第10章

Hepossessesapotentialcapitalof£；100。Ifhegivesthese£；100

toanotherforoneyear，sothelattermayusethemasrealcapital，hegiveshimthepowertoproduceaprofitof£；20——asurplus-valuewhichcoststhisothernothing，andforwhichhepaysnoequivalent。Ifthisothershouldpay，say，£；5atthecloseoftheyeartotheownerofthe£；100outoftheprofitproduced，hewouldtherebypaytheuse-valueofthe£；100——theuse-valueofitsfunctionascapital，thefunctionofproducingaprofitof£；20。Thepartoftheprofitpaidtotheowneriscalledinterest，whichisjustanothername，orspecialterm，forapartoftheprofitgivenupbycapitalintheprocessoffunctioningtotheownerofthecapital，insteadofputtingitintoitsownpocket。

Itisplainthatthepossessionof£；100givestheirownerthepowertopockettheinterest-thatcertainportionofprofitproducedbymeansofhiscapital。Ifhehadnotgiventhe£；100totheotherperson，thelattercouldnothaveproducedanyprofit，andcouldnotatallhaveactedasacapitalistwithreferencetothese£；100。[2]

Tospeakhereofnaturaljustice，asGilbartdoes(seenote)，isnonsense。

Thejusticeofthetransactionsbetweenagentsofproductionrestsonthefactthattheseariseasnaturalconsequencesoutoftheproductionrelationships。

Thejuristicformsinwhichtheseeconomictransactionsappearaswilfulactsofthepartiesconcerned，asexpressionsoftheircommonwillandascontractsthatmaybeenforcedbylawagainstsomeindividualparty，cannot，beingmereforms，determinethiscontent。Theymerelyexpressit。

Thiscontentisjustwheneveritcorresponds，isappropriate，tothemodeofproduction。Itisunjustwheneveritcontradictsthatmode。Slaveryonthebasisofcapitalistproductionisunjust；likewisefraudinthequalityofcommodities。

The£；100producetheprofitof£；20becausetheyfunctionascapital，beitindustrialormercantile。Butthesinequanonofthisfunctionascapitalisthattheyareexpendedascapital，i。e。，areexpendedinpurchasingmeansofproduction(inthecaseofindustrialcapital)orcommodities(inthecaseofmerchant’scapital)。Buttobeexpended，theymustbeavailable。IfA。theownerofthe£；100，wereeithertospendthemforpersonalconsumption，ortokeepthemasahoard，theycouldnothavebeeninvestedascapitalbyBinhiscapacityoffunctioningcapitalist。Bdoesnotexpendhisowncapital，butA’s；however，hecannotexpendA’scapitalwithoutA’sconsent。Therefore，itisreallyAwhooriginallyexpendsthe£；100ascapital，albeithisfunctionascapitalistislimitedtothisoutlayof£；100ascapital。Inrespecttothese£；100，BactsascapitalistonlybecauseAlendshimthe£；100，thusexpendingthemascapital。

Letusfirstconsiderthesingularcirculationofinterest-bearingcapital。

Weshallthensecondlyhavetoanalysethepeculiarmannerinwhichitissoldasacommodity，namelyloanedinsteadofrelinquishedonceandforall。

ThepointofdepartureisthemoneywhichAadvancestoB。Thismaybedonewithorwithoutsecurity。Thefirst-namedform，however，isthemoreancient，saveadvancesoncommoditiesorpaper，suchasbillsofexchange，shares，etc。Thesespecialformsdonotconcernusatthispoint。Wearedealingherewithinterest-bearingcapitalinitsusualform。

InB’spossessionthemoneyisactuallyconvertedintocapital，passesthroughM——C——M’andreturnstoAasM’，asM+DM，whereDMrepresentstheinterest。Forthesakeofsimplicityweshallnotconsiderherethecase，inwhichcapitalremainsinB’spossessionforalongtermandinterestispaidatregularintervals。

Themovement，therefore，isM——M——C——M’——M’。

Whatappearsduplicatedhere，is1)theoutlayofmoneyascapital，and2)itsrefluxasrealisedcapital，asM’orM+DM。

Inthemovementofmerchant’scapital，M——C——M’，thesamecommoditychangeshandstwice，ormorethantwice，ifmerchantsellstomerchant。

Buteverysuchchangeofplaceofthesamecommodityindicatesametamorphosis，apurchaseorsaleofthecommodity，nomatterhowoftentheprocessmayberepeated，untilitentersconsumption。

Ontheotherhand，thesamemoneychangeshandstwiceinC——M——C，butthisindicatesthecompletemetamorphosisofthecommodity，whichisfirstconvertedintomoneyandthenfrommoneybackintoanothercommodity。

Butininterest-bearingcapitalthefirsttimeMchangeshandsisbynomeansaphaseeitherofthecommoditymetamorphosis，orofreproductionofcapital。Itfirstbecomesonewhenitisexpendedasecondtime，inthehandsoftheactivecapitalistwhocarriesontradewithit，ortransformsitintoproductivecapital。M’sfirstchangeofhandsdoesnotexpressanythinghere，beyonditstransferfromAtoB——atransferwhichusuallytakesplaceundercertainlegalformsandstipulations。

Thisdoubleoutlayofmoneyascapital，ofwhichthefirstismerelyatransferfromAtoB，ismatchedbyitsdoublereflux。AsM’，orM+DM，itflowsbackoutoftheprocesstoB，thepersonactingascapitalist。

ThelatterthentransfersitbacktoA，buttogetherwithapartoftheprofit，asrealisedcapital，asM+DM，inwhichDMisnottheentireprofit，butonlyaportionoftheprofit——theinterest。ItflowsbacktoBonlyaswhathehadexpended，asfunctioningcapital，butasthepropertyofA。Tomakeitsrefluxcomplete，BmustconsequentlyreturnittoA。Butinadditiontothecapital，BmustalsoturnovertoAaportionoftheprofit，apartwhichgoesunderthenameofinterest，whichhehadmadewiththiscapitalsinceAhadgivenhimthemoneyonlyasacapital，i。e。，asvaluewhichisnotonlypreservedinitsmovement，butalsocreatessurplus-valueforitsowner。

ItremainsinB’shandsonlysolongasitisfunctioningcapital。Andwithitsreflux——onthestipulateddate——itceasestofunctionascapital。

Whennolongeractingascapital，however，itmustagainbereturnedtoA，whohadneverceasedbeingitslegalowner。

Theformoflending，whichispeculiartothiscommodity，tocapitalascommodity，andwhichalsooccursinothertransactionsinsteadofthatofsale，followsfromthesimpledefinitionthatcapitalobtainshereasacommodity，orthatmoneyascapitalbecomesacommodity。

Adistinctionshouldbemadehere。

Wehaveseen(BookII，Chap。I)，andrecallbrieflyatthispoint，thatintheprocessofcirculationcapitalservesascommodity-capitalandmoney-capital。

Butinneitherformdoescapitalbecomeacommodityascapital。

Assoonasproductivecapitalturnsintocommodity-capitalitmustbeplacedonthemarkettobesoldasacommodity。Thereitactssimplyasacommodity。Thecapitalistthenappearsonlyasthesellerofcommodities，justasthebuyerisonlythebuyerofcommodities。Asacommoditytheproductmustrealiseitsvalue，mustassumeitstransmutedformofmoney，intheprocessofcirculationbyitssale。Itisalsoquiteimmaterialforthisreason，whetherthiscommodityisboughtbyaconsumerasanecessityoflife，orbyacapitalistasmeansofproduction，i。e。，asacomponentpartofhiscapital。Intheactofcirculationcommodity-capitalactsonlyasacommodity，notasacapital。Itiscommodity-capital，asdistinctfromanordinarycommodity，1)becauseitisweightedwithsurplus-value，therealisationofitsvalue，therefore，beingsimultaneouslytherealisationofsurplus-value；butthisaltersnothingaboutitssimpleexistenceasacommodity，asaproductwithacertainprice；2)becauseitsfunctionasacommodityisaphaseinitsprocessofreproductionascapital，andthereforeitsmovementasacommoditybeingonlyapartialmovementofitsprocess，issimultaneouslyitsmovementascapital。Yetitdoesnotbecomethatthroughthesaleassuch，butonlythroughtheconnectionofthesalewiththewholemovementofthisspecificquantityofvalueinthecapacityofcapital。

