第9章

Themerchant’scapitaldoesnotdirectlyparticipateincreatingprofitorsurplus-value，andjoinsinshapingthegeneralrateofprofitonlyinsofarasitdrawsadividendproportionatetoitsshareinthetotalcapital，outofthemassofprofitproducedbyindustrialcapital。

ThegreaterthenumberofturnoversofanindustrialcapitalunderconditionsdescribedinBookII，PartII，thegreaterthemassofprofititcreates。

True，throughtheformationofageneralrateofprofit，thetotalprofitisdistributedamongthedifferentcapitalsnotinproportiontotheiractualpartinitsproduction，butinproportiontothealiquotparttheymakeupofthetotalcapital，i。e。，inproportiontotheirmagnitude。

Butthisdoesnotaltertheessenceofthematter。Thegreaterthenumberofturnoversofthetotalindustrialcapital，thegreaterthemassofprofits，themassofannuallyproducedsurplus-value，and，therefore，othercircumstancesremainingunchanged，therateofprofit。Itisdifferentwithmerchant’scapital。Therateofprofitisagivenmagnitudewithrespecttoit，determinedontheonehandbythemassofprofitproducedbyindustrialcapital，andontheotherbytherelativemagnitudeofthetotalmerchant’scapital，byitsquantitativerelationtothesumofcapitaladvancedintheprocessesofproductionandcirculation。Thenumberofitsturnoversdoes，indeed，decisivelyaffectitsrelationtothetotalcapital，ortherelativemagnitudeofmerchant’scapitalrequiredforthecirculation，foritisevidentthattheabsolutemagnitudeoftherequiredmerchant’scapitalandthevelocityofitsturnoversstandininverseproportion。But，allotherconditionsremainingequal，therelativemagnitudeofmerchant’scapital，orthepartitmakesupofthetotalcapital，isdeterminedbyitsabsolutemagnitude。

Ifthetotalcapitalis10，000，andthemerchant’scapital1/10ofthatsum，itis=1，000；ifthetotalcapitalis1，000，then1/10ofit=100。

Theabsolutemagnitudeofmerchant’scapitalvaries，dependingonthemagnitudeofthetotalcapital，althoughitsrelativemagnituderemainsthesame。

Buthereweassumethatitsrelativemagnitude，say，1/10ofthetotalcapital，isgiven。Thisrelativemagnitude，however，isagaindeterminedbytheturnover。Ifitisturnedoverrapidly，itsabsolutemagnitude，forexample，will=£；1，000inthefirstcase，=100inthesecond，andhenceitsrelativemagnitude=1/10。Withaslowerturnoveritsabsolutemagnitudeis，say，=2，000inthefirstcase，and=200inthesecond。

Itsrelativemagnitudewillthenhaveincreasedfrom1/10to1/5ofthetotalcapital。Circumstanceswhichreducetheaverageturnoverofmerchant’scapital，likethedevelopmentofmeansoftransportation，forinstance，reduceprotantotheabsolutemagnitudeofmerchant’scapital，andtherebyincreasethegeneralrateofprofit。Iftheoppositetakesplace，thenthereverseistrue。Adevelopedcapitalistmodeofproduction，comparedwithearlierconditions，exertsatwo-foldinfluenceonmerchant’scapital。

Ontheonehand，thesamequantityofcommoditiesisturnedoverwithasmallermassofactuallyfunctioningmerchant’scapital；owingtothemorerapidturnoverofmerchant’scapital，andthemorerapidreproductionprocess，onwhichthisdepends，therelationofmerchant’scapitaltoindustrialcapitaldiminishes。Ontheotherhand，withthedevelopmentofthecapitalistmodeofproductionallproductionbecomestheproductionofcommodities，whichplacesallproductsintothehandsofagentsofcirculation。Itistobeaddedthatunderthepreviousmodeofproduction，whichproducedonasmallscale，averylargeportionoftheproducerssoldtheirgoodsdirectlytotheconsumers，orworkedontheirpersonalorders，saveforthemassofproductsconsumeddirectly，inkind，bytheproducerhimself，andthemassofservicesperformedinkind。While，therefore，underformermodesofproductioncommercialcapitalwasgreaterinrelationtothecommodity-capitalwhichitturnedover，itwas:

1)absolutelysmaller，becauseadisproportionatelysmallerpartofthetotalproductwasproducedascommodities，andpassedascommodity-capitalintocirculation，fallingintothehandsofmerchants。Itwassmaller，becausethecommodity-capitalwassmaller。Butatthesametimeitwasproportionatelylarger，notonlybecauseitsturnoverwasslowerandnotonlyinrelationtothemassofcommoditiesturnedoverbyit。Itwaslargeralsobecausethepriceofthismassofcommodities，andhencethemerchant’scapitaltobeadvancedforit，weregreaterthanundercapitalistproductiononaccountofalowerproductivityoflabour，sothatthesamevaluewasincorporatedinasmallermassofcommodities。

2)Itisnotonlythatalargermassofcommoditiesisproducedonthebasisofcapitalistproduction(takingintoaccountalsothereducedvalueofthismassofcommodities)，butthesamemassofproducts，forinstance，ofcorn，alsoformsagreatercommoditymass，i。e。，moreandmoreofitbecomesanobjectofcommerce。Asaconsequence，thereisanincreasenotonlyofthemassofmerchant’scapital，butofallcapitalappliedincirculation，suchasinmarineshipping，railways，telegraph，etc。

3)However，andthisisanaspectwhichbelongstothediscussionof”competitionamongcapitals”:idleoronlyhalf-functioningmerchant’scapitalgrowswiththeprogressofthecapitalistmodeofproduction，withtheeaseofenteringretailtrade，withspeculation，andtheredundanceofreleasedcapital。

But，assumingtherelativemagnitudeofmerchant’scapitaltototalcapitaltobegiven，thedifferenceofturnoversinthevariousbranchesofcommercedoesnotaffecteitherthemagnitudeofthetotalprofitfallingtotheshareofmerchant’scapital，orthegeneralrateofprofit。Themerchant’sprofitisnotdeterminedbythemassofcommodity-capitalturnedoverbyhim，butbythedimensionsofthemoney-capitaladvancedbyhimtopromotethisturnover。Ifthegeneralannualrateofprofitis15%，andthemerchantadvances£；100，whichheturnsoveronceayear，hewillsellhiscommoditiesat115。Ifhiscapitalturnsoverfivetimesayear，hewillsellacommodity-capitalheboughtat100at403fivetimesayear，henceinayearacommodity-capitalof500at515。Thisgivesthesameannualprofitof15onhisadvancedcapitalof100。Ifthiswerenotso，merchant’scapitalwouldyieldamuchhigherprofit，proportionatetothenumberofitsturnovers，thanindustrialcapital，whichwouldbeinconflictwiththelawofthegeneralrateofprofit。

Hence，thenumberofturnoversofmerchant’scapitalinthevariousbranchesofcommercehasadirectinfluenceonthemercantilepricesofcommodities。Theamountaddedtothemercantileprice，thealiquotpartofmercantileprofitofagivencapital，whichfallsuponthepriceofproductionofacommodity，isininverseproportiontothenumberofturnovers，orthevelocityofturnover，ofmerchants’capitalsinthevariouslinesofcommerce。Ifacertainmerchant’scapitalisturnedoverfivetimesayear，itwilladdtoacommodity-capitalofequalvaluebut1/5ofwhatanothermerchant’scapital，whichturnsoverjustonceayear，addstoacommodity-capitalofequalvalue。

Themodificationofsellingpricesbytheaverageperiodofturnoverofcapitalsindifferentbranchesofcommerceamountstothis:Thesamemassofprofits，determinedforanygivenmagnitudeofmerchant’scapitalbythegeneralannualrateofprofit，hencedeterminedindependentlyofthespecificcharacterofthecommercialoperationsofthiscapital，isdifferentlydistributed-proportionatelytotherateofturnover-overmassesofcommoditiesofequalvalue，sothat，forinstance，ifamerchant’scapitalisturnedoverfivetimesayear，15%/5=3%ifonceayear，15%，isaddedtothepriceofthecommodities。

Thesamepercentageofcommercialprofitindifferentbranchesofcommerce，therefore，increasesthesellingpricesofcommoditiesbyquitedifferentpercentagesoftheirvalues，alldependingontheirperiodsofturnover。

Ontheotherhand，inthecaseofindustrialcapital，theperiodofturnoverdoesnotinanywayaffectthemagnitudeofthevalueofindividualcommoditiesproduced，althoughitdoesaffectthemassofvaluesandsurplus-valuesproducedinagiventimebyagivencapital，becauseitaffectsthemassofexploitedlabour。Thisisconcealed，tobesure，andseemstobeotherwiseassoonasoneturnstopricesofproduction。Butthisisduesolelytothefactthat，accordingtopreviouslyanalysedlaws，thepricesofproductionofvariouscommoditiesdeviatefromtheirvalues。Ifwelookupontheprocessofproductionasawhole，anduponthemassofcommoditiesproducedbythetotalindustrialcapital，weshallatoncefindthegenerallawvindicated。

While，therefore，acloserinspectionoftheinfluenceoftheperiodofturnoverontheformationofvaluesbyindustrialcapitalleadsusbacktothegenerallawandtothebasisofpoliticaleconomy，thatthevaluesofcommoditiesaredeterminedbythelabour-timecontainedinthem，theinfluenceoftheturnoversofmerchant’scapitalonmercantilepricesrevealsphenomenawhich，withoutbenefitofaveryfar-reachinganalysisoftheconnectinglinks，seemtopointtoapurelyarbitrarydeterminationofprices；namely，thattheyarefixedbyacapitalsimplybentuponpocketingacertainquantityofprofitinayear。Dueparticularlytothisinfluenceofturnovers，itappearsthatwithincertainlimitstheprocessofcirculationassuchdeterminescommodity-pricesindependentlyoftheprocessofproduction。

