The peasant, for instance, sells his wheat for $10, which thus serve as circulating medium. When due, he pays his debt to the weaver, who supplied him with linen, with that sum. The same $10 now function as means of payment. The weaver, in turn, buys a Bible for cash; the sum functions once more as circulating medium, etc. Hence, the quantity of money current and the mass of commodities circulating during a given period, such as a day, no longer correspond. Money that represents commodities long withdrawn from circulation, continues to be current. Commodities circulate, whose equivalent in money will not appear on the scene till some future day. Moreover, the debts contracted each day, and the payments falling due on the same day, are quite different quantities.
Credit-money springs directly out of the function of money as a means of payment. Certificates of the debts owing for the purchased commodities circulate for the purpose of transferring those debts to others. On the other hand, to the same extent as the system of credit is extended, so is the function of money as a means of payment.
The development of money into a medium of payment makes it necessary to accumulate money against the dates fixed for the payment of the sums owing. While hoarding, as a distinct mode of acquiring riches, vanishes with the progress of civil society, the formation of reserves of the means of payment grows with that progress.
THE CIRCULAR COURSE OF CAPITAL AND THE TIME REQUISITE FOR ITS CIRCULATION
(Extracted from vol. II, ch. 1, 2, 3, 4, German edition.)
WE have learnt to know what constitutes the essence of money--that it represents in a material and concrete shape the exchange-value of all other commodities, i. e. of all the human labour incorporated in such commodities; and we have further seen the functions of money in the simple circulation of commodities. It now remains for us to investigate the