Marx now returns to, as Engels puts it, ‘the [...] “confusion” about what was money on the money market and what was capital.’ The two positions he deals with are these:
Tooke (Inquiry into the Currency Principle):
The business of bankers [...] may be divided into two branches [...] [:] transactions between dealers and dealers, and between dealers and consumers. One branch of the bankers’ business is to collect capital from those who have not immediate employment for it, and to distribute or transfer it to those who have. The other branch is to receive deposits of the incomes of their customers, and to pay out the amount, as it is wanted for expenditure by the latter in the objects of their consumption [...] the former being a circulation of capital, the latter of currency. [The first is] the concentration of capital on the one hand and the distribution of it on the other [; the latter] ‘administering the circulation for local purposes of the district’.
Fullarton (On the Regulation of Currencies):
A demand for capital on loan and a demand for additional circulation are quite distinct things, and not often found associated. [...] It is a great error, indeed, to imagine that the demand for pecuniary accommodation [i.e. for the loan of capital] is identical with a demand for additional means of circulation, or even that the two are frequently associated. Each demand originates in circumstances peculiarly affecting itself, and very distinct from each other. It is when everything looks prosperous, when wages are high, prices on the rise, and factories busy, that an additional supply of currency is usually required to perform the additional functions inseparable from the necessity of making larger and more numerous payments; whereas it is chiefly in a more advanced stage of the commercial cycle, when difficulties begin to present themselves, when markets are overstocked, and returns delayed, that interest rises, and a pressure comes upon the Bank for advances of capital. It is true that there is no medium through which the Bank is accustomed to advance capital except that of its promissory notes; and that to refuse the notes, therefore, is to refuse the accommodation. But the accommodation once granted, everything adjusts itself in conformity with the necessities of the market; the loan remains, and the currency, if not wanted, finds its way back to the issuer. Accordingly, a very slight examination of the Parliamentary Returns may convince anyone, that the securities in the hands of the Bank of England fluctuate more frequently in an opposite direction to its circulation than in concert with it, and that the example, therefore, of that great establishment furnishes no exception to the doctrine so strongly pressed by the country bankers, to the effect that no bank can enlarge its circulation, if that circulation be already adequate to the purposes to which a banknote currency is commonly applied; but that every addition to its advances, after that limit is passed, must be made from its capital, and supplied by the sale of some of its securities in reserve, or by abstinence from further investment in such securities.
As we proceed, we need to bear in mind the following. What determines the quantity of circulating medium necessary, as we have seen, is, first, the volume of commodity exchanges, and, second, the circulating medium’s velocity. Demand for money as means of circulation is not the same as, or reducible to, the demand for money as capital. And, as Marx has repeatedly stated, money is money, and capital is capital; money capital is capital not in virtue of being money, but in virtue of being capital, value that is valorised.
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