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[123] See Law and Franklin about surplus value which gold and silver are supposed to acquire from their function of money. Also Forbonnais.
[124] This fiction is literally advanced by Montesquieu. [The passage from Montesquieu is quoted by Marx in his Capital, v. I. Part 1, Ch. III, section 2, b, foot-note. Note by K. Kautsky to 2nd German edition].
[125] Steuart, l. c. v. I., p. 394 seq.
[126] Steuart, l. c., v. 2. p. 377-379 passim (not found in the 1767 London edition. Translator).
[127] Steuart, l. c., p. 379-380 passim (London, 1767 edition, v. l. p. 400. Transl.).
[128] "The additional coin will be locked up, or converted into plate.... As for the paper money, so soon as it has served the first purpose of supplying the demand of him who borrowed it, it will return upon the debtor in it and become realized.... Let the specie of a country, therefore, be augmented or diminished in ever so great a proportion, commodities will still rise and fall according to the principles of demand and competition, and these will constantly depend upon the inclinations of those who have property or any kind of equivalent whatsoever to give, but never upon the quantity of coin they are possessed of.... Let it (namely, the quantity of specie in a country) be ever so low, while there is real property of any denomination in the country, a competition to consume in those who possess it, prices will be high, by the means of barter, symbolical money, mutual prestations and a thousand other inventions.... If this country has a communication with other nations, there must be a proportion between the prices of many kinds of merchandize there and elsewhere, and a sudden augmentation or diminution of the specie, supposing it could of itself operate the effects of raising or sinking prices, would be restrained in its operation by foreign competition." l. c. v. 1, p. 400-402. "The circulation of every country must be in proportion to the industry of the inhabitants producing the commodities which come to market.... If the coin of a country, therefore, falls below the proportion of the price of industry offered to sale, inventions, like symbolical money, will be fallen upon, to provide for an equivalent for it. But if the specie be found above the proportion of industry, it will have no effect in raising prices, nor will it enter into circulation: it will be hoarded up in treasures.... Whatsoever be the quantity of money in a nation, in correspondence with the rest of the world, there never can remain in circulation, but the quantity nearly proportional to the consumption of the rich and to the labour and industry of the poor inhabitants," and this proportion is not determined "by the quantity of money actually in the country" (l. c. p. 403-408 passim.) "All nations will endeavor to throw their ready money, not necessary for their own circulation, into that country where the interest of money is high with respect to their own." (l. c. v. 2. p. 5). "The richest nation in Europe may be the poorest in circulating specie." l. c., v. 2, p. 6. For the polemics against Steuart see Arthur Young. [In his foot-note in Capital, v. 1, Part 1, ch. III., section 2, b. p. 62, Humboldt ed., Marx says: The theory of Hume was defended against the attacks of J. Steuart and others, by A. Young, in his "Political Arithmetic," London, 1774, in which work there is a special chapter entitled "Prices depend on quantity of money." Note by K. Kautsky to 2nd German edition].
[129] Steuart, l. e., v. 2, p. 370. Louis Blanc translates the expression "money of the society" which stands for home or national money, as socialist money, which is perfectly meaningless and makes a Socialist of John Law. (See the first volume of his History of the French Revolution).
[130] Maclaren, l. c. p. 43 seq. Patriotism led Gustav Julius, a German writer who met with very early death, to hold up old Bsch as an authority as against the Ricardian school. Honest Bsch rendered Steuart's elegant English into Hamburg Platt and by trying to improve upon the original spoiled it as often as he could.
[131] Note to the 2nd edition: This is not an exact statement. Adam Smith expresses the law correctly on many occasions. [See Capital, Humboldt edition, p. 62, ft-note 1, where writing seven years later, Marx makes the following qualification: "This statement applies only in so far as Adam Smith, ex officio, treats of money. Now and then, however, as in his criticism of the earlier systems of political economy, he takes the right view. 'The quantity of coin in every country is regulated by the value of the commodities which are to be circulated by it.... The value of the goods annually bought and sold in any country requires a certain quantity of money to circulate and distribute them to their proper consumers, and can give employment to no more. The channel of circulation necessarily draws to itself a sum sufficient to fill it, and never admits any more.' Wealth of Nations, Book iv., ch. I."
[132] The distinction between currency and money is therefore not found in "Wealth of Nations." Deceived by the apparent impartiality of Adam Smith, who knew his Hume and Steuart very well, honest Maclaren remarks: "The theory of the dependence of prices on the extent of the currency had not as yet, attracted attention; and Doctor Smith, like Mr. Locke (Locke undergoes a change in his view), considers metallic money nothing but a commodity." Maclaren, l. c. p. 44.
[133] David Ricardo, "The High Price of Bullion, a Proof of the Depreciation of Bank-notes." 4th edition, London, 1811. (The first edition appeared in 1809). Further, "Reply to Mr. Bosanquet's Practical Observations on the Report of the Bullion Committee." London, 1811.
[134] David Ricardo: "On the Principles of Political Economy, etc." p. 77. "Their value [of metals] [like that of all other commodities], depends on the total quantity of labour necessary to obtain the metal, and to bring it to market."
[135] l. c. p. 77, 180, 181.
[136] Ricardo, l. c. p. 421. "The quantity of money that can be employed in a country must depend on its value: if gold alone were employed for the circulation of commodities, a quantity would be required, one fifteenth only of what would be necessary, if silver were made use of for the same purpose." See also Ricardo's: "Proposals for an Economical and Secure Currency," London, 1816, p. 89, where he says: "The amount of notes in circulation depends on the amount required for the circulation of the country; which is regulated ... by the value of the standard [of money], the amount of payments, and the economy practised in effecting them."