Allsuperficialandfalseconceptionsoftheprocessofreproductionasawholearederivedfromexaminationsofmerchant’scapitalandfromtheconceptionswhichitspeculiarmovementscallforthinthemindsofcirculationagents。

If，asthereaderwillhaverealisedtohisgreatdismay，theanalysisoftheactualintrinsicrelationsofthecapitalistprocessofproductionisaverycomplicatedmatterandveryextensive；ifitisaworkofsciencetoresolvethevisible，merelyexternalmovementintothetrueintrinsicmovement，itisself-evidentthatconceptionswhichariseaboutthelawsofproductioninthemindsofagentsofcapitalistproductionandcirculationwilldivergedrasticallyfromthesereallawsandwillmerelybetheconsciousexpressionofthevisiblemovements。Theconceptionsofthemerchant，stockbroker，andbanker，arenecessarilyquitedistorted。Thoseofthemanufacturersarevitiatedbytheactsofcirculationtowhichtheircapitalissubject，andbythelevellingofthegeneralrateofprofit。[2]Competitionlikewiseassumesacompletelydistortedroleintheirminds。

Ifthelimitsofvalueandsurplus-valuearegiven，itiseasytograsphowcompetitionofcapitalstransformsvaluesintopricesofproductionandfurtherintomercantileprices，andsurplus-valueintoaverageprofit。

Butwithouttheselimits，itisabsolutelyunintelligiblewhycompetitionshouldreducethegeneralrateofprofittoonelevelinsteadofanother，e。g。，makeit15%insteadof1，500%。Competitioncanatbestonlyreducethegeneralrateofprofittoonelevel。Butitcontainsnoelementbywhichitcoulddeterminethislevelitself。

Fromthestandpointofmerchant’scapital，therefore，itistheturnoverwhichappearstodetermineprices。Ontheotherhand，whiletherateofturnoverofindustrialcapital，insofarasitenablesacertaincapitaltoexploitmoreorlesslabour，exertsadeterminingandlimitinginfluenceonthemassofprofit，andthusonthegeneralrateofprofit，thisrateofprofitobtainsformerchant’scapitalasanexternalfact，itsinternalconnectionwiththeproductionofsurplus-valuebeingentirelyobliterated。

If，underotherwiseequalcircumstancesandparticularlythesameorganiccomposition，thesameindustrialcapitalisturnedoverfourtimesayearinsteadoftwice，itproducestwiceasmuchsurplus-valueand，consequently，profit。Andthisisapparentassoon，andaslong，asthiscapitalhasamonopolyonanimprovedmethodofproduction，whichmakesthisacceleratedturnoverpossible。Conversely，differencesintheperiodsofturnoverindifferentbranchesofcommercemanifestthemselvesinthefactthatprofitmadeontheturnoverofagivencommodity-capitalisininverseproportiontothenumberoftimesthemoney-capitalturnsoverthiscommodity-capital。

Smallprofitsandquickreturnsappeartotheshopkeepertobetheprinciplewhichhefollowsoutofsheerprinciple。

Fortherest，itisself-evidentthatregardlessofalternating，mutuallycompensating，speedierandslowerturnovers，thislawofturnoverofmerchant’scapitalholdsgoodineachbranchofcommerceonlyfortheaverageturnoversmadebytheentiremerchant’scapitalinvestedineachparticularbranch。

ThecapitalofA，whodealsinthesamebranchasB，maymakemoreorlessthantheaveragenumberofturnovers。Inthiscasetheothersmakelessormore。Thisdoesnotaltertheturnoverofthetotalmassofmerchant’scapitalinvestedinthisline。Butitisofdecisivemomentfortheindividualmerchantorshopkeeper。Inthiscasehemakesanextraprofit，justasindustrialcapitalistsmakeextraprofitsiftheyproduceunderbetterthanaverageconditions。Ifcompetitioncompelshim，hecansellcheaperthanhiscompetitorswithoutloweringhisprofitbelowtheaverage。Iftheconditionswhichwouldenablehimtoturnoverhiscapitalmorerapidly，arethemselvesforsale，suchasafavourableshoplocation，hecanpayextrarentforit，i。e。，convertaportionofhissurplus-profitintoground-rent。

FOOTNOTES[1]”Profit，onthegeneralprinciple，isalwaysthesame，whateverbeprice；

keepingitsplacelikeanincumbentbodyontheswellingorsinkingtide。

As，therefore，pricesrise，atradesmanraisesprice；aspricesfall，atradesmanlowersprice。”(Corbet，AnInquiryintotheCauses，etc。，oftheWealthofIndividuals，London，1841，p。20。)Here，asinthetextgenerally；itisonlyamatterofordinarycommerce，notofspeculation。

Theanalysisofspeculation，aswellaseverythingelsepertainingtothedivisionofmercantilecapital，fallsoutsidethefieldofourinquiry。”Theprofitoftradeisavalueaddedtocapitalwhichisindependentofprice，thesecond”(speculation)”isfoundedonthevariationinthevalueofcapitalorinpriceitself”(1。c。，p。128)。

[2]Thisisaverynaive，butalsoaverycorrectremark:”Surelythefactthatoneandthesamecommoditymaybehadfromdifferentsellersatconsiderablydifferentpricesisfrequentlyduetomistakesofcalculation。”(FellerandOdermann，DasGanzederkaufmä；nnischenArithmetik，7thed。，1859，S。451。)Thisshowshowpurelytheoretical，thatis，abstract，becomesthedeterminationofprices。

Capital，Vol。3，Chapter19KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartIV

CONVERSIONOFCOMMODITY-CAPITALANDMONEY-CAPITAL

INTOCOMMERCIALCAPITALANDMONEY-DEALINGCAPITAL

(MERCHANT’SCAPITAL)CHAPTER19

Money-DealingCapitalThepurelytechnicalmovementsperformedbymoneyinthecirculationprocessofindustrial，and，aswemaynowadd，ofcommercialcapital(sinceittakesoverapartofthecirculationmovementofindustrialcapitalasitsown，peculiarmovement)，ifindividualisedasafunctionofsomeparticularcapitalperformingjustthese，andonlythese，operationsasitsspecificoperations，convertthiscapitalintomoney-dealingcapital。

Aportionofindustrialcapital，and，moreprecisely，alsoofcommercialcapital，notonlyobtainsallthetimeintheformofmoney，asmoney-capitalingeneral，butasmoney-capitalengagedpreciselyinthesetechnicalfunctions。

Adefinitepartofthetotalcapitaldissociatesitselffromtherestandstandsapartintheformofmoney-capital，whosecapitalistfunctionconsistsexclusivelyinperformingtheseoperationsfortheentireclassofindustrialandcommercialcapitalists。Asinthecaseofcommercialcapital，aportionofindustrialcapitalengagedinthecirculationprocessintheformofmoney-capitalseparatesfromtherestandperformstheseoperationsofthereproductionprocessforalltheothercapital。Themovementsofthismoney-capitalare，therefore，oncemoremerelymovementsofanindividualisedpartofindustrialcapitalengagedinthereproductionprocess。

Itisonlywhen，andinsofaras，capitalisnewlyinvested——whichalsoappliestoaccumulation——thatcapitalinmoney-formappearsasthestarting-pointandtheendresultofthemovement。Butforallcapitalsalreadyengagedintheprocess，thesefirstandlastpointsappearmerelyaspointsoftransit。Since，asalreadyseeninthecaseofsimplecommodity-circulation，fromthemomentofleavingthesphereofproductiontothemomentofitsre-entryindustrialcapitalundergoesthemetamorphosisC’——M——C，M

infactrepresentstheendresultofonephaseofthemetamorphosis，justtobecomethestarting-pointofthereversephase，whichsupplementsit。

AndalthoughtheC——MofindustrialcapitalisalwaysM——C——Mformerchant’scapital，theactualprocessforthelatteriscontinuallyalsoC——M——Conceithasbeguntofunction。ButitperformstheactsC——

MandM——Csimultaneously。ThisistosaythatthereisnotjustonecapitalinthestageC——MwhileanotherisinthestageM——C，butthatthesamecapitalbuyscontinuallyandsellscontinuallyatoneandthesametimebecauseofthecontinuityoftheproductionprocess。Itistobefoundalwaysinbothstagesatoneandthesametime。Whileoneofitspartsturnsintomoney，latertobereconvertedintocommodities，anotherturnssimultaneouslyintocommodities，tobereconvertedintomoney。

Italldependsontheformofthecommodityexchangewhetherthemoneyserveshereasameansofcirculationorofpayment。Inbothcasesthecapitalisthastopayoutmoneyconstantlytomanypersons，andtoreceivemoneycontinuallyfrommanypersons。Thispurelytechnicaloperationofdisbursingandreceivingmoneyisinitselflabourwhich，aslongasthemoneyservesasameansofpayment，necessitatesdrawinguppaymentbalancesandactsofbalancingaccounts。Thislabourisacostofcirculation，i。e。，notlabourcreatingvalue。Itisshortenedinbeingcarriedoutbyaspecialsectionofagents，orcapitalists，fortherestofthecapitalistclass。

Adefiniteportionofthecapitalmustbeonhandconstantlyasahoard，aspotentialmoney-capital——areserveofmeansofpurchase，areserveofmeansofpayment，andidlecapitalintheformofmoneywaitingtobeputtowork。Anotherportionstreamsbackcontinuallyinthisform。Asidefromcollecting，paying，andbook-keeping，thisentailssafekeepingthehoard，whichisanoperationallinitself。Itis，indeed，acontinuousconversionofthehoardintomeansofcirculationandmeansofpayment，anditsrestorationbymeansofmoneysecuredthroughsalesandfrompaymentsdue。Thisconstantmovementofthepartofcapitalexistingasmoney，dissociatedfromthefunctionofcapitalitself，thispurelytechnicalfunction，causesitsownlabourandexpense，classifiedascostsofcirculation。

Thedivisionoflabourbringsitaboutthatthesetechnicaloperations，dependentuponthefunctionsofcapital，shouldbeperformedfortheentirecapitalistclassasmuchaspossiblebyaspecialsectionofagentsorcapitalistsastheirexclusivefunction——orthattheseoperationsshouldbeconcentratedintheirhands。Wehavehere，asinmerchant’scapital，divisionoflabourinatwo-foldsense。Itbecomesaspecialisedbusiness，andbecauseperformedasaspecialisedbusinessforthemoney-mechanismofthewholeclass，itisconcentratedandconductedonalargescale。

Afurtherdivisionoflabourtakesplacewithinit，boththroughdivisionintovariousindependentbranches，andthroughsegmentationofworkwithinthesebranches(largeoffices，numerousbook-keepersandcashiers，andfar-reachingdivisionoflabour)。Payingandreceivingmoney，settlingaccounts，keepingcurrentaccounts，storingmoney，etc——allthis，dissociatedfromtheactsnecessitatingthesetechnicaloperations，makesmoney-dealingcapitalofthecapitaladvancedforthesefunctions。

Thevariousoperations，whoseindividualisationintospecificbusinessesgivesrisetothemoneytrade，springfromthedifferentpurposesofmoneyitselfandfromitsfunctions，whichcapitalinitsmoney-formmustthereforelikewisecarryout。

Ihavepointedoutearlierthatfinancedevelopedoriginallyfromtheexchangeofproductsbetweendifferentcommunities。[1]

Tradinginmoney，commerceinthemoney-commodity，firstdevelopedthereforeoutofinternationalcommerce。Eversincedifferentnationalcoinshaveexistedmerchantsbuyinginforeigncountrieshavehadtoexchangetheirnationalcoinsforlocalcoins，andviceversa，ortoexchangedifferentcoinsforuncoinedpuresilverorgold——theworld-money。Hencetheexchangebusinesswhichistoberegardedasoneofthenaturalfoundationsofmodernfinance。[2]Outofitdevelopedbanksofexchange，inwhichsilver(orgold)servesasworld-money——nowcalledbankmoneyorcommercialmoney——asdistinctfromcurrency。Exchangetransactions，inthesenseofmerenotesofpaymenttotravellersfromamoney-changerinonecountrytoachangerinanothercountry，developedbackinRomeandGreeceoutoftheactualmoney-changing。

Tradingingoldandsilverascommodities(rawmaterialsforthemakingofluxuryarticles)isthenaturalbasisofthebulliontrade，orthetradewhichactsasamediumforthefunctionsofmoneyasuniversalmoney。Thesefunctions，aspreviouslyexplained(BuchI，Kap。III，3，c[Englishedition:

Ch。III，3，c——Ed。])，aretwo-fold:currencymovementbackandforthbetweenthevariousnationalspheresofcirculationinordertobalanceinternationalpaymentsandinconnectionwiththemigrationsofcapitalinquestofinterest；simultaneously，flowofpreciousmetalsfromtheirsourcesofproductionviatheworld-marketandtheirdistributionamongthevariousnationalspheresofcirculation。Goldsmithsactedasbankersstillduringthegreaterpartofthe17thcenturyinEngland。Weshallcompletelydisregardthewayinwhichthebalancingofinternationalaccountsdevelopedfurtherinthebilljobbing，etc。，andeverythingreferringtotransactionsinvaluablepapers；inshort，weshallleaveoutofconsiderationallspecialformsofthecreditsystem，whichdonotasyetconcernushere。

Nationalmoneydiscardsitslocalcharacterinthecapacityofuniversalmoney；onenationalcurrencyisexpressedinanother，andthusallofthemarefinallyreducedtotheircontentofgoldorsilver，whilethelatter，beingthetwocommoditiescirculatingasworld-money，aresimultaneouslyreducedtotheirreciprocalvalue-ratio，whichchangescontinually。Itisthisintermediateoperationwhichthemoneytradermakeshisspecialoccupation。Money-changingandthebulliontradearethustheoriginalformsofthemoneytrade，andspringfromthetwo-foldfunctionsofmoney-asnationalmoneyandworld-money。

Thecapitalistprocessofproduction，justascommerceingeneral，evenunderpre-capitalistmethods，imply:

First，theaccumulationofmoneyasahoard，i。e。，hereasthatpartofcapitalwhichmustalwaysbeonhandintheformofmoneyasareservefundofmeansofpaymentandpurchase。Thisisthefirstformofahoard，asitreappearsunderthecapitalistmodeofproduction，andasitappearsgenerallywiththedevelopmentofmerchant’scapital，atleastforthepurposesofthiscapital。Bothremarksapplytonational，aswellasinternational，circulation。Thehoardisincontinuousflux，poursceaselesslyintocirculation，andreturnsceaselesslyfromit。Thesecondformofahoardisthatofidle，temporarilyunemployedcapitalintheshapeofmoney，includingnewlyaccumulatedandnotyetinvestedmoney-capital。Thefunctionsentailedbythisformationofahoardareprimarilythoseofsafekeeping，bookkeeping，etc。

Secondly，however，thisinvolvesoutlaysofmoneyforpurchases，collectingmoneyfromsales，makingandreceivingpayments，balancingpayments，etc。Themoney-dealerperformsalltheseservicesatfirstasasimplecashierofthemerchantsandindustrialcapitalists。”[3]

Themoneytradebecomesfullydeveloped，eveninitsfirststages，assoonasitsordinaryfunctionsaresupplementedbylendingandborrowingandbycredit。Ofthismoreinthenextpart，whichdealswithinterest-bearingcapital。

Thebulliontradeitself，thetransferofgoldorsilverfromonecountrytoanother，ismerelytheresultoftradingincommodities。Itisdeterminedbytherateofexchangewhichexpressesthestandingofinternationalpaymentsandtheinterestratesinthedifferentmarkets。Thebulliontraderassuchactsmerelyasanintermediaryoftheresults。

Indiscussingmoneyandthewayitsmovementsandformsdevelopoutofsimplecommodity-circulation，wesaw(Book1Ch。III)thatthemovementsofthemassofmoneycirculatingasmeansofpurchaseandpaymentdependonthemetamorphosisofcommodities，onthevolumeandvelocityofthismetamorphosis，whichwenowknowtobebutaphaseintheentireprocessofreproduction。Asforsecuringthemoneymaterials——goldandsilver——fromtheirsourcesofproduction，thisresolvesitselfintoadirectexchangeofcommodities，anexchangeofgoldandsilverascommoditiesforothercommodities。Hence，itisitselfasmuchaphaseoftheexchangeofcommoditiesasthesecuringofironorothermetals。However，sofarasthemovementofpreciousmetalsontheworld-marketisconcerned(wehereleaveasidemovementsexpressingthetransferofcapitalbyloans——atypeoftransferwhichalsoobtainsintheshapeofcommodity-capital)，itisquiteasmuchdeterminedbytheinternationalexchangeofcommoditiesasthemovementofmoneyasanationalmeansofpurchaseandpaymentisdeterminedbytheexchangeofcommoditiesinthehomemarket。Theinflowandoutflowofpreciousmetalsfromonenationalsphereofcirculationtoanother，inasmuchasthisiscausedmerelybyadepreciationofthenationalcurrency，orbyadoublestandard，arealientomoneycirculationassuchandmerelyrepresentcorrectionsofdeviationsbroughtaboutarbitrarilybystatedecrees。Finally，asconcernstheformationsofhoardswhichconstitutereservefundsformeansofpurchaseandpayment，beitforhomeorforeigntrade，andwhichalsomerelyrepresentaformoftemporarilyidlecapital，theyareinbothcasesnecessaryprecipitatesofthecirculationprocess。

Iftheentirecirculationofmoneyisinvolume，formandmovementpurelyaresultofcommodity-circulation，which，initsturn，fromthecapitalistpointofview，isonlythecirculationprocessofcapital(alsoembracingtheexchangeofcapitalforrevenue，andofrevenueforrevenue，sofarasoutlayofrevenueiseffectedthroughretailtrade)，itisself-evidentthatdealinginmoneydoesnotmerelypromotethecirculationofmoney，amereresultandphenomenonofcommodity-circulation。Thiscirculationofmoneyitself，aphaseincommodity-circulation，istakenforgrantedinmoney-dealing。Whatthelatterpromotesismerelythetechnicaloperationsofmoneycirculationwhichitconcentrates，shortens，andsimplifies。Dealinginmoneydoesnotformthehoards。Itprovidesthetechnicalmeansbywhichtheformationofhoardsmay，sofarasitisvoluntary(hence，notanexpressionofunemployedcapitalorofdisturbancesinthereproductionprocess)，bereducedtoitseconomicminimumbecause，ifmanagedforthecapitalistclassasawhole，thereservefundsofmeansofpurchaseandpaymentneednotbeaslargeastheywouldhavetobeifeachcapitalistweretomanagehisownThemoney-dealersdonotbuythepreciousmetals。Theymerelyhandletheirdistributionassoonasthecommoditytradehasboughtthem。Theyfacilitatethesettlingofbalances，inasmuchasmoneyservesasthemeansofpayment，andreducethroughtheartificialmechanismofthesesettlementstheamountofmoneyrequiredforthispurpose。Buttheydonotdetermineeithertheconnections，orthevolume，ofthemutualpayments。Thebillsofexchangeandthecheques，forinstance，whichareexchangedforoneanotherinbanksandclearinghouses，representquiteindependenttransactionsandaretheresultsofgivenoperations，anditismerelyaquestionofabettertechnicalsettlementoftheseresults。Sofarasmoneycirculatesasameansofpurchase，thevolumeandnumberofpurchasesandsaleshavenoconnectionwhateverwithmoney-dealing。Thelattercandonomorethanshortenthetechnicaloperationsthatgowithbuyingandselling，andthusreducetheamountofcashmoneyrequiredtoturnoverthecommodities。