Inthesamewayasmoney-capitalitreallyactssimplyasmoney，i。e。，asameansofbuyingcommodities(theelementsofproduction)。Thefactthatthismoneyissimultaneouslymoney-capital，aformofcapital，doesnotemergefromtheactofbuying，theactualfunctionwhichithereperformsasmoney，butfromtheconnectionofthisactwiththetotalmovementofcapital，sincethisact，performedbycapitalasmoney，initiatesthecapitalistproductionprocess。

Butinsofarastheyactuallyfunction，i。e。，actuallyplayaroleintheprocess，commodity-capitalactshereonlyasacommodityandmoney-capitalonlyasmoney。Atnotimeduringthemetamorphosis，viewedbyitself，doesthecapitalistsellhiscommoditiesascapitaltothebuyer，althoughtohimtheyrepresentcapital；nordoeshegiveupmoneyascapitaltotheseller。Inbothcasesbegivesuphiscommoditiessimplyascommodities，andmoneysimplyasmoney，i。e。，asameansofpurchasingcommodities。

Itisonlyinconnectionwiththeentireprocess，atthemomentwherethepointofdepartureappearssimultaneouslyasthepointofreturn，inM——M’orC——C’，thatcapitalintheprocessofcirculationappearsascapital(whereasintheprocessofproductionitappearsascapitalthroughthesubordinationofthelabourertothecapitalistandtheproductionofsurplusvalue)。Inthismomentofreturn，however，theconnectiondisappears。

WhatwehavethenisM’，orM+DM，asumofmoneyequaltothesumoriginallyadvancedplusanincrement——therealisedsurplus-value(regardlessofwhethertheamountofvalueincreasedbyDM

existsintheformofmoney，orcommodities，orelementsofproduction)。

Anditispreciselyatthispointofreturnwherecapitalexistsasrealisedcapital，asanexpandedvalue，thatitneverentersthecirculationinthisform——insofarasthispointisfixedasapointofrest，whetherrealorimaginary——butratherappearstohavebeenwithdrawnfromcirculationasaresultofthewholeprocess。Wheneveritisagainexpended，itisnevergivenuptoanotherascapital，butissoldtohimasanordinarycommodity，orgiventohimasordinarymoneyinexchangeforcommodities。

Itneverappearsascapitalinitsprocessofcirculation，onlyascommodityormoney，andatthispointthisistheonlyformofitsexistenceforothers。Commoditiesandmoneyareherecapitalnotbecausecommoditieschangeintomoney，ormoneyintocommodities，notintheiractualrelationstosellersorbuyers，butonlyintheiridealrelationstothecapitalisthimself(subjectivelyspeaking)，orasphasesintheprocessofreproduction(objectivelyspeaking)。Capitalexistsascapitalinactualmovement，notintheprocessofcirculation，butonlyintheprocessofproduction，intheprocessbywhichlabour-powerisexploited。

Thematterisdifferentwithinterest-bearingcapital，however，anditispreciselythisdifferencewhichlendsititsspecificcharacter。

Theownerofmoneywhodesirestoenhancehismoneyasinterest-bearingcapital，turnsitovertoathirdperson，throwsitintocirculation，turnsitintoacommodityascapital；notjustcapitalforhimself，butalsoforothers。Itisnotcapitalmerelyforthemanwhogivesitup，butisfromtheveryfirstgiventothethirdpersonascapital，asavalueendowedwiththeuse-valueofcreatingsurplus-value，ofcreatingprofit；

avaluewhichpreservesitselfinitsmovementandreturnstoitsoriginalowner，inthiscasetheownerofmoney，afterperformingitsfunction。

Henceitleaveshimonlyforaspecifiedtime，passesbuttemporarilyoutofthepossessionofitsownerintothepossessionofafunctioningcapitalist，isthereforeneithergivenupinpaymentnorsold，butmerelyloaned，merelyrelinquishedwiththeunderstandingthat，first，itshallreturntoitspointofdepartureafteradefinitetimeinterval，and，second，thatitshallreturnasrealisedcapital——acapitalhavingrealiseditsuse-value，itspowerofcreatingsurplus-value。

Commoditiesloanedoutascapitalareloanedeitherasfixedorascirculatingcapital，dependingontheirproperties。Moneymaybeloanedoutineitherform。Itmaybeloanedasfixedcapital，forinstance，ifitispaidbackintheformofanannuity，wherebyaportionofthecapitalflowsbacktogetherwiththeinterest。Certaincommodities，suchashouses，ships，machines，etc。，canbeloanedoutonlyasfixedcapitalbythenatureoftheiruse-values。Yetallloanedcapital，whateveritsform，andnomatterhowthenatureofitsuse-valuemaymodifyitsreturn，isalwaysonlyaspecificformofmoney-capital。Becausewhatisloanedoutisalwaysadefinitesumofmoney，anditisthissumonwhichinterestiscalculated。

Shouldwhateverisloanedoutbeneithermoneynorcirculatingcapital，itisalsopaidbackinthewayfixedcapitalreturns。Thelenderperiodicallyreceivesinterestandaportionoftheconsumedvalueofthefixedcapitalitself，thisbeinganequivalentfortheperiodicwearandtear。Andattheendofthestipulatedtermtheunconsumedportionoftheloanedfixedcapitalisreturnedinkind。Iftheloanedcapitaliscirculatingcapital，itislikewisereturnedinthemannerpeculiartocirculatingcapital。

Themannerofrefluxis，therefore，alwaysdeterminedbytheactualcircuitdescribedbycapitalintheactofreproductionandbyitsspecificvarieties。Butasforloanedcapital，itsrefluxassumestheformofreturnpayments，becauseitsadvance，bywhichitistransferred，possessestheformofaloan。

Inthischapterwetreatonlyofactualmoney-capital，fromwhichtheotherformsofloanedcapitalarederived。

Theloanedcapitalflowsbackintwoways。Intheprocessofreproductionitreturnstothefunctioningcapitalist，andthenitsreturnrepeatsitselfoncemoreastransfertothelender，themoney-capitalist，asreturnpaymenttotherealowner，itslegalpointofdeparture。

Intheactualprocessofcirculation，capitalappearsalwaysasacommodityorasmoney，anditsmovementalwaysisbrokenupintoaseriesofpurchasesandsales。Inshort，theprocessofcirculationresolvesitselfintothemetamorphosisofcommodities。Itisdifferent，whenweconsidertheprocessofreproductionasawhole。Ifwestartoutwithmoney(andthesameistrueifwestartoutwithcommodities，sincewebeginwiththeirvalue，henceviewthemsubspecieasmoney)，weshallseethatacertainsumofmoneyisexpendedandreturnsafteracertainperiodwithanincrement。

Theadvancedsumofmoneyreturnstogetherwithasurplus-value。Ithasremainedintactandincreasedinmakingacertaincycle。Butnow，beingloanedoutascapital，moneyisloanedasjustthesumofmoneywhichpreservesandexpandsitself，whichreturnsafteracertainperiodwithanincrement，andisalwaysreadytoperformthesameprocessoveragain。Itisexpendedneitherasmoneynorasacommodity，thus，neitherexchangedagainstacommoditywhenadvancedintheformofmoney，norsoldinexchangeformoneywhenadvancedasacommodity；rather，itisexpendedascapital。

Thisrelationtoitself，inwhichcapitalpresentsitselfwhenthecapitalistproductionprocessisviewedasawholeandasasingleunity，andinwhichcapitalappearsasmoneythatbegetsmoney，ishereimpartedtoitasitscharacter，itsdesignation，withoutanyintermediarymovement。Anditisrelinquishedwiththisdesignationwhenloanedoutasmoney-capital。

Aqueerconceptionoftheroleofmoney-capitalisholdbyProudhon(Gratuité；duCré；dit。DiscussionentreM。F。BastiatetM。Proudhon，Paris，1850)。LoaningseemsaneviltoProudhonbecauseitisnotselling。Loaningforaninterestis”thefacultyofsellingthesamearticleoverandoveragain，andofreceivingItspriceagainandagain，withoutoncerelinquishingownershipoftheobjectwhichisbeingsold”(p。9)。[ThecitedwordsbelongtoCheve，oneoftheeditorsofthenewspaperLaVoixdupeuple，andtheauthorofthe”firstletter”

inthebookGratuité；duCré；dit。DiscussionentreM。F。

BastiatetM。Proudhon，Paris，1850——Ed]Theobject——money，ahouse，etc——doesnotchangeownersasinsellingandbuying。ButProudhondoesnotseethatnoequivalentisreceivedinreturnformoneygivenawayintheformofinterest-bearingcapital。True，theobjectisgivenawayineveryactofbuyingandselling，sofarasthereareprocessesofexchangeatall。Ownershipofthesoldarticleisalwaysrelinquished。Butitsvalueisnotgivenup。Inasalethecommodityisgivenaway，butnotitsvalue，whichisreturnedintheformofmoney，orinwhatisherejustanotherformofit——promissorynotes，ortitlesofpayment。Whenpurchasing，themoneyisgivenaway，butnotitsvalue，whichisreplacedintheformofcommodities。Theindustrialcapitalistretainsthesamevalueinhishandsthroughouttheprocessofreproduction(excludingsurplus-value)，butindifferentforms。

Inasmuchasthereisanexchange，i。e。，anexchangeofarticles，thereisnochangeinthevalue。Thesamecapitalistalwaysretainsthesamevalue。Butsolongassurplus-valueisproducedbythecapitalist，thereisnoexchange。Assoonasanexchangeoccurs，thesurplus-valueisalreadyincorporatedinthecommodities。Ifweviewtheentirecircuitmadebycapital，M——C——M’，ratherthanindividualactsofexchange，weshallseethatadefiniteamountofvalueiscontinuallyadvanced，andthatthissameamountplussurplus-value，orprofit，iswithdrawnfromcirculationTheactualactsofexchangedonot，atanyrate，revealhowthisprocessispromoted。AnditispreciselythisprocessofMascapital，onwhichtheinterestofthemoney-lendingcapitalistrests，andfromwhichitisderived。”Infact，”saysProudhon，”thehat-maker，whosellshats，receivestheirvalue，neithermorenorless。Butthemoney-lendingcapitalist……doesnotrecoverjusthiscapital，herecoversmorethanhiscapital，morethanhethrowsintotheexchange；hereceivesaninterestoverandabovehiscapital”(p。69)。Herethelatterrepresentstheproductivecapitalistasdistinctfromtheloancapitalist。Proudhonhasobviouslyfailedtograspthesecretofhowtheproductivecapitalistcansellcommoditiesattheirvalue(equalisationthroughpricesofproductionishereimmaterialtohisconception)andreceiveaprofitoverandabovethecapitalheflingsintoexchange。Supposethepriceofproductionof100hats=£；115，andthatthispriceofproductionhappenstocoincidewiththevalueofthehats，whichmeansthatthecapitalproducingthehatsisofthesamecompositionastheaveragesocialcapital。Shouldtheprofit=15%，thehattermakesaprofitof£；15bysellinghiscommoditiesattheirvalueof£；115。Theycosthimonly£；100。Ifheproducedthemwithhisowncapital，hepocketstheentiresurplusof£；15butifwithborrowedcapital，hemayhavetogiveup£；5asinterest。Thisaltersnothinginthevalueofthehats，onlyinthedistributionamongdifferentpersonsofthesurplus-valuealreadycontainedinthisvalue。

Since，therefore，thevalueofthehatsisnotaffectedbythepaymentofinterest，itisnonsenseonProudhon’sparttosay:”Asincommercetheinterestoncapitalisaddedtothewagesoflabourersinmakingupthepriceofcommodities，itisimpossibleforthelabourertobuybacktheproductofhisownlabour。Vivreentravaillantisaprinciplewhichcontainsacontradictionundertheruleofinterest”(p。105)。[3]

HowlittleProudhonunderstoodthenatureofcapitalisshowninthefollowingstatement，inwhichhedescribesthemovementofcapitalingeneralasamovementpeculiartointerest-bearingcapital:”Sincemoney-capitalreturnstoitssourcefromexchangethroughtheaccumulationofinterest，itfollowsthatreinvestmentalwaysmadebythesameindividualcontinuallybringsprofittothesameperson，”p。154。

Whatisitthatstillpuzzleshiminthepeculiarmovementofinterest-bearingcapital？Thecategories:buying，price，givinguparticles，andtheimmediateforminwhichsurplus-valueappearshere；inshort，thephenomenonthatcapitalassuchhasbecomeacommodity，thatselling，consequently，hasturnedintolendingandpriceintoashareoftheprofit。

Thereturnofcapitaltoitspointofdepartureisgenerallythecharacteristicmovementofcapitalinitstotalcircuit。Thisisbynomeansafeatureofinterest-bearingcapitalalone。Whatsinglesitoutisrathertheexternalformofitsreturnwithouttheinterventionofanycircuit。Theloaningcapitalistgivesawayhiscapital，transfersittotheindustrialcapitalist，withoutreceivinganyequivalent。Histransferisnotanactbelongingtotherealcirculationprocessofcapitalatall。Itservesmerelytointroducethiscircuit，whichiseffectedbytheindustrialcapitalist。

Thisfirstchangeofpositionofmoneydoesnotexpressanyactofthemetamorphosis——neitherbuyingnorselling。Ownershipisnotrelinquished，becausethereisnoexchangeandnoequivalentisreceived。Thereturnofthemoneyfromthehandsoftheindustrialcapitalisttothoseoftheloaningcapitalistmerelysupplementsthefirstactofgivingawaythecapital。Advancedintheformofmoney，thecapitalagainreturnstotheindustrialcapitalistthroughthecircularprocessintheformofmoney。

Butsinceitdidnotbelongtohimwhenheinvestedit，itcannotbelongtohimonitsreturn。Passingthroughtheprocessofreproductioncannotbyanymeansturnthecapitalintohisproperty。Hemustthereforerestoreittothelender。Thefirstexpenditure，whichtransfersthecapitalfromthelendertotheborrower，isalegaltransactionwhichhasnothingtodowiththeactualprocessofreproduction。Itismerelyapreludetothisprocess。Thereturnpayment，whichagaintransfersthecapitalthathasflowedbackfromtheborrowertothelenderisanotherlegaltransaction，asupplementofthefirst。Oneintroducestheactualprocess，theotherisanactsupplementarytothisprocess。Pointofdepartureandpointofreturn，thegivingawayandtherecoveryoftheloanedcapital，thusappearasarbitrarymovementspromotedbylegaltransactions，whichtakeplacebeforeandaftertheactualmovementofcapitalandhavenothingtodowithitassuch。Itwouldhavebeenallthesameasconcernsthisactualmovementifthecapitalhadfromthefirstbelongedtotheindustrialcapitalistandhadreturnedtohim，therefore，ashisown。

Inthefirstintroductoryactthelendergiveshiscapitaltotheborrower。

Inthesupplementalandclosingacttheborrowerreturnsthecapitaltothelender。Asconcernsthetransactionbetweenthesetwo-andasidefromtheinterestforthepresent——asconcernsthemovementoftheloanedcapitalbetweenlenderandborrower，therefore，thetwoacts(separatedbyalongerorshortertimeinterval，duringwhichtheactualreproductionprocessofthecapitaltakesplace)embracetheentiremovement。Andthismovement，disposingonconditionofreturning，constitutespersethemovementoflendingandborrowing，thatspecificformofconditionallyalienatingmoneyorcommodities。

Thecharacteristicmovementofcapitalingeneral，thereturnofthemoneytothecapitalist，i。e。，thereturnofcapitaltoitspointofdeparture，assumesinthecaseofinterest-bearingcapitalawhollyexternalappearance，separatedfromtheactualmovement，ofwhichitisaform。Agivesawayhismoneynotasmoney，butascapital。Notransformationoccursinthecapital。Itmerelychangeshands。ItsrealtransformationintocapitaldoesnottakeplaceuntilitisinthehandsofB。ButforAitbecomescapitalassoonashegivesittoB。TheactualrefluxofcapitalfromtheprocessesofproductionandcirculationtakesplaceonlyforB。ButforAtherefluxassumesthesameformasthealienation。ThecapitalreturnsfromBtoA。Givingaway，i。e。，loaningmoneyforacertaintimeandreceivingitbackwithinterest(surplus-value)isthecompleteformofthemovementpeculiartointerest-bearingcapitalassuch。

Theactualmovementofloanedmoneyascapitalisanoperationlyingoutsidethetransactionsbetweenlenderandborrower。Inthesetheintermediateactisobliterated，invisible，notdirectlyincluded。Aspecialsortofcommodity，capitalhasitsownpeculiarmodeofalienation。Neitherdoesitsreturn，therefore，expressitselfastheconsequenceandresult，ofsomedefiniteseriesofeconomicprocesses，butastheeffectofaspecificlegalagreementbetweenbuyerandseller。Thetimeofreturndependsontheprogressoftheprocessofreproduction；inthecaseofinterest-bearingcapital，itsreturnascapitalseemstodependonthemereagreementbetweenlenderandborrower。Sothatinregardtothistransactionthereturnofcapitalnolongerappearsasaresultarisingoutoftheprocessofreproduction；itappearsasiftheloanedcapitalneverlosttheformofmoney。Tobesure，thesetransactionsarereallydeterminedbytheactualreproductivereturns。Butthisisnotevidentinthetransactionitself。

Norisitbyanymeansalwaysthecaseinpractice。IftheactualreturndoesnottakeplaceindueLime，theborrowermustlookforotherresourcestomeethisobligationsvis-à；-visthelender。Thebareformofcapital——moneyexpendedasacertainsum，A，whichreturnsassumA+1/XAafteragivenlapseoftimewithoutanyotherintermediateactsavethislapseoftime——isonlyameaninglessformoftheactualmovementofcapital。

Intheactualmovementofcapitalitsreturnisaphaseintheprocessofcirculation。Themoneyisfirstconvertedintomeansofproduction；

productiontransformsthemintocommodities；throughsaleofthecommoditiestheyarereconvertedintomoneyandreturninthisformintothehandsofthecapitalistwhohadoriginallyadvancedthecapitalintheformofmoney。Butinthecaseofinterest-bearingcapital，thereturn，likealienation，istheresultofalegaltransactionbetweentheownerofthecapitalandasecondparty。Weseeonlythealienationandthereturnpayment。Whateverpassesintheinterimisobliterated。

Butsincemoneyadvancedascapitalhasthepropertyofreturningtothepersonwhoadvancedit，totheonewhoexpendeditascapital，andsinceM——C——M’istheimmanentformofthemovementofcapital，theownerofthemoneycan，forthisveryreason，loanitoutascapital，assomethingthathasthepropertyofreturningtoitspointofdeparture，ofpreserving，andincreasing，itsvalueinthecourseofitsmovement。

Hegivesitawayascapital，becauseitreturnstoitspointofdepartureafterhavingbeenemployedascapital，hencecanberestoredbytheborrowerafteracertainperiodpreciselybecauseithascomebacktohim。

Loaningmoneyascapital——itsalienationontheconditionofitbeingreturnedafteracertaintime-presupposes，therefore，thatitwillbeactuallyemployedascapital，andthatitactuallyflowsbacktoitsstarting-point。

Therealcyclemadebymoneyascapitalis，therefore，thepremiseforthelegaltransactionbywhichtheborrowermustreturnthemoneytothelender。Iftheborrowerdoesnotusethemoneyascapital，thatishisownbusiness。Thelenderloansitascapital，andassuchitissupposedtoperformthefunctionsofcapital，whichincludethecircuitofmoney-capitaluntilitreturnstoitsstarting-pointintheformofmoney。

Theactsofcirculation，M——CandC——M’，inwhichacertainamountofvaluefunctionsasmoneyorcommodities，arebutintermediateprocesses，merephasesofthetotalmovement。Ascapital，itperformstheentiremovementM——M’。Itisadvancedasmoneyorasumofvaluesinoneformoranother，andreturnsasasumofvalues。Thelenderofmoneydoesnotexpenditinpurchasingcommodities，or，ifthissumofvaluesisincommodity-form，doesnotsellitformoney。Headvancesitascapital，asM——M’，asavalue，whichreturnstoitspointofdepartureafteracertainterm。Helendsinsteadofbuyingorselling。Thislending，therefore，istheappropriateformofalienatingvalueascapital，insteadofalienatingitasmoneyorcommodities。Itdoesnotfollow，however，thatlendingcannotalsotaketheformoftransactionswhichhavenothingtodowiththecapitalistprocessofreproduction。

Wehavesofaronlyconsideredthemovementsofloanedcapitalbetweenitsownerandtheindustrialcapitalist。Nowwemustinquireintointerest。

Thelenderexpendshismoneyascapital；theamountofvalue，whichherelinquishestoanother，iscapital，andconsequentlyreturnstohim。

Butthemerereturnofitwouldnotbetherefluxoftheloanedsumofvalueascapital，butmerelythereturnofaloanedsumofvalue。

Toreturnascapital，theadvancedsumofvaluemustnotonlybepreservedinthemovementbutmustalsoexpand，mustincreaseinvalue，i。e。，mustreturnwithasurplus-value，asM+DM，thelatterbeinginterestoraportionoftheaverageprofit，whichdoesnotremaininthehandsoftheoperatingcapitalist，butfallstotheshareofthemoney-capitalist。

ThefactthatthelatterhasrelinquisheditascapitalimpliesthatitmustberestoredtohimasM+DM。Later，weshallalsohavetoturnourattentiontotheforminwhichinterestispaidinthemeantimeatfixedintervals，butwithoutthecapital，whosereturnfollowsattheendofalengthyperiod。

Whatdoesthemoney-capitalistgivetotheborrower，theindustrialcapitalist？Whatdoeshereallyturnovertohim？Itisonlythisactofhandingovermoneywhichchangeslendingmoneyintoalienationofmoneyascapital，i。e。，alienationofcapitalasacommodity。

Itisonlybythisactofalienatingthatcapitalisloanedbythemoney-lenderasacommodity，orthatthecommodityathisdisposalisgiventoanotherascapital。

Whatisalienatedinanordinarysale？Notthevalueofthesoldcommodity，forthismerelychangesitsform。Thevalueexistsideallyinacommodityasitspricebeforeitactuallypassesasmoneyintothehandsoftheseller。

Thesamevalueandthesameamountofvaluemerelychangetheirform。Intheoneinstancetheyexistincommodity-form，intheotherintheformofmoney。Whatisreallyalienatedbytheseller，and，therefore，passesintotheindividualorproductiveconsumptionofthebuyer，istheuse-valueofthecommodity——thecommodityasause-value。

What，now，istheuse-valuewhichthemoney-capitalistgivesupfortheperiodoftheloanandrelinquishestotheproductivecapitalist——

theborrower？Itistheuse-valuewhichthemoneyacquiresbybeingcapableofbecomingcapital，ofperformingthefunctionsofcapital，andcreatingadefinitesurplus-value，theaverageprofit(whateverisaboveorbelowitappearshereasamereaccident)duringitsprocess，besidespreservingitsoriginalmagnitudeofvalue。Inthecaseoftheothercommoditiestheuse-valueisultimatelyconsumed。Theirsubstancedisappears，andwithittheirvalue。Incontrast，thecommodity-capitalispeculiarinthatitsvalueanduse-valuenotonlyremainintactbutalsoincrease，throughconsumptionofitsuse-value。

Itisthisuse-valueofmoneyascapital——thisfacultyofproducinganaverageprofit——whichthemoney-capitalistrelinquishestotheindustrialcapitalistfortheperiod，duringwhichheplacestheloanedcapitalatthelatter’sdisposal。

Moneythusloanedhasinthisrespectacertainsimilaritywithlabour-powerinitsrelationtotheindustrialcapitalist。Withthedifferencethatthelatterpaysforthevalueoflabour-power，whereashesimplypaysbackthevalueoftheloanedcapital。Theuse-valueoflabour-powerfortheindustrialcapitalististhatlabour-powercreatesmorevalue(profit)

initsconsumptionthanitpossessesitself，andthanitcosts。Thisadditionalvalueisuse-valuefortheindustrialcapitalist。Andinlikemannertheuse-valueofloanedcapitalappearsasitsfacultyofbegettingandincreasingvalue。

Themoney-capitalist，infact，alienatesause-value，andthuswhateverhegivesawayisgivenasacommodity。Itistothisextentthattheanalogywithacommodityperseiscomplete。Inthefirstplace，itisavaluewhichpassesfromonehandtoanother。Inthecaseofanordinarycommodity，acommodityassuch，thesamevalueremainsinthehandsofthebuyerandseller，onlyindifferentforms；bothhavethesamevaluewhichtheyhadbeforethetransaction，andwhichtheyhadalienated——

theoneintheformofacommodity，theotherintheformofmoney。Thedifferenceisthatinaloanthemoney-capitalististheonlyoneinthetransactionwhogivesawayvalue；buthepreservesitthroughtheprospectivereturn。Intheloantransactionjustonepartyreceivesvalue，sinceonlyonepartyrelinquishesvalue——Inthesecondplace，arealuse-valueisrelinquishedontheoneside，andreceivedandconsumedontheother。

Butincontrasttoordinarycommoditiesthisuse-valueisvalueinitself，namelytheexcessovertheoriginalvaluerealisedthroughtheuseofmoneyascapital。Theprofitisthisuse-value。

Theuse-valueoftheloanedmoneyliesinitsbeingabletoserveascapitaland，assuch，toproducetheaverageprofitunderaverageconditions。[4]

What，now，doestheindustrialcapitalistpay，andwhatis，therefore，thepriceoftheloanedcapital？”Thatwhichmenpayasinterestfortheuseofwhattheyborrow”is，accordingtoMassie，”apartoftheprofititiscapableofproducing，”1。c。，p。49。[5]

Whatthebuyerofanordinarycommoditybuysisitsuse-value；whathepaysforisitsvalue。Whattheborrowerofmoneybuysislikewiseitsuse-valueascapital；butwhatdoeshepayfor？Surelynotitsprice，orvalue，asinthecaseofordinarycommodities。Nochangeofformoccursinthevaluepassingbetweenborrowerandlender，asoccursbetweenbuyerandsellerwhenitexistsinoneinstanceintheformofmoney，andinanotherintheformofacommodity。Thesamenessofthealienatedandreturnedvalueisrevealedhereinanentirelydifferentway。Thesumofvalue，i。e。，themoney，isgivenawaywithoutanequivalent，andisreturnedafteracertainperiod。Thelenderalwaysremainstheownerofthesamevalue，evenafteritpassesfromhishandsintothoseoftheborrower。

Inanordinaryexchangeofcommoditiesmoneyalwayscomesfromthebuyer’sside；butinaloanitcomesfromthesideoftheseller。Heistheonewhogivesawaymoneyforacertainperiod，andthebuyerofcapitalistheonewhoreceivesitasacommodity。Butthisisonlypossibleaslongasthemoneyactsascapitalandisthereforeadvanced。Theborrowerborrowsmoneyascapital，asavalueproducingmorevalue。Butatthemomentwhenitisadvanceditisstillonlypotentialcapital，likeanyothercapitalatitsstarting-point，themomentitisadvanced。Itisonlythroughitsemploymentthatitexpandsitsvalueandrealisesitselfascapital。However，ithastobereturnedbytheborrowerasrealisedcapital，henceasvalueplussurplus-value(interest)。Andthelattercanonlybeaportionoftherealisedprofit。Onlyaportion，notallofit。Fortheuse-valueoftheloanedcapitaltotheborrowerconsistsinproducingprofitforhim。Otherwisetherewouldnothavebeenanyalienationofuse-valueonthelender’spart。Ontheotherhand，notalltheprofitcanfalltotheborrower’sshare。Otherwisehewouldpaynothingforthealienateduse-value，andwouldreturntheadvancedmoneytothelenderasordinarymoney，notascapital，asrealisedcapital，foritisrealisedcapitalonlyasM+DM。

Bothofthem，lenderandborrower，expendthesamesumofmoneyascapital。

Butitisonlyinthehandsofthelatterthatitservesascapital。Theprofitisnotdoubledbythedoubleexistenceofthesamesumofmoneyascapitalfortwopersons。Itcanserveascapitalforbothofthemonlybydividingtheprofit。Theportionwhichfallstothelenderiscalledinterest。

Theentiretransaction，asassumed，takesplacebetweentwokindsofcapitalists——themoney-capitalistandtheindustrialormerchantcapitalist。

Itmustalwaysbeborneinmindthatherecapitalascapitalisacommodity，orthatthecommodityherediscussediscapital。Alltherelationsinevidenceherewouldthereforebeirrationalfromthestandpointofanordinarycommodity，orfromthatofcapitalinsofarasitactsasacommodity-capitalintheprocessofreproduction。Lendingandborrowing，insteadofsellingandbuying，isadistinctionwhichherespringsfromthespecificnatureofthecommodity——capital。Similarly，thefactthatitisinterest，notthepriceofthecommodity，whichispaidhere。Ifwewanttocallinterestthepriceofmoney-capital，thenitisanirrationalformofpricequiteatvariancewiththeconceptionofthepriceofcommodities。[6]Thepriceisherereducedtoitspurelyabstractandmeaninglessform，signifyingthatitisacertainsumofmoneypaidforsomethingservinginonewayoranotherasause-value；whereastheconceptionofpricereallysignifiesthevalueofsomeuse-valueexpressedinmoney。

Interest，signifyingthepriceofcapital，isfromtheoutsetquiteanirrationalexpression。Thecommodityinquestionhasadoublevalue，firstavalue，andthenapricedifferentfromthisvalue，whilepricerepresentstheexpressionofvalueinmoney。Money-capitalisnothingbutasumofmoney，orthevalueofacertainquantityofcommoditiesfixedinasumofmoney。Ifacommodityisloanedoutascapital，itisonlyadisguisedformofasumofmoney。Becausewhatisloanedoutascapitalisnotsoandsomanypoundsofcotton，butsomuchandsomuchmoneyexistingintheformofcottonasitsvalue。Thepriceofcapital，therefore，referstoitastoasumofmoney，evenifnotcurrency，asMr。Torrensthinks(seeFootnote59)。How，then，canasumofvaluehaveapricebesidesitsownprice，besidesthepriceexpressedinitsownmoney-form？Price，afterall，isthevalueofacommodity(thisisalsotrueofthemarket-price，whosedifferencefromvalueisnotoneofquality，butonlyoneofquantity，referringonlytothemagnitudeofvalue)asdistinctfromitsuse-value。

Apricewhichdiffersfromvalueinqualityisanabsurdcontradiction。[7]

Capitalmanifestsitselfascapitalthroughself-expansion。Thedegreeofitsself-expansionexpressesthequantitativedegreeinwhichitrealisesitselfascapital。Thesurplus-valueorprofitproducedbyit——itsrateormagnitude——ismeasurableonlybycomparisonwiththevalueoftheadvancedcapital。Thegreaterorlesserself-expansionofinterest-bearingcapitalis，therefore，likewiseonlymeasurablebycomparingtheamountofinterest，itsshareinthetotalprofits，withthevalueoftheadvancedcapital。If，therefore，priceexpressesthevalueofthecommodity，theninterestexpressestheself-expansionofmoney-capitalandthusappearsasthepricepaidforittothelender。Thisshowshowabsurditisfromtheveryfirsttoapplyheretothesimplerelationsofexchangethroughthemediumofmoneyinbuyingandselling，asProudhondoes。Thebasicpremiseispreciselythatmoneyfunctionsascapitalandmaythusbetransferredassuch，i。e。，aspotentialcapital，toathirdperson。

Capital，however，appearshereasacommodity，inasmuchasitisofferedonthemarket，andtheuse-valueofmoneyisactuallyalienatedascapital。

Itsuse-value，however，liesinproducingprofit。Thevalueofmoneyorofcommoditiesemployedascapitaldoesnotdependontheirvalueasmoneyorascommodities，butonthequantityofsurplus-valuetheyproducefortheirowner。Theproductofcapitalisprofit。Onthebasisofcapitalistproductionitismerelyadifferentuseofmoney——whetheritisexpendedasmoney；oradvancedascapital。Money，orcommodities，areinthemselvespotentiallycapital，justaslabour-powerispotentialcapital。Because，1)moneymaybeconvertedintoelementsofproductionandis，asis，merelyanabstractexpressionofthem——theirexistenceasvalue；2)thematerialelementsofwealthhavethepropertyofpotentiallybecomingcapital，becausetheirsupplementaryopposite，whichmakesthemintocapital，namelywage-labour，isavailableonthebasisofcapitalistproduction。

Thecontradictorysocialfeaturesofmaterialwealth——itsantagonismtolabouraswage-labour——areexpressedincapitalistpropertyassuchindependentlyoftheproductionprocess。Thisparticularfact，setapartfromtheprocessofcapitalistproductionitself，fromwhichitconstantlyresultsandaswhoseconstantresultitservesasaconstantprerequisite，expressesitselfinthatmoneyandcommoditiesalikearelatent，potential，capital，sothattheymaybesoldascapital，andinthattheycaninthisformcommandthelabourofothersbestowingaclaimtoappropriatethelabourofothers，andthereforerepresentself-expandingvalues。Italsobecomesclearlyapparentthatthisrelationship，andnotthelabourofferedasanequivalentonthepartofthecapitalist，suppliesthetitleandthemeanstoappropriatethelabourofothers。

Furthermore，capitalappearsasacommodity，inasmuchasthedivisionofprofitintointerestandprofitproperisregulatedbysupplyanddemand，thatis，bycompetition，justasthemarket-pricesofcommodities。Butthedifferencehereisjustasapparentastheanalogy。Ifsupplyanddemandcoincide，themarket-priceofcommoditiescorrespondstotheirpriceofproduction，i。e。，theirpricethenappearstoberegulatedbytheimmanentlawsofcapitalistproduction，independentlyofcompetition，sincethefluctuationsofsupplyanddemandexplainnothingbutdeviationsofmarket-pricesfrompricesofproduction。Thesedeviationsmutuallybalanceoneanother，sothatinthecourseofcertainlongerperiodstheaveragemarket-pricesequalthepricesofproduction。Assoonassupplyanddemandcoincide，theseforcesceasetooperate，i。e。，compensateoneanother，andthegenerallawdeterminingpricesthenalsocomestoapplytoindividualcases。Themarket-pricethencorrespondseveninitsimmediateform，andnotonlyastheaverageofmarket-pricemovements，tothepriceofproduction，whichisregulatedbytheimmanentlawsofthemodeofproductionitself。

Thesameappliestowages。Ifsupplyanddemandcoincide，theyneutraliseeachother’seffect，andwagesequalthevalueoflabour-power。Butitisdifferentwiththeinterestonmoney-capital。Competitiondoesnot，inthiscase，determinethedeviationsfromtherule。Thereisrathernolawofdivisionexceptthatenforcedbycompetition，because，asweshalllatersee，nosuchthingasa”natural”rateofinterestexists。Bythenaturalrateofinterestpeoplemerelymeantheratefixedbyfreecompetition。

Thereareno”natural”limitsfortherateofinterest。Whenevercompetitiondoesnotmerelydeterminethedeviationsandfluctuations，whenever，therefore，theneutralisationofopposingforcesputsastoptoanyandalldetermination，thethingtobedeterminedbecomessomethingarbitraryandlawless。Moreonthisinthenextchapter。

Inthecaseofinterest-bearingcapitaleverythingappearssuperficial:

theadvanceofcapitalasmeretransferfromlendertoborrower；therefluxofrealisedcapitalasmeretransferback，asareturnpaymentwithinterest，byborrowertolender。Thesameistrueofthefact，immanentinthecapitalistmodeofproduction，thattherateofprofitisnotonlydeterminedbytherelationofprofitmadeinonesingleturnovertoadvancedcapital-value，butalsobythelengthofthisperiodofturnover，hencedeterminedasprofityieldedbyindustrialcapitalwithindefinitespansoftime。Inthecaseofinterest-bearingcapitalthislikewiseappearsonthesurfacetomeanthatadefiniteinterestispaidtothelenderforadefinitetimespan。

Withhisusualinsightintotheinternalconnectionofthings，theromanticAdamMü；llersays(ElementederStaatskunst，Berlin，1809，DritterTheil，S。138)；”Indeterminingthepricesofthings，timeisnotconsidered；

whileindetermininginterest，timeistheprincipalfactor。”Hedoesnotseehowthetimeofproductionandthetimeofcirculationenterintothedeterminationofcommodity-prices，andhowthisisjustwhatdeterminestherateofprofitforagivenperiodofturnoverofcapital，whereasinterestisdeterminedbypreciselythisdeterminationofprofitforagivenperiod。

Hissagacityhere，aselsewhere，consistsinobservingthecloudsofdustonthesurfaceandpresumptuouslydeclaringthisdusttobesomethingmysteriousandimportant。

FOOTNOTES[1]Atthispointcertainpassagesmaybequoted，inwhichtheeconomistssoconceivethematter——”You(theBankofEngland)areverylargedealersinthecommodityofcapital？”isthequestionposedtoadirectorofthisbankwhenhewasinterrogatedfortheReportonBankActsonthewitnessstand。(H。ofC。1857，p。404。)

[2]”Thatamanwhoborrowsmoneywithaviewofmakingaprofitbyit，shouldgivesomeportionofhisprofittothelender，isaself-evidentprincipleofnaturaljustice。”(Gilbart，TheHistoryandPrinciplesofBanking，London，1834，p。463。)

[3]”Ahouse，””money，”etc。，arenottobeloanedas”capital”ifProudhonistohavehisway，butaretobesoldas”commodities……cost-price”(p。

44)。LutherstoodsomewhataboveProudhon。Heknewthatprofit-makingdoesnotdependonthemanneroflendingorbuying:”Theyturnbuyingalsointousury。Butthisisreallytoomuchtobiteoffatonce。Wemustfirstconfineourselvestoonething，usuryinlending，andafterwehavestoppedthat(afterjudgement-day)，weshallnotfailtopreachagainstusuryinbuying。”(MartinLuther，AndiePfarherrnwiderdenWucherzupredigen，Wittenberg，1540。)

[4]”Theequitablenessoftakinginterestdependsnotuponaman’smakingornotmakingprofit，butuponits”(theborrowed)”beingcapableofproducingprofitifrightlyemployed”。(AnEssayontheGoverningCausesoftheNaturalRateofInterest，whereinthesentimentsofSirW。PettyandMr。

Locke，onthathead，areconsidered，London，1750，p。49。TheauthorofthisanonymousworkisJ。Massie。)

[5]”Richpeople，insteadofemployingtheirmoneythemselves……letitouttootherpeopleforthemtomakeprofitof，reservingfortheownersaproportionoftheprofitssomade”(l。c。，pp。23-24)。

[6]”Theterm’value，’whenappliedtocurrency，hasthreeseveralmeanings……

2)currency，actuallyinhand……comparedwiththesameamountofcurrencytobereceiveduponafutureday。Inthiscasethevalueofcurrencyismeasuredbytherateofinterest，andtherateofinterestbeingdeterminedbytheratiobetweentheamountofliablecapitalandthedemandforit。”

(ColonelR。Torrens，OntheOperationoftheBankCharterActof1844，etc。，2nded。，1847，pp。5，6。)

[7]”Theambiguityoftheterm’valueofmoney’orofthecurrency，whenemployedindiscriminatelyasitis，tosignifybothvalueinexchangeforcommoditiesandvalueinuseofcapital，isaconstantsourceofconfusion。”(Tooke，InquiryintotheCurrencyPrinciple，p。77。)Themainconfusion(impliedinthematteritself)thatvalueassuch(interest)becomestheuse-valueofcapital，hasescapedTooke。

Capital，Vol。3，Chapter22KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartV

DIVISIONOFPROFITINTOINTERESTANDPROFIT

OFENTERPRISE。

INTEREST-BEARINGCAPITALCHAPTER22

DivisionofProfit。RateofInterest。

NaturalRateofInterest。

Thesubjectofthischapter，likealltheotherphenomenaofcreditweshallcomeacrosslateron，cannotbeanalysedhereindetail。Thecompetitionbetweenlendersandborrowersandtheresultantminorfluctuationsofthemoney-marketfalloutsidethescopeofourinquiry。Thecircuitdescribedbytherateofinterestduringtheindustrialcyclerequiresforitspresentationtheanalysisofthiscycleitself，butthislikewisecannotbegivenhere。

Thesameappliestothegreaterorlesserapproximateequalisationoftherateofinterestintheworld-market。Wearehereconcernedwiththeindependentformofinterest-bearingcapitalandtheindividualisationofinterest，asdistinctfromprofit。

Sinceinterestismerelyapartofprofitpaid，accordingtoourearlierassumption，bytheindustrialcapitalisttothemoney-capitalist，themaximumlimitofinterestistheprofititself，inwhichcasetheportionpocketedbytheproductivecapitalistwould=0。Asidefromexceptionalcases，inwhichinterestmightactuallybelargerthanprofit，butthencouldnotbepaidoutoftheprofit，onemightconsiderasthemaximumlimitofinterestthetotalprofitminustheportion(tobesubsequentlyanalysed)whichresolvesitselfintowagesofsuperintendence。Theminimumlimitofinterestisaltogetherindeterminable。Itmayfalltoanylow。Yetinthatcasetherewillalwaysbecounteractinginfluencestoraiseitagainabovethisrelativeminimum。”Therelationbetweenthesumpaidfortheuseofcapitalandthecapitalexpressestherateofinterestasmeasuredinmoney。””Therateofinterestdepends1)ontherateofprofit；2)ontheproportioninwhichtheentireprofitisdividedbetweenthelenderandborrower。”(Economist，January22，1853。)”Ifthatwhichmenpayasinterestfortheuseofwhattheyborrow，beapartoftheprofitsitiscapableofproducing，thisinterestmustalwaysbegovernedbythoseprofits。”(Massie，1。c。，p。49。)

Letusfirstassumethatthereisafixedrelationbetweenthetotalprofitandthatpartofitwhichhastobepaidasinteresttothemoney-capitalist。

Itisthenclearthattheinterestwillriseorfallwiththetotalprofit，andthelatterisdeterminedbythegeneralrateofprofitanditsfluctuations。

Forinstance，iftheaveragerateofprofitwere=20%andtheinterest=1/4oftheprofit，therateofinterestwould=

5%；iftheaveragerateofprofitwere=16%，therateofinterestwould=4%。Withtherateofprofitat20%，therateofinterestmightriseto8%，andtheindustrialcapitalistwouldstillmakethesameprofitashewouldatarateofprofit=16%andarateofinterest=4%，namely12%。

Shouldinterestriseonlyto6%or7%，hewouldstillkeepalargershareoftheprofit。Iftheinterestamountedtoaconstantquotaoftheaverageprofit，itwouldfollowthatthehigherthegeneralrateofprofit，thegreatertheabsolutedifferencebetweenthetotalprofitandtheinterest，andthegreatertheportionofthetotalprofitpocketedbytheproductivecapitalist，andviceversa。Takeitthatinterest=1/5oftheaverageprofit。One-fifthof10is2；thedifferencebetweentotalprofitandinterest=8。One-fifthof20=4；difference=20-4=16；1/5of25=5；difference=25-5=20；1/5of30=6；difference=30-6=24；1/5of35=7；difference=35-7=28。Thedifferentratesofinterestof4，5，6，7%wouldherealwaysrepresentnomorethan1/5，or20%ofthetotalprofit。Iftheratesofprofitaredifferent，therefore，differentratesofinterestmayrepresentthesamealiquotpartsofthetotalprofit，orthesamepercentageofthetotalprofit。Withsuchconstantproportionsofinterest，theindustrialprofit(thedifferencebetweenthetotalprofitandtheinterest)wouldriseproportionatelytothegeneralrateofprofit，andconversely。

Allotherconditionstakenasequal，i。e。，assumingtheproportionbetweeninterestandtotalprofittobemoreorlessconstant，thefunctioningcapitalistisableandwillingtopayahigherorlowerinterestdirectlyproportionaltotheleveloftherateofprofit。[1]Sincewehaveseenthattherateofprofitisinverselyproportionaltothedevelopmentofcapitalistproduction，itfollowsthatthehigherorlowerrateofinterestinacountryisinthesameinverseproportiontothedegreeofindustrialdevelopment，atleastinsofarasthedifferenceintherateofinterestactuallyexpressesthedifferenceintheratesofprofit。Itshalllaterdevelopthatthisneednotalwaysbethecase。

Inthissenseitmaybesaidthatinterestisregulatedthroughprofit，or，moreprecisely，thegeneralrateofprofit。Andthismodeofregulatinginterestapplieseventoitsaverage。

Inanyeventtheaveragerateofprofitistoberegardedastheultimatedeterminantofthemaximumlimitofinterest。

Thefactthatinterestistoberelatedtoaverageprofitwillbeconsideredpresentlyatgreaterlength。Wheneveraspecifiedentity，suchasprofit，istobedividedbetweentwoparties，thematternaturallyhingesaboveallonthemagnitudeoftheentitywhichistobedivided，andthis，themagnitudeoftheprofit，isdeterminedbyitsaveragerate。Supposethegeneralrateofprofit，hencethemagnitudeofprofit，foracapitalofgivensize，say，=100，isassumedasgiven。Thenthevariationsofinterestwillobviouslybeinverselyproportionaltothoseofthepartofprofitremaininginthehandsoftheproducingcapitalist，workingwithaborrowedcapital。Andthecircumstancesdeterminingtheamountofprofittobedistributed，ofthevalueproducedbyunpaidlabour，differwidelyfromthosewhichdetermineitsdistributionbetweenthesetwokindsofcapitalists，andfrequentlyproduceentirelyoppositeeffects。[2]

Ifweobservethecyclesinwhichmodernindustrymoves——stateofinactivity，mountingrevival，prosperity，over-production，crisis，stagnation，stateofinactivity，etc。，whichfallbeyondthescopeofouranalysis——weshallfindthatalowrateofinterestgenerallycorrespondstoperiodsofprosperityorextraprofit，ariseininterestseparatesprosperityanditsreverse，andamaximumofinterestuptoapointofextremeusurycorrespondstotheperiodofcrisis。[3]Thesummerof1843usheredinaperiodofremarkableprosperity；therateofinterest，still41/2%inthespringof1842，fellto2%inthespringandsummerof1843；[4]inSeptemberitfellaslowas11/2%(Gilbart，I，p。166)；whereuponitroseto8%andhigherduringthecrisisof1847。

Itispossible，however，forlowinteresttogoalongwithstagnation，andformoderatelyrisinginteresttogoalongwithrevivedactivity。

Therateofinterestreachesitspeakduringcrises，whenmoneyisborrowedatanycosttomeetpayments。Sinceariseininterestimpliesafallinthepriceofsecurities，thissimultaneouslyoffersafineopportunitytopeoplewithavailablemoney-capital，toacquireatridiculouslylowpricessuchinterest-bearingsecuritiesasmust，inthecourseofthings，atleastregaintheiraveragepriceassoonastherateofinterestfallsagain。[5]

However，therateofinterestalsohasatendencytofallquiteindependentlyofthefluctuationsintherateofprofit。And，indeed，duetotwomaincauses:

I。”Wereweeventosupposethatcapitalwasneverborrowedwithanyviewbuttoproductiveemployment，Ithinkitverypossiblethatinterestmightvarywithoutanychangeintherateofgrossprofits。For，asanationadvancesinthecareerofwealth，aclassofmenspringsupandincreasesmoreandmore，whobythelaboursoftheirancestorsfindthemselvesinthepossessionoffundssufficientlyampletoaffordahandsomemaintenancefromtheinterestalone。Verymanyalsowhoduringyouthandmiddleagewereactivelyengagedinbusiness，retireintheirlatterdays’tolivequietlyontheinterestofthesumstheyhavethemselvesaccumulated。Thisclass，aswellastheformer，hasatendencytoincreasewiththeincreasingrichesofthecountry，forthosewhobeginwithatolerablestockarelikelytomakeanindependencesoonerthantheywhocommencewithlittle。Thusitcomestopass，thatinoldandrichcountries，theamountofnationalcapitalbelongingtothosewhoareunwillingtotakethetroubleofemployingitthemselves，bearsalargerproportiontothewholeproductivestockofthesociety，thaninnewlysettledandpoorerdistricts。Howmuchmorenumerousinproportiontothepopulationistheclassofrentiers……

inEngland！Astheclassofrentiersincreases，soalsodoesthatoflendersofcapital，fortheyareoneandthesame。”(Ramsay，AnEssayontheDistributionofWealth，pp。201-02。)

II。Thedevelopmentofthecreditsystemandtheattendantever-growingcontrolofindustrialistsandmerchantsoverthemoneysavingsofallclassesofsocietythatiseffectedthroughthebankers，andtheprogressiveconcentrationofthesesavingsinamountswhichcanserveasmoney-capital，mustalsodepresstherateofinterest。Moreaboutthislater。

Withreferencetothedeterminationoftherateofinterest，Ramsaysaysthatit”dependspartlyupontherateofgrossprofits，partlyontheproportioninwhichtheseareseparatedintoprofitsofcapitalandthoseofenterprise。Thisproportionagaindependsuponthecompetitionbetweenthelendersofcapitalandtheborrowers；whichcompetitionisinfluenced，thoughbynomeansentirelyregulated，bytherateofgrossprofitexpectedtoberealised。[6]Andthereasonwhycompetitionisnotexclusivelyregulatedbythiscause，is，becauseontheonehandmanyborrowwithoutanyviewtoproductiveemployment；and，ontheother，becausetheproportionofthewholecapitaltobelent，varieswiththerichesofthecountryindependentlyofanychangeingrossprofits。”(Ramsay，1。c。，pp。206-07。)

Todeterminetheaveragerateofinterestwemust1)calculatetheaveragerateofinterestduringitsvariationsinthemajorindustrialcycles；

and2)findtherateofinterestforinvestmentswhichrequirelong-termloansofcapital。

Theaveragerateofinterestprevailinginacertaincountry——asdistinctfromthecontinuallyfluctuatingmarketrates——cannotbedeterminedbyanylaw。Inthisspherethereisnosuchthingasanaturalrateofinterestinthesenseinwhicheconomistsspeakofanaturalrateofprofitandanaturalrateofwages。Massiehasrightlysaidinthisrespect(p。49):”Theonlythingwhichanymancanbeindoubtaboutonthisoccasion，is，whatproportionoftheseprofitsdoofrightbelongtotheborrower，andwhattothelender；andthisthereisnoothermethodofdeterminingthanbytheopinionsofborrowersandlendersingeneral；forrightandwrong，inthisrespect，areonlywhatcommonconsentmakesso。”Equatingsupplyanddemand——assumingtheaveragerateofprofitasgiven——meansnothing。

Whereverelsethisformulaisresortedto(andthisisthenpracticallycorrect)，itservesasaformulatofindthefundamentalrule(theregulatinglimitsorlimitingmagnitudes)whichisindependentof，andratherdetermines，competition；notablyasaformulaforthosewhoareheldcaptivebythepracticeofcompetition，andbyitsphenomenaandtheconceptionsarisingoutofthem，toarriveatwhatisagainbutasuperficialideaoftheinnerconnectionofeconomicrelationsobtainingwithincompetition。Itisamethodtopassfromthevariationsthatgowithcompetitiontothelimitsofthesevariations。Thisisnotthecasewiththeaveragerateofinterest。

Thereisnogoodreasonwhyaverageconditionsofcompetition，thebalancebetweenlenderandborrower，shouldgivethelenderaninterestrateof3，4，5%，etc。，orelseacertainpercentageofthegrossprofits，say20%or50%，onhiscapital。Whereveritiscompetitionassuchwhichdeterminesanything，thedeterminationisaccidental，purelyempirical，andonlypedantryorfantasywouldseektorepresentthisaccidentasanecessity。[7]NothingismoreamusinginthereportsofParliamentfor1857and1858

concerningbanklegislationandcommercialcrisesthantohearof”therealrateproduced”asthedirectorsoftheBankofEngland，Londonbankers，countrybankers，andprofessionaltheoristschatterbackandforth，nevergettingbeyondsuchcommonplacesasthat”thepricepaidfortheuseofloanablecapitalshouldvarywiththesupplyofsuchcapital，”that”ahighrateandