen above the mint price. All sovereigns, even those retaining 
the standard weight, would be worth less as coin than in the shape 
of bars. Sovereigns of standard weight would be reconverted into 
bars, a form in which a greater quantity of gold has a greater 
value than a smaller quantity of gold. When the decline of the 
metal content has affected a sufficient number of sovereigns to 
cause a permanent rise of the market price of gold over its mint 
price, the coins will retain the same names of account but these 
will henceforth stand for a smaller quantity of gold. In other 
words, the standard of money will be changed, and henceforth 
gold will be minted in accordance with this new standard. Thus, in 
consequence of its idealisation as a medium of circulation, gold in 
its turn will have changed the legally established relation in which 
it functioned as the standard of price. A similar revolution would 
be repeated after a certain period of time; gold both as the 
standard of price and the medium of circulation in this way being 
subject to continuous changes, so that a change in the one aspect 
would cause a change in the other and vice versa. This accounts 
for the phenomenon mentioned earlier, namely that, as the history 
of all modern nations shows, the same monetary titles continued to 
stand for a steadily diminishing metal content. The contradiction 
between gold as coin and gold as the standard of price becomes 
also the contradiction between gold as coin and gold as the 
universal equivalent, which circulates not only within the boun- 

346 A Contribution to the Critique of Political Economy 

daries of a given territory but also on the world market. As a 
measure of value gold has always retained its full weight, because 
it has served only nominally as gold. When serving as an 
equivalent in the separate transaction C—M, gold reverts from 
movement immediately to a state of rest; but when it serves as a 
coin its natural substance comes into constant conflict with its 
function. The transformation of gold sovereigns into nominal gold 
cannot be entirely prevented, but legislation attempts to preclude 
the establishment of nominal gold as coin by withdrawing it from 
circulation when the coins in question have lost a certain 
percentage of their substance. According to English law, for 
instance, a sovereign which has lost more than 0.747 grain of 
weight is no longer legal tender. Between 1844 and 1848, 
48 million gold sovereigns were weighed by the Bank of England, 
which possesses scales for weighing gold invented by Mr. Cotton. 
This machine is not only able to detect a difference between the 
weights of two sovereigns amounting to one-hundredth of a grain, 
but like a rational being it flings the light-weight coin onto a board 
from which it drops into another machine that cuts it into pieces 
with oriental cruelty. 

Under these conditions, however, gold coins would not be able 
to circulate at all unless they were confined to a definite sphere of 
circulation where they wear out less quickly. In so far as a gold 
coin in circulation is worth a quarter of an ounce, whereas it 
weighs only a fifth of an ounce, it has indeed become a mere 
token or symbol for one-twentieth of an ounce of gold, and in this 
way the process of circulation converts all gold coins to some 
extent into mere tokens or symbols representing their substance. 
But a thing cannot be its own symbol. Painted grapes are no 
symbol of real grapes, but are imaginary grapes. Even less is it 
possible for a light-weight sovereign to be the symbol of a 
standard-weight sovereign, just as an emaciated horse cannot be 
the symbol of a fat horse. Since gold thus becomes a symbol of 
itself but cannot serve as such a symbol it assumes a symbolic 
existence—quite separate from its own existence—in the shape of 
silver or copper counters in those spheres of circulation where it 
wears out most rapidly, namely where purchases and sales of 
minute amounts go on continuously. A certain proportion of the 
total number of gold coins, although not always the same coins, 
perpetually circulate in these spheres. This proportion of gold 
coins is replaced by silver or copper tokens. Various commodities 
can thus serve as coin alongside gold, although only one specific 
commodity can function as the measure of value and therefore 

Chapter Two. Money or Simple Circulation 347 

also as money within a particular country. These subsidiary means 
of circulation, for instance silver or copper tokens, represent 
definite fractions of gold coins within the circulation. The amount 
of silver or copper these tokens themselves contain is, therefore, 
not determined by the value of silver or copper in relation to that 
of gold, but is arbitrarily established by law. They may be issued 
only in amounts not exceeding those in which the small fractions 
of gold coin they represent would constantly circulate, either as 
small change for gold coin of higher denominations or to realise 
correspondingly low prices of commodities. The silver tokens and 
copper tokens will belong to distinct spheres of retail trade. It is 
self-evident that their velocity of circulation stands in inverse ratio 
to the price they realise in each individual purchase and sale, or to 
the value of the fraction of the gold coin they represent. The 
relatively insignificant total amount of subsidiary coins in circula- 
tion indicates the velocity with which they perpetually circulate, if 
one bears in mind the huge volume of retail trade daily transacted 
in a country like England. A recently published parliamentary 
report* shows, for instance, that in 1857 the English Mint coined 
gold to the amount of £4,859,000 and silver having a nominal 
value of £373,000 and a metal value of £363,000. In the ten-year 
period ending December 31, 1857, the total amount of gold 
coined came to £55,239,000 and that of silver to only £2,434,000. 
The nominal value of copper coins issued in 1857 was only 
£6,720, while the value of the copper contained in them was 
£3,492; of this total £3,136 was issued as pennies, £2,464 as 
halfpennies and £1,120 as farthings. The total nominal value of 
the copper coin struck during the last ten years came.to £141,477, 
and their metal value to £73,503. Just as gold coin is prevented 
from perpetually functioning as coin by the statutory ppévision 
that on losing a certain quantity of metal it is demonetised, so 
conversely by laying down the price level which they can legally 
realise silver and copper counters are prevented from moving into 
the sphere of gold coin and from establishing themselves as 
money. Thus for example in England, copper is legal tender for 
sums up to 6d. and silver for sums up to 20s. The issue of silver 
and copper tokens in quantities exceeding the requirements of 
their spheres of circulation would not lead to a rise in 
commodity-prices but to the accumulation of these tokens in the 
hands of retail traders, who would in the end be forced to sell 
them as metal. In 1798, for instance, English copper coins to the 

a The Economist, No. 763, April 10, 1858, p. 401.— Ed. 

13* 

348 A Contribution to the Critique of Political Economy 

amounts of £20, £30 and £50, spent by private people, had 
accumulated in the tills of shopkeepers and, since their attempts to 
put the coins again into circulation failed, they finally had to sell 
them as metal on the copper market.* 

The metal content of the silver and copper tokens, which 
represent gold coin in distinct spheres of home circulation, is 
determined by law; but when in circulation they wear away, just as 
gold coins do, and, because of the velocity and constancy of their 
circulation, they are reduced even faster to a merely imaginary, or 
shadow existence. If one were to establish that silver and copper 
tokens also, on losing a certain amount of metal, should cease to 
function as coin, it would be necessary to replace them in turn in 
certain sections of their own sphere of circulation by some other 
symbolic money, such as iron or lead; and in this way the 
representation of one type of symbolic money by other types of 
symbolic money would go on for ever. The needs of currency 
circulation itself accordingly compel all countries with a developed 
circulation to ensure that silver and copper tokens function as coin 
independently of the percentage of metal they lose. It thus 
becomes evident that they are, by their very nature, symbols of 
gold coin not because they are made of silver or copper, not 
because they have value, but they are symbols in so far as they 
have no value. 

Relatively worthless things, such as paper, can function as 
symbols of gold coins. Subsidiary coins consist of metal, silver, 
copper, etc., tokens principally because in most countries the less 
valuable metals circulated as money—e.g. silver in England, 
copper in the ancient Roman Republic, Sweden, Scotland, 
etc.—before the process of circulation reduced them to the status 
of small coin and put a more valuable metal in their place. It is in 
the nature of things moreover that the monetary symbol which 
directly arises from metallic currency should be, in the first place, 
once again a metal. Just as the portion of gold which would 
constantly have to circulate as small change is replaced by metal 
tokens, so the portion of gold which as coin remains always in the 
sphere of home circulation, and must therefore circulate perpetu- 
ally, can be replaced by tokens without intrinsic value. The level 
below which the volume of currency never falls is established in 
each country by experience. What was originally an insignificant 
divergence of the nominal content from the actual metal content 

* David Buchanan, Observations on the Subjects Treated of in Doctor Smith’s Inquiry 
on the Wealth of Nations etc, Edinburgh, 1814, p. 31. 

Chapter Two. Money or Simple Circulation 349 

of metallic currency can therefore reach a stage where the two 
things are completely divorced. The names of coins become thus 
detached from the substance of money and exist apart from it in 
the shape of worthless scraps of paper. In the same way as the 
exchange value of commodities is crystallised into gold money as a 
result of exchange, so gold money in circulation is sublimated into 
its own symbol, first in the shape of worn gold coin, then in the 
shape of subsidiary metal coin, and finally in the shape of 
worthless counters, scraps of paper, mere tokens of value. 

But the gold coin gave rise first to metallic and then to paper 
substitutes only because it continued to function as a coin despite 
the loss of metal it mcurred. It circulated not because it was worn, 
but it was worn to a symbol because it continued to circulate. Only 
in so far as in the process of circulation gold currency becomes a 
mere token of its own value can mere tokens of value be 
substituted for it. 

In so far as the circuit C—M—C is the dynamic unity of the 
two aspects C—M and M—C, which directly change into each 
other, or in so far as the commodity undergoes the entire 
metamorphosis, it evolves its exchange value into price and into 
money, but immediately abandons these forms again to become 
once more a commodity, or rather a use value. The exchange 
value of the commodity thus acquires only a seemingly independent 
existence. We have seen, on the other hand, that gold, when it 
functions only as specie, that is when it is perpetually in 
circulation, does indeed represent merely the interlinking of the 
metamorphoses of commodities and their ephemeral existence as 
money. Gold realises the price of one commodity only in order to 
realise that of another, but it never appears as exchange value in a 
state of rest or even a commodity in a state of rest. The reality 
which in this process the exchange value of commodities assumes, 
and which is expressed by gold in circulation, is merely the reality 
of an electric spark. Although it is real gold, it functions merely as 
apparent gold, and in this function therefore a token of itself can 
be substituted for it. 

The token of value, say a piece of paper, which functions as a 
coin, represents the quantity of gold indicated by the name of the 
coin, and is thus a token of gold. A definite quantity of gold as such 
does not express a value relation, nor does the token which takes 
its place. The gold token represents value in so far as a definite 
quantity of gold, because it is objectified labour time, possesses a 
definite value. But the amount of value which the token 
represents depends in each case upon the value of the quantity of 

350 A Contribution to the Critique of Political Economy 

gold represented by it. As far as commodities are concerned, the 
token of value represents the reality of their price and constitutes a 
signum pretii* and a token of their value only because their value is 
expressed in their price. In the circuit C—M—C, in so far as it 
expresses merely the dynamic unity of the two metamorphoses or 
the direct transformation of one metamorphosis into the other— 
and this is how it appears in the sphere of circulation, within 
which the token of value operates—the exchange value of 
commodities assumes in the price merely a nominal existence and 
in money merely an imaginary or symbolic existence. Exchange 
value thus appears to be something purely conceptual or an 
imagined entity but possessing no reality except in the com- 
modities, in so far as a definite amount of labour time is 
objectified in them. The token of value therefore seems to represent 
the value of commodities directly, since it appears to be not a token 
of gold but a token of the exchange value which exists solely in 
the commodity and is merely expressed in the price. But the 
appearance is deceptive. The token of value is directly only a token 
of price, that is a token of gold, and only indirectly a token of the 
value of the commodity. Gold, unlike Peter Schlemihl, has not sold 
its shadow, but uses its shadow as a means of purchase. Thus the 
token of value is effective only when in the process of exchange it 
signifies the price of one commodity compared with that of 
another or when it represents gold with regard to every commodity 
owner. First of all custom turns a certain, relatively worthless 
object, a piece of leather, a scrap of paper, etc., into a token of the 
material of which money consists, but it can maintain this position 
only if its function as a symbol is guaranteed by the general 
intention of commodity owners, in other words, if it acquires a 
legal conventional existence and hence a legal rate of exchange. 
Paper money issued by the state and given a legal rate is an 
advanced form of the token of value, and the only kind of paper 
money which directly arises from metallic currency or from simple 
commodity circulation itself. Credit money belongs to a more 
advanced stage of the social process of production and conforms 
to very different laws. Symbolic paper money indeed does not 
differ at all from subsidiary metal coin except in having a wider 
sphere of circulation. Even the merely technical development of 
the standard of price, or of the mint price, and later the external 
transformation of gold bars into gold coin led to state intervention 
and consequently to a visible separation of internal circulation 

2 Sign of price.— Ed. 

Chapter Two. Money or Simple Circulation 351 

from the general circulation of commodities, this division being 
completed by the transformation of coin into a token of value. 
Money as a simple medium of circulation can after all acquire an 
independent existence only within the sphere of internal circula- 
tion. 

Our exposition has shown that gold in the shape of coin, that is 
tokens of value divorced from gold substance itself, originates in 
the process of circulation itself and does not come about by 
arrangement or state intervention. Russia affords a_ striking