Money-dealinginitspureform，whichweconsiderhere，i。e。，setapartfromthecreditsystem，isthusconcernedonlywiththetechniqueofacertainphaseofcommodity-circulation，namely，thatofmoneycirculationandthedifferentfunctionsofmoneyarisinginitscirculation。

Thissubstantiallydistinguishesdealinginmoneyfromthedealingincommodities，whichpromotesthemetamorphosisofcommoditiesandtheirexchange，orevengivesthisprocessofthecommodity-capitaltheappearanceofaprocessofacapitalsetapartfromindustrialcapital。While，therefore，commercialcapitalhasitsownformofcirculation，M——C——M，inwhichthecommoditychangesbandstwiceandthusprovidesarefluxofmoney，asdistinctfromC——M——C，inwhichmoneychangeshandstwiceandthuspromotescommodityexchange，thereisnosuchspecialforminthecaseofmoney-dealingcapital。

Insofarasmoney-capitalisadvancedbyaseparateclassofcapitalistsinthistechnicalpromotionofmoneycirculation——acapitalwhichonareducedscalerepresentstheadditionalcapitalthemerchantsandindustrialcapitalistswouldotherwisehavetoadvancethemselvesforthesepurposes-thegeneralformofcapital，M——M’，occurshereaswell。ByadvancingM，theadvancingcapitalistsecuresM+DM。ButpromotionofM——M’doesnothereconcernthematerial，butonlythetechnical，processesofthemetamorphosis。

Itisevidentthatthemassofmoney-capitalwithwhichthemoney-dealersoperateisthemoney-capitalofmerchantsandindustrialcapitalistsintheprocessofcirculation，andthatthemoney-dealers’operationsareactuallyoperationsofmerchantsandindustrialcapitalists，inwhichtheyactasmiddlemen。

Itisequallyevidentthatthemoney-dealers’profitisnothingbutadeductionfromthesurplus-value，sincetheyoperatewithalreadyrealisedvalues(evenwhenrealisedintheformofcreditors’claims)。

Justasinthecommoditytrade，thereisaduplicationoffunctions，becauseapartofthetechnicaloperationsconnectedwithmoneycirculationmustbecarriedoutbythedealersandproducersofcommoditiesthemselves。

FOOTNOTES[1]ZurKritikderpolitischenOekonomie，S。27。

[2]”Thegreatdifferencesamongcoinsasconcernstheirgrainandcoinagebymanyprincesandtownsthatwereprivilegedtocoinmoney，necessitatedthecreationofbusinessestablishmentstoenablemerchantstouselocalmoneywherevercompensationforthedifferentcoinswasrequired。Tobeabletomakecashpayments，merchantswhotravelledtoaforeignmarketprovidedthemselveswithuncoinedpuresilver，orgold。Inthesamewaytheyexchangedmoneyreceivedinlocalmarketsforuncoinedsilverorgoldwhenreturninghome。Thebusinessofexchangingmoney，theexchangeofuncoinedpreciousmetalsforlocalcoins，andviceversa，thusbecameawidespreadandpayingbusiness。”(Hullmann，Stä；dtewesendesMittelalters。Bonn，1826-29，I，S。437-38。)”Banksofexchangedonotowetheirnametothefactthattheyissuebillsofexchange……buttothefactthattheyusedtoexchangecoins。LongbeforetheestablishmentoftheAmsterdamBankofExchangein1609，thereexistedintheDutchmerchanttownsmoney-changersandexchangehouses，evenexchangebanks……Thebusinessofthesemoney-changersconsistedinexchangingthenumerousvarietiesofcoinbroughtintothecountrybyforeigntradersforthecurrencyoftherealm。Graduallytheircircleofactivityextended……Theybecamethebankersandcashiersoftheirtimes。ButthegovernmentofAmsterdamviewedasdangerousthecombinationofcashierandexchangebusinesses，andtomeetthisdangeritwasresolvedtoestablishalargecharteredinstitutionabletoperformboththecashierandexchangeoperations。ThisinstitutionwasthefamousAmsterdamBankofExchangeof1609。Inlikemanner，theexchangebanksofVenice，Genoa，Stockholm，Hamburg，owetheirorigintothecontinualnecessityofchangingmoney。Ofallthese，theHamburgExchangeistheonlyonetodaystilldoingbusiness，becausetheneedforsuchaninstitutionisstillfeltinthatmerchants’town，whichhasnoMintofitsown，etc。”(S。Vissering，HandboekvanPraktischeStaathuishoudkunde，Amsterdam，1860-61，I，247-48。)

[3]”TheinstitutionofcashierhasprobablynowherepreserveditsoriginalindependentcharactersopureasintheDutchmerchanttowns”(cf。ontheoriginofthecashierbusinessinAmsterdam。E。Lusac，Holland’sRykdom，PartIII)。”ItsfunctionscoincideinpartwiththoseoftheoldAmsterdamBankofExchange。Thecashierreceivesfromthemerchants，whoemployhisservices，acertainamountofmoney，forwhichheopensa’creditfortheminhisbooks。Later，theysendhimtheirclaims，whichhecollectsforthemandcreditstotheiraccount。Atthesametime，hemakespaymentsontheirdrafts(kassiersbriefes)andchargestheamountstotheiraccount。Hemakesasmallchargeforthesereceiptsandpayments，whichyieldshimaremunerationforhislaboursonlycorrespondingtothesizeoftheturnoveraccomplishedbetweenthetwoparties。Ifpaymentsaretobebalancedbetweentwomerchants，whobothdealwiththesamecashier，suchpaymentsaresettledverysimplybymutualentriesinthebooks，forthecashiersbalancetheirmutualclaimsfromdaytoday。Thecashier’sactualbusinessthusconsistsbasicallyofthismediationinpayments。

Therefore，itexcludesindustrialenterprises，speculation，andopeningofunlimitedcredits；foritmustbetheruleinthisbusinessthatthecashiermakesnopaymentoverandabovethecreditofanyonekeepinganaccountwithhim。”(Vissering，loc。cit。，p。434。)RethebankingassociationsofVenice:”TherequirementsandlocalityofVenice，wherecarryingbullionwaslessconvenientthaninotherplaces，inducedthelargemerchantsofthatcitytofoundbankingassociationsunderduesafeguards，supervisionandmanagement。Membersofsuchassociationsdepositedcertainsums，onwhichtheydrewdraftsfortheircreditors，whereuponthepaidsumwasdeductedfromthedebtor’saccountonthepageofthebookreservedforthatPurposeandaddedtothesumcreditedinthesamebooktothecreditor。Thisistheearliestbeginningoftheso-calledgirobanks。Theseassociationsareindeedold。Butifattributedtothe12thcentury，theyarebeingconfoundedwiththeStateLoanInstituteestablishedin1171。”

(Hü；llmann，Loc。cit。，pp。453-54。)

Capital，Vol。3，Chapter20KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartIV

CONVERSIONOFCOMMODITY-CAPITALANDMONEY-CAPITAL

INTOCOMMERCIALCAPITALANDMONEY-DEALINGCAPITAL

(MERCHANT’SCAPITAL)CHAPTER20

HistoricalFactsaboutMerchant’sCapitalTheparticularforminwhichcommercialandmoney-dealingcapitalsaccumulatemoneywillbediscussedinthenextpart。

Itisself-evidentfromwhathasgonebeforethatnothingcouldbemoreabsurdthantoregardmerchant’scapital，whetherintheshapeofcommercialorofmoney-dealingcapital，asaparticularvarietyofindustrialcapital，suchas，say，mining，agriculture，cattle-raising，manufacturing，transport，etc。，whicharesidelinesofIndustrialcapitaloccasionedbythedivisionofsociallabour，andhencedifferentspheresofinvestment。Thesimpleobservationthatinthecirculationphaseofitsreproductionprocesseveryindustrialcapitalperformsascommodity-capitalandasmoney-capitaltheveryfunctionswhichappearastheexclusivefunctionsofthetwoformsofmerchant’scapital，shouldruleoutsuchacrudenotion。Ontheotherhand，incommercialandmoney-dealingcapitalthedifferencesbetweenindustrialcapitalasproductivecapitalandthesamecapitalinthesphereofcirculationareindividualisedthroughthefactthatthedefiniteformsandfunctionswhichcapitalassumesforthemomentappearasindependentformsandfunctionsofaseparateportionofthecapitalandareexclusivelyboundupwithit。Thetransmutedformofindustrialcapitalandthematerialdifferencesbetweenproductivecapitalsappliedindifferentbranchesofindustry，whicharisefromthenatureofthesevariousbranches，areworldsapart。

Asidefromthecruditywithwhichtheeconomistgenerallyconsidersdistinctionsofform，whichreallyconcernhimonlyfromtheirsubstantiveside，thismisconceptionbythevulgareconomistisexplainedontwoadditionalcounts。First，hisinabilitytoexplainthepeculiarnatureofmercantileprofit；and，secondly，hisapologeticendeavourstodeducecommodity-capitalandmoney-capital，andlatercommercialcapitalandmoney-dealingcapitalasformsarisingnecessarilyfromtheprocessofproductionassuch，whereastheyareduetothespecificformofthecapitalistmodeofproduction，whichaboveallpresupposesthecirculationofcommodities，andhenceofmoney，asitsbasis。

Ifcommercialcapitalandmoney-dealingcapitaldonotdifferfromgrainproductionanymorethanthisdiffersfromcattle-raisingandmanufacturing，itisplainasdaythatproductionandcapitalistproductionarealtogetheridentical，andthat，amongotherthings，thedistributionofthesocialproductsamongthemembersofasociety，beitforproductiveorindividualconsumption，mustjustasconsistentlybehandledbymerchantsandbankersastheconsumptionofmeatbycattle-raisingandthatofclothingbytheirmanufacture。[1]

Thegreateconomists，suchasSmith，Ricardo，etc。，areperplexedovermercantilecapitalbeingaspecialvariety，sincetheyconsiderthebasicformofcapital，capitalasindustrialcapital，andcirculationcapital(commodity-capitalandmoney-capital)solelybecauseitisaphaseinthereproductionprocessofeverycapital。Therulesconcerningtheformationofvalue，profit，etc。，immediatelydeducedbythemfromtheirstudyofindustrialcapital，donotextenddirectlytomerchant’scapital。Forthisreason，theyleavemerchant’scapitalentirelyasideandmentionitonlyasakindofindustrialcapital。Wherevertheymakeaspecialanalysisofit，asRicardodoesindealingwithforeigntrade，theyseektodemonstratethatitcreatesnovalue(andconsequentlynosurplus-value)。Butwhateveristrueofforeigntrade，isalsotrueofhometrade。

Hithertowehaveconsideredmerchant’scapitalmerelyfromthestandpoint，andwithinthelimits，ofthecapitalistmodeofproduction。However，notcommercealone，butalsomerchant’scapital，isolderthanthecapitalistmodeofproduction，is，infact，historicallytheoldestfreestateofexistenceofcapital。

Sincewehavealreadyseenthatmoney-dealingandthecapitaladvancedforitrequirenothingmorefortheirdevelopmentthantheexistenceofwholesalecommerce，andfurtherofcommercialcapital，itisonlythelatterwhichwemustoccupyourselveswithhere。

Sincemerchant’scapitalis。pennedinthesphereofcirculation，andsinceitsfunctionconsistsexclusivelyofpromotingtheexchangeofcommodities，itrequiresnootherconditionsforitsexistence——asidefromtheundevelopedformsarisingfromdirectbarter——outsidethosenecessaryforthesimplecirculationofcommoditiesandmoney。Orrather，thelatteristheconditionofitsexistence。Nomatterwhatthebasisonwhichproductsareproduced，whicharethrownintocirculationascommodities——whetherthebasisoftheprimitivecommunity，ofslaveproduction，ofsmallpeasantandpettybourgeois，orthecapitalistbasis，thecharacterofproductsascommoditiesisnotaltered，andascommoditiestheymustpassthroughtheprocessofexchangeanditsattendantchangesofform。Theextremesbetweenwhichmerchant’scapitalactsasmediatorexistforitasgiven，justastheyaregivenformoneyandforitsmovements。Theonlynecessarythingisthattheseextremesshouldbeonhandascommodities，regardlessofwhetherproductioniswhollyaproductionofcommodities，orwhetheronlythesurplusoftheindependentproducers’immediateneeds，satisfiedbytheirownproduction，isthrownonthemarket。Merchant’scapitalpromotesonlythemovementsoftheseextremes，ofthesecommodities，whicharepreconditionsofitsownexistence。

Theextenttowhichproductsentertradeandgothroughthemerchants’

handsdependsonthemodeofproduction，andreachesitsmaximumintheultimatedevelopmentofcapitalistproduction，wheretheproductisproducedsolelyasacommodity，andnotasadirectmeansofsubsistence。Ontheotherhand，onthebasisofeverymodeofproduction，tradefacilitatestheproductionofsurplus-productsdestinedforexchange，inordertoincreasetheenjoyments，orthewealth，oftheproducers(heremeantaretheownersoftheproducts)。Hence，commerceimpartstoproductionacharacterdirectedmoreandmoretowardsexchange-value。

Themetamorphosisofcommodities，theirmovement，consists1)materially，oftheexchangeofdifferentcommoditiesforoneanother，and2)formally，oftheconversionofcommoditiesintomoneybysale，andofmoneyintocommoditiesbypurchase。Andthefunctionofmerchant’scapitalresolvesitselfintotheseveryactsofbuyingandsellingcommodities。Itthereforemerelypromotestheexchangeofcommodities；yetthisexchangeisnottoheconceivedattheoutsetasabareexchangeofcommoditiesbetweendirectproducers。Underslavery，feudalismandvassalage(sofarasprimitivecommunitiesareconcerned)itistheslave-owner，thefeudallord，thetribute-collectingstate，whoaretheowners，hencesellers，oftheproducts。

Themerchantbuysandsellsformany。Purchasesandsalesareconcentratedinhishandsandconsequentlyarenolongerboundtothedirectrequirementsofthebuyer(asmerchant)。

Butwhateverthesocialorganisationofthespheresofproductionwhosecommodityexchangethemerchantpromotes，hiswealthexistsalwaysintheformofmoney，andhismoneyalwaysservesascapital。ItsformisalwaysM——C——M’。Money，theindependentformofexchange-value，isthepointofdeparture，andincreasingtheexchange-valueanendinitself。Commodityexchangeassuchandtheoperationseffectingit-separatedfromproductionandperformedbynon-producers-arejustameansofincreasingwealthnotasmerewealth，butaswealthinitsmostuniversalsocialform，asexchange-value。

ThecompellingmotiveanddeterminingpurposearetheconversionofMintoM+DM。ThetransactionsM——CandC——M’，whichpromoteM-M’，appearmerelyasstagesoftransitioninthisconversionofMintoM+DM。ThisM——C——M’，thecharacteristicmovementofmerchant’scapital，distinguishesitfromC——M——C，tradeincommoditiesdirectlybetweenproducers，whichhasforitsultimateendtheexchangeofuse-values。

Thelessdevelopedtheproduction，themorewealthinmoneyisconcentratedinthehandsofmerchantsorappearsinthespecificformofmerchants’

wealth。

Withinthecapitalistmodeofproduction——i。e。，assoonascapitalhasestablisheditsswayoverproductionandimpartedtoitawhollychangedandspecificform——merchant’scapitalappearsmerelyasacapitalwithaspecificfunction。Inallpreviousmodesofproduction，andallthemore，whereverproductionministerstotheimmediatewantsoftheproducer，merchant’scapitalappearstoperformthefunctionparexcellenceofcapital。

Thereis，therefore，nottheleastdifficultyinunderstandingwhymerchant’scapitalappearsasthehistoricalformofcapitallongbeforecapitalestablisheditsowndominationoverproduction。Itsexistenceanddevelopmenttoacertainlevelareinthemselveshistoricalpremisesforthedevelopmentofcapitalistproduction1)aspremisesfortheconcentrationofmoneywealth，and2)becausethecapitalistmodeofproductionpresupposesproductionfortrade，sellingonalargescale，andnottotheindividualcustomer，hencealsoamerchantwhodoesnotbuytosatisfyhispersonalwantsbutconcentratesthepurchasesofmanybuyersinhisonepurchase。Ontheotherhand，alldevelopmentofmerchant’scapitaltendstogiveproductionmoreandmorethecharacterofproductionforexchange-valueandtoturnproductsmoreandmoreintocommodities。Yetitsdevelopment，asweshallpresentlysee，isincapablebyitselfofpromotingandexplainingthetransitionfromonemodeofproductiontoanother。

Withincapitalistproductionmerchant’scapitalisreducedfromitsformerindependentexistencetoaspecialphaseintheinvestmentofcapital，andthelevellingofprofitsreducesitsrateofprofittothegeneralaverage。Itfunctionsonlyasanagentofproductivecapital。Thespecialsocialconditionsthattakeshapewiththedevelopmentofmerchant’scapital，areherenolongerparamount。Onthecontrary，wherevermerchant’scapitalstillpredominateswefindbackwardconditions。Thisistrueevenwithinoneandthesamecountry，inwhich，forinstance，thespecificallymerchanttownspresentfarmorestrikinganalogieswithpastconditionsthanindustrialtowns。[2]

Theindependentandpredominantdevelopmentofcapitalasmerchant’scapitalistantamounttothenon-subjectionofproductiontocapital，andhencetocapitaldevelopingonthebasisofanaliensocialmodeofproductionwhichisalsoindependentofit。Theindependentdevelopmentofmerchant’scapital，therefore，standsininverseproportiontothegeneraleconomicdevelopmentofsociety。

Independentmercantilewealthasapredominantformofcapitalrepresentstheseparationofthecirculationprocessfromitsextremes，andtheseextremesaretheexchangingproducersthemselves。Theyremainindependentofthecirculationprocess，justasthelatterremainsindependentofthem。

Theproductbecomesacommoditybywayofcommerce。Itiscommercewhichhereturnsproductsintocommodities，nottheproducedcommoditywhichbyitsmovementsgivesrisetocommerce。Thus，capitalappearsherefirstascapitalintheprocessofcirculation。Itisinthecirculationprocessthatmoneydevelopsintocapital。Itisincirculationthatproductsfirstdevelopasexchange-values，ascommoditiesandasmoney。Capitalcan，andmust，formintheprocessofcirculation，beforeitlearnstocontrolitsextremes——thevariousspheresofproductionbetweenwhichcirculationmediates。Moneyandcommoditycirculationcanmediatebetweenspheresofproductionofwidelydifferentorganisation，whoseinternalstructureisstillchieflyadjustedtotheoutputofuse-values。Thisindividualisationofthecirculationprocess，inwhichspheresofproductionareinterconnectedbymeansofathird，hasatwo-foldsignificance。Ontheonehand，thatcirculationhasnotasyetestablishedaholdonproduction，butisrelatedtoitastoagivenpremise。Ontheotherhand，thattheproductionprocesshasnotasyetabsorbedcirculationasamerephaseofproduction。Both，however，arethecaseincapitalistproduction。Theproductionprocessrestswhollyuponcirculation，andcirculationisameretransitionalphaseofproduction，inwhichtheproductcreatedasacommodityisrealisedanditselementsofproduction，likewisecreatedascommodities，arereplaced。

Thatformofcapital——merchant’scapital——whichdevelopeddirectlyoutofcirculationappearsheremerelyasoneoftheformsofcapitaloccurringinitsreproductionprocess。

Thelawthattheindependentdevelopmentofmerchant’scapitalisinverselyproportionaltothedegreeofdevelopmentofcapitalistproductionisparticularlyevidentinthehistoryofthecarryingtrade，asamongtheVenetians，Genoese，Dutch，etc。，wheretheprincipalgainswerenotthusmadebyexportingdomesticproducts，butbypromotingtheexchangeofproductsofcommerciallyandotherwiseeconomicallyundevelopedsocieties，andbyexploitingbothproducingcountries。[3]Here，merchant’scapitalisinitspureform，separatedfromtheextremes——thespheresofproductionbetweenwhichitmediates。Thisisthemainsourceofitsdevelopment。Butthismonopolyofthecarryingtradedisintegrates，andwithitthistradeitself，proportionatelytotheeconomicdevelopmentofthepeoples，whomitexploitsatbothendsofitscourse，andwhoselackofdevelopmentwasthebasisofitsexistence。Inthecaseofthecarryingtradethisappearsnotonlyasthedeclineofaspecialbranchofcommerce，butalsothatofthepredominanceofthepurelytradingnations，andoftheircommercialwealthingeneral，whichresteduponthecarryingtrade。Thisisbutaspecialform，inwhichisex-pressedthesubordinationofmerchantstoindustrialcapitalwiththeadvanceofcapitalistproduction。

Thebehaviourofmerchant’scapitalwhereveritrulesoverproductionisstrikinglyillustratednotonlybythecolonialeconomy(theso-calledcolonialsystem)ingeneral，butquitespecificallybythemethodsoftheoldDutchEastIndiaCompany。

Sincethemovementofmerchant’scapitalisM——C——M’，themerchant’sprofitismade，first，inactswhichoccuronlywithinthecirculationprocess，henceinthetwoactsofbuyingandselling；and，secondly，itisrealisedinthelastact，thesale。Itisthereforeprofituponalienation。Primafacie，apureandindependentcommercialprofitseemsimpossiblesolongasproductsaresoldattheirvalue。Tobuycheapinordertoselldearistheruleoftrade。Hence，nottheexchangeofequivalents。Theconceptionofvalueisincludedinitinsofarasthevariouscommoditiesareallvalues，andthereforemoney。inrespecttoqualitytheyareallexpressionsofsociallabour。Buttheyarenotvaluesofequalmagnitude。

Thequantitativeratioinwhichproductsareexchangedisatfirstquitearbitrary。Theyassumetheformofcommoditiesinasmuchastheyareexchangeables，i。e。，expressionsofoneandthesamethird。Continuedexchangeandmoreregularreproductionforexchangereducesthisarbitrarinessmoreandmore。Butatfirstnotfortheproducerandconsumer，butfortheirgo-between，themerchant，whocomparesmoney-pricesandpocketsthedifference。

Itisthroughhisownmovementsthatheestablishesequivalence。

Merchant’scapitalisoriginallymerelytheinterveningmovementbetweenextremeswhichitdoesnotcontrol，andbetweenpremiseswhichitdoesnotcreate。

Justasmoneyoriginatesfromthebareformofcommodity-circulation，C——M——C，notonlyasameasureofvalueandamediumofcirculation，butalsoastheabsoluteformofcommodity，andhenceofwealth，orhoard，sothatitsconservationandaccumulationasmoneybecomesanendinitself，so，too，doesmoney，thehoard，assomethingthatpreservesandincreasesitselfthroughmerealienation，originatefromthebareformofthecirculationofmerchant’scapital，M——C——M’。

ThetradingnationsofancienttimesexistedlikethegodsofEpicurusintheintermediateworldsoftheuniverse，orratherliketheJewsintheporesofPolishsociety。Thetradeofthefirstindependentflourishingmerchanttownsandtradingnationsrestedasapurecarryingtradeuponthebarbarismoftheproducingnations，betweenwhomtheyactedthemiddleman。

Inthepre-capitaliststagesofsocietycommerceruledindustry。Inmodernsocietythereverseistrue。Ofcourse，commercewillhavemoreorlessofacounter-effectonthecommunitiesbetweenwhichitiscarriedon。Itwillsubordinateproductionmoreandmoretoexchange-valuebymakingluxuriesandsubsistencemoredependentonsalethanontheimmediateuseoftheproducts。Therebyitdissolvestheoldrelationships。Itmultipliesmoneycirculation。Itencompassesnolongermerelythesurplusofproduction，butbitesdeeperanddeeperintothelatter，andmakesentirebranchesofproductiondependentuponit。Neverthelessthisdisintegratingeffectdependsverymuchonthenatureoftheproducingcommunity。

Solongasmerchant’scapitalpromotestheexchangeofproductsbetweenundevelopedsocieties，commercialprofitnotonlyappearsasout-bargainingandcheating，butalsolargelyoriginatesfromthem。Asidefromthefactthatitexploitsthedifferencebetweenthepricesofproductionofvariouscountries(andinthisrespectittendstolevelandfixthevaluesofcommodities)，thosemodesofproductionbringitaboutthatmerchant’scapitalappropriatesanoverwhelmingportionofthesurplus-productpartlyasamediatorbetweencommunitieswhichstillsubstantiallyproduceforuse-value，andforwhoseeconomicorganisationthesaleoftheportionoftheirproductenteringcirculation，orforthatmatteranysaleofproductsattheirvalue，isofsecondaryimportance；andpartly，becauseunderthoseearliermodesofproductiontheprincipalownersofthesurplus-productwithwhomthemerchantdealt，namely，theslave-ownerthefeudallord，andthestate(forinstance，theorientaldespot)representtheconsumingwealthandluxurywhichthemerchantseekstotrap，asAdamSmithcorrectlyscentedinthepassageonfeudaltimesquotedearlier。Merchant’scapital，whenitholdsapositionofdominance，standseverywhereforasystemofrobbery，[4]sothatitsdevelopmentamongthetradingnationsofoldandmoderntimesisalwaysdirectlyconnectedwithplundering，piracy，kidnappingslaves，andcolonialconquest；asinCarthage，Rome，andlateramongtheVenetians，Portuguese，Dutch，etc。

Thedevelopmentofcommerceandmerchant’scapitalgivesriseeverywheretothetendencytowardsproductionofexchange-values，increasesitsvolume，multipliesit，makesitcosmopolitan，anddevelopsmoneyintoworld-money。

Commerce，therefore，hasamoreorlessdissolvinginfluenceeverywhereontheproducingorganisation，whichitfindsathandandwhosedifferentformsaremainlycarriedonwithaviewtouse-value。Towhatextentitbringsaboutadissolutionoftheoldmodeofproductiondependsonitssolidityandinternalstructure。Andwhitherthisprocessofdissolutionwilllead，inotherwords，whatnewmodeofproductionwillreplacetheold，doesnotdependoncommerce，butonthecharacteroftheoldmodeofproductionitself。Intheancientworldtheeffectofcommerceandthedevelopmentofmerchant’scapitalalwaysresultedinaslaveeconomy；dependingonthepointofdeparture，onlyinthetransformationofpatriarchalslavesystemdevotedtotheproductionofimmediatemeansofsubsistenceintoonedevotedtotheproductionofsurplus-value。However，inthemodernworld，itresultsinthecapitalistmodeofproduction。Itfollowstherefromthattheseresultsspringinthemselvesfromcircumstancesotherthanthedevelopmentofmerchant’scapital。

Itisinthenatureofthingsthatassoonastownindustryassuchseparatesfromagriculturalindustry，itsproductsarefromtheoutsetcommoditiesandthusrequirethemediationofcommercefortheirsaleTheleaningofcommercetowardsthedevelopmentoftowns，and，ontheotherhand，thedependenceoftownsuponcommerce，aresofarnatural。However，itdependsonaltogetherdifferentcircumstancestowhatmeasureindustrialdevelopmentwillgohandinhandwiththisdevelopment。AncientRome，initslaterrepublicandays，developedmerchant’scapitaltoahigherdegreethaneverbeforeintheancientworld，withoutshowinganyprogressinthedevelopmentofcrafts，whileinCorinthandotherGreciantownsinEuropeandAsiaMinorthedevelopmentofcommercewasaccompaniedbyhighlydevelopedcrafts。Ontheotherhand，quitecontrarytothegrowthoftownsandattendantconditions，thetradingspiritandthedevelopmentofmerchant’scapitaloccurfrequentlyamongunsettlednomadicpeoples。

Thereisnodoubt——anditispreciselythisfactwhichhasledtowhollyerroneousconceptions——thatinthe16thand17thcenturiesthegreatrevolutions，whichtookplaceincommercewiththegeographicaldiscoveriesandspeededthedevelopmentofmerchant’scapital，constituteoneoftheprincipalelementsinfurtheringthetransitionfromfeudaltocapitalistmodeofproduction。Thesuddenexpansionoftheworld-market，themultiplicationofcirculatingcommodities，thecompetitivezealoftheEuropeannationstopossessthemselvesoftheproductsofAsiaandthetreasuresofAmerica，andthecolonialsystem——allcontributedmateriallytowarddestroyingthefeudalfettersonproduction。However，initsfirstperiod——themanufacturingperiod——themodernmodeofproductiondevelopedonlywheretheconditionsforithadtakenshapewithintheMiddleAges。Compare，forinstance，HollandwithPortugal。[5]Andwheninthe16th，andpartiallystillinthe17th，centurythesuddenexpansionofcommerceandemergenceofanewworld-marketoverwhelminglycontributedtothefalloftheoldmodeofproductionandtheriseofcapitalistproduction，thiswasaccomplishedconverselyonthebasisofthealreadyexistingcapitalistmodeofproduction。Theworld-marketitselfformsthebasisforthismodeofproduction。Ontheotherhand，theimmanentnecessityofthismodeofproductiontoproduceonanever-enlargedscaletendstoextendtheworld-marketcontinually，sothatitisnotcommerceinthiscasewhichrevolutionisesindustry，butindustrywhichconstantlyrevolutionisescommerce。Commercialsupremacyitselfisnowlinkedwiththeprevalencetoagreaterorlesserdegreeofconditionsforalargeindustry。Compare，forinstance，EnglandandHolland。ThehistoryofthedeclineofHollandastherulingtradingnationisthehistoryofthesubordinationofmerchant’scapitaltoindustrialcapital。Theobstaclespresentedbytheinternalsolidityandorganisationofpre-capitalistic，nationalmodesofproductiontothecorrosiveinfluenceofcommercearestrikinglyillustratedintheintercourseoftheEnglishwithIndiaandChina。Thebroadbasisofthemodeofproductionhereisformedbytheunityofsmall-scaleagricultureandhomeindustry，towhichinIndiaweshouldaddtheformofvillagecommunitiesbuiltuponthecommonownershipofland，which，incidentally，wastheoriginalforminChinaaswell。InIndiatheEnglishlostnotimeinexercisingtheirdirectpoliticalandeconomicpower，asrulersandlandlords，todisruptthesesmalleconomiccommunities。[6]Englishcommerceexertedarevolutionaryinfluenceonthesecommunitiesandtorethemapartonlyinsofarasthelowpricesofitsgoodsservedtodestroythespinningandweavingindustries，whichwereanancientintegratingelementofthisunityofindustrialandagriculturalproduction。Andevensothisworkofdissolutionproceedsverygradually。AndstillmoreslowlyinChina，whereitisnotreinforcedbydirectpoliticalpower。Thesubstantialeconomyandsavingintimeaffordedbytheassociationofagriculturewithmanufactureputupastubbornresistancetotheproductsofthebigindustries，whosepricesincludethefauxfraisofthecirculationprocesswhichpervadesthem。UnliketheEnglish，Russiancommerce，ontheotherhand，leavestheeconomicgroundworkofAsiaticproductionuntouched。[7]

Thetransitionfromthefeudalmodeofproductionistwo-fold。Theproducerbecomesmerchantandcapitalist，incontrasttothenaturalagriculturaleconomyandtheguild-boundhandicraftsofthemedievalurbanindustries。

Thisisthereallyrevolutionisingpath。Orelse，themerchantestablishesdirectswayoverproduction。Howevermuchthisserveshistoricallyasastepping-stone——witnesstheEnglish17th-centuryclothier，whobringstheweavers，independentastheyare，underhiscontrolbysellingtheirwooltothemandbuyingtheircloth——itcannotbyitselfcontributetotheoverthrowoftheoldmodeofproduction，buttendsrathertopreserveandretainitasitsprecondition。ThemanufacturerintheFrenchsilkindustryandintheEnglishhosieryandlaceindustries，forexample，wasthusmostlybutnominallyamanufactureruntilthemiddleofthe19thcentury。

Inpointoffact，hewasmerelyamerchant，wholettheweaverscarryonintheiroldunorganisedwayandexertedonlyamerchant’scontrol，forthatwasforwhomtheyreallyworked。[8]Thissystempresentseverywhereanobstacletotherealcapitalistmodeofproductionandgoesunderwithitsdevelopment。Withoutrevolutionisingthemodeofproduction，itonlyworsenstheconditionofthedirectproducers，turnsthemintomerewage-workersandproletariansunderconditionsworsethanthoseundertheimmediatecontrolofcapital，andappropriatestheirsurplus-labouronthebasisoftheoldmodeofproduction。ThesameconditionsexistinsomewhatmodifiedforminpartoftheLondonhandicraftfurnitureindustry。ItispractisednotablyintheTowerHamletsonaverylargescale。Thewholeproductionisdividedintoverynumerousseparatebranchesofbusinessindependentofoneanother。Oneestablishmentmakesonlychairs，anotheronlytables，athirdonlybureaus，etc。Buttheseestablishmentsthemselvesarerunmoreorlesslikehandicraftsbyasingleminormasterandafewjourneymen。Nevertheless，productionistoolargetoworkdirectlyforprivatepersons。Thebuyersaretheownersoffurniturestores。OnSaturdaysthemastervisitsthemandsellshisproduct，thetransactionbeingclosedwithasmuchhagglingasinapawnshopoveraloan。Themastersdependonthisweeklysale，iffornootherreasonthantoheabletobuyrawmaterialsforthefollowingweekandtopayoutwages。Underthesecircumstances，theyarereallyonlymiddlemenbetweenthemerchantandtheirownlabourers。Themerchantistheactualcapitalistwhopocketsthelion’sshareofthesurplus-value。[9]Almostthesameappliesinthetransitiontomanufactureofbranchesformerlycarriedonashandicraftsorsidelinestoruralindustries。Thetransitiontolarge-scaleindustrydependsonthetechnicaldevelopmentofthesesmallowner-operatedestablishments——wherevertheyemploymachinerythatadmitsofahandicraft-likeoperation。Themachineisdrivenbysteam，insteadofbyhand。Thisisoflatethecase，forinstance，intheEnglishhosieryindustry。

Thereis，consequently，athree-foldtransition。First，themerchantbecomesdirectlyanindustrialcapitalist。Thisistrueincraftsbasedontrade，especiallycraftsproducingluxuriesandimportedbymerchantstogetherwiththerawmaterialsandlabourersfromforeignlands，asinItalyfromConstantinopleinthe15thcentury。Second，themerchantturnsthesmallmastersintohismiddlemen，orbuysdirectlyfromtheindependentproducer，leavinghimnominallyindependentandhismodeofproductionunchanged。Third，theindustrialistbecomesmerchantandproducesdirectlyforthewholesalemarket。

IntheMiddleAges，themerchantwasmerelyonewho，asPopperightlysays，”transferred”thegoodsproducedbyguildsorpeasants[Poppe，GeschichtederTechnologieseitderWiederherstellungderWissenschaftenbisandasEndedesachtzehntenJahrhunderts，BandI，Gö；ttingen。1807，S。

70——Ed。]Themerchantbecomesindustrialist，orrather，makescraftsmen，particularlythesmallruralproducers，workforhim。Conversely，theproducerbecomesmerchant。Themasterweaver，forinstance，buyshiswooloryarnhimselfandsellshisclothtothemerchant，insteadofreceivinghiswoolfromthemerchantpiecemealandworkingforhimtogetherwithhisjourneymen。Theelementsofproductionpassintotheproductionprocessascommoditiesboughtbyhimself。Andinsteadofproducingforsomeindividualmerchant，orforspecifiedcustomers，heproducesfortheworldoftrade。

Theproducerishimselfamerchant。Merchant’scapitaldoesnomorethancarryontheprocessofcirculation。Originally，commercewasthepreconditionforthetransformationofthecrafts，theruraldomesticindustries，andfeudalagriculture，intocapitalistenterprises。Itdevelopstheproductintoacommodity，partlybycreatingamarketforit，andpartlybyintroducingnewcommodityequivalentsandsupplyingproductionwithnewrawandauxiliarymaterials，therebyopeningnewbranchesofproductionbasedfromthefirstuponcommerce，bothasconcernsproductionforthehomeandworld-market，andasconcernsconditionsofproductionoriginatingintheworld-market。

Assoonasmanufacturegainssufficientstrength，andparticularlylarge-scaleindustry，itcreatesinitsturnamarketforitself，bycapturingitthroughitscommodities。Atthispointcommercebecomestheservantofindustrialproduction，forwhichcontinuedexpansionofthemarketbecomesavitalnecessity。Evermoreextendedmassproductionfloodstheexistingmarketandtherebyworkscontinuallyforastillgreaterexpansionofthismarketforbreakingoutofitslimits。Whatrestrictsthismassproductionisnotcommerce(insofarasitexpressestheexistingdemand)，butthemagnitudeofemployedcapitalandthelevelofdevelopmentoftheproductivityoflabour。Theindustrialcapitalistalwayshastheworld-marketbeforehim，compares，andmustconstantlycompare，hisowncost-priceswiththemarket-pricesathome，andthroughouttheworld。Intheearlierperiodsuchcomparisonfellalmostentirelytothemerchants，andthussecuredthepredominanceofmerchant’scapitaloverindustrialcapital。

Thefirsttheoreticaltreatmentofthemodernmodeofproduction——

themercantilesystem——proceedednecessarilyfromthesuperficialphenomenaofthecirculationprocessasindividualisedinthemovementsofmerchant’scapital，andthereforegraspedonlytheappearanceofmatters。Partlybecausemerchant’scapitalisthefirstfreestateofexistenceofcapitalingeneral。

Andpartlybecauseoftheoverwhelminginfluencewhichitexertedduringthefirstrevolutionisingperiodoffeudalproduction——thegenesisofmodernproduction。Therealscienceofmoderneconomyonlybeginswhenthetheoreticalanalysispassesfromtheprocessofcirculationtotheprocessofproduction。Interest-bearingcapitalis，indeed，likewiseaveryoldformofcapital。Butweshallseelaterwhymercantilismdoesnottakeitasitspointofdeparture，butrathercarriesonapolemicagainstit。

FOOTNOTES[1]ThesageMr。Roscher[DieGrundlagenderNationalö；konomie，3。

Auflage，1858，§；60，5。103——Ed。]hasfiguredoutthat，sincecertainpeopledesignatetradeasmediationbetweenproducersandconsumers，”one”mightjustaswelldesignateproductionitselfasmediationofconsumption(betweenwhom？)，andthisimplies，ofcourse，thatmerchant’scapitalisasmuchapartofproductivecapitalasagriculturalandindustrialcapital。Inotherwords，becauseIcansay，thatmancanmediatehisconsumptiononlybymeansofproduction(andhehastodothisevenwithoutgettinghiseducationatLeipzig)，orthatlabourisrequiredfortheappropriationoftheproductsofNature(whichmightbecalledmediation)，itfollows，ofcourse，thatsocialmediationarisingfromaspecificsocialformofproduction-becausemediation-hasthesameabsolutecharacterofnecessity，andthesamerank。Thewordmediationsettleseverything。Bytheway，themerchantsarenotmediatorsbetweenproducersandconsumers(consumersasdistinctfromproducers，consumers，thatis，whodonotproduce，areleftasideforthemoment)，butmediatorsintheexchangeoftheproductsoftheseproducersamongthemselves。TheyarebutmiddlemenInanexchange，whichinthousandsofcasesproceedswithoutthem。

[2]HerrW。Kiesselbach(inhisDerGangdesWelthandelsimMittelalter，1860)isindeedstillenwrappedintheideasofaworld，inwhichmerchant’scapitalisthegeneralformofcapital。Hehasnottheleastideaofthemodernmeaningofcapital，anymorethanMommsenwhenhespeaksinhishistoryofRomeof”capital”andtheruleofcapital。InmodernEnglishhistory，thecommercialestateproperandthemerchanttownsarealsopoliticallyreactionaryandinleaguewiththelandedandmoneyedinterestagainstindustrialcapital。Compare，forinstance，thepoliticalroleofLiverpoolwiththatofManchesterandBirmingham。ThecompleteruleofindustrialcapitalwasnotacknowledgedbyEnglishmerchant’scapitalandmoneyedinterestuntilaftertheabolitionofthecorntax，etc。

[3]”Theinhabitantsoftradingcities，byimportingtheimprovedmanufacturesandexpensiveluxuriesofrichercountriesaffordedsomefoodtothevanityofthegreatproprietors，whoeagerlypurchasedthemwithgreatquantitiesoftherudeproduceoftheirownlands。ThecommerceofagreatpartofEuropeinthosetimes，accordinglyconsistedchiefly，intheexchangeoftheirownrudeproduceforthemanufacturedproduceofmorecivilisednations……

Whenthistastebecamesogeneralastooccasionaconsiderabledemand，themerchants，inordertosavetheexpenseofcarriage，naturallyendeavouredtoestablishsomemanufacturesofthesamekindintheirowncountry。”

(AdamSmith[WealthofNations]，BookIII，Ch。III，London，1776，pp。489，490。)

[4]”Nowthereisamongmerchantsmuchcomplaintaboutthenobles，orrobbers，becausetheymusttradeundergreatdangerandruntheriskofbeingkidnapped，beaten，blackmailed，androbbed。Iftheywouldsufferthesethingsforthesakeofjustice，themerchantswouldbesaintlypeople……Butsincesuchgreatwrongandunchristianthieveryandrobberyarecommittedallovertheworldbymerchants，andevenamongthemselves，isitanywonderthatGodshouldprocurethatsuchgreatwealth，gainedbywrong，shouldagainbelostorstolen，andtheythemselvesbehitovertheheadormadeprisoner？……Andtheprincesshouldpunishsuchunjustbargainswithduerigourand。takecarethattheirsubjectsshallnotbesooutrageouslyabusedbymerchants。Becausetheyfailtodoso，Godemploysknightsandrobbers，andpunishesthemerchantsthroughthemforthewrongstheycommitted，andusesthemashisdevils，justasheplaguesEgyptandalltheworldwithdevils，ordestroysthroughenemies。Hethuspitsoneagainsttheother，withouttherebyinsinuatingthatknightsareanythelessrobbersthanmerchants，althoughthemerchantsdailyrobthewholeworld。whileaknightmayroboneortwoonceortwiceayear。””GobythewordofIsaiah:

Thyprinceshavebecomethecompanionsofrobbers。Fortheyhangthethieves，whohavestolenaguldenorahalfgulden，buttheyassociatewiththose，whoroballtheworldandstealwithgreaterassurancethanallothers，sothattheproverbremainstrue:Bigthieveshanglittlethieves；andastheRomansenatorCatosaid:Meanthieveslieinprisonsandstocks，butpublicthievesareclothedingoldandsilks。ButwhatwillGodsayfinally？HewilldoashesaidtoEzekiel；hewillamalgamateprincesandmerchants，onethiefwithanother，likeleadandiron，aswhenacityburnsdown，leavingneitherprincesnormerchants。”(MartinLuther，VonKaufshandlungundWucher，1524，S。296-97。)

[5]Howpredominantfishery，manufactureandagriculture，asidefromothercircumstances，wereasthebasisforHolland’sdevelopment，hasalreadybeenexplainedby18th-centurywriters，suchasMassie[p。60]。Incontradistinctiontotheformerview，whichunderratedthevolumeandimportanceofcommerceinAsia，inAntiquity，andintheMiddleAges，ithasnowcometobethecustomtoextremelyoverrateit。ThebestantidoteagainstthisconceptionistostudytheimportsandexportsofEnglandintheearly18thcenturyandtocomparethemwithmodernimportsandexports。Andyettheywereincomparablygreaterthanthoseofanyformertradingnation。(SeeAnderson，AnHistoricalandChronologicalDeductionoftheOriginofCommerce。[Vol。II，London，1764，p。261etseq——Ed。])

[6]Ifanynation’shistory，thenthehistoryoftheEnglishinIndiaisastringoffutileandreallyabsurd(inpracticeinfamous)economicexperiments。

InBengaltheycreatedacaricatureoflarge-scaleEnglishlandedestates；

insouth-easternIndiaacaricatureofsmallparcelledproperty；inthenorth-westtheydidalltheycouldtotransformtheIndianeconomiccommunitywithcommonownershipofthesoilintoacaricatureofitself。

[7]SinceRussiahasbeenmakingfranticexertionstodevelopitsowncapitalistproduction，whichisexclusivelydependentuponitsdomesticandtheneighbouringAsiaticmarket，thisisalsobeginningtochange——F。E。

[8]ThesameistrueoftheribbonandbastingmakersandthesilkweaversoftheRhine。EvenarailwayhasbeenbuiltnearKrefeldfortheintercourseoftheseruralhand-weaverswiththetown”manufacturer。”Butthiswaslaterputoutofbusiness，togetherwiththehand-weavers，bythemechanicalweavingindustry——F。E。

[9]Thissystemhasbeendevelopedsince1865onastilllargerscale。FordetailsseetheFirstReportoftheSelectCommitteeoftheHouseofLordsontheSweatingSystem，London，1888——F。E。

Capital，Vol。3，Chapter21KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartV

DIVISIONOFPROFITINTOINTERESTANDPROFIT

OFENTERPRISE。

INTEREST-BEARINGCAPITALCHAPTER21

Interest-BearingCapitalInourfirstdiscussionofthegeneral，oraverage，rateofprofit(PartIIofthisbook)wedidnothavethisratebeforeusinitscompleteform，theequalisationofprofitappearingonlyasequalisationbetweenindustrialcapitalsinvestedindifferentspheres。Thiswassupplementedintheprecedingpart，whichdealtwiththeparticipationofmerchant’scapitalinthisequalisation，andalsocommercialprofit。Thegeneralrateofprofitandtheaverageprofitnowappearedinnarrowerlimitsthanbefore。Itshouldberememberedinthecourseofouranalysisthatinanyfuturereferencetothegeneralrateofprofitortoaverageprofitwemeanthislatterconnotation，henceonlythefinalformofaveragerate。Andsincethisrateisthesameformercantile，aswellasindustrial，capital，itisnolongernecessary，sofarasthisaverageprofitisconcerned，tomakeadistinctionbetweenindustrialandcommercialprofit。Whetherindustriallyinvestedinthesphereofproduction，orcommerciallyinthesphereofcirculation，capitalyieldsthesameaverageannualprofitproratatoitsmagnitude。

Money——heretakenastheindependentexpressionofacertainamountofvalueexistingeitheractuallyasmoneyorascommodities——maybeconvertedintocapitalonthebasisofcapitalistproduction，andmaytherebybetransformedfromagivenvaluetoaself-expanding，orincreasing，value。

Itproducesprofit，i。e。，itenablesthecapitalisttoextractacertainquantityofunpaidlabour，surplus-productandsurplus-valuefromthelabourers，andtoappropriateit。Inthisway，asidefromitsuse-valueasmoney，itacquiresanadditionaluse-value，namelythatofservingascapital。Itsuse-valuethenconsistspreciselyintheprofititproduceswhenconvertedintocapital。Inthiscapacityofpotentialcapital，asameansofproducingprofit，itbecomesacommodity，butacommoditysuigeneris。Or，whatamountstothesame，capitalascapitalbecomesacommodity。[1]

Supposetheannualaveragerateofprofitis20%。Inthatcaseamachinevaluedat£；100，employedascapitalunderaverageconditionsandanaverageamountofintelligenceandpurposiveeffort，wouldyieldaprofitof£；20。Amaninpossessionof£；100，therefore，possessesthepowertomake£；120outof£；100，ortoproduceaprofitofpound；20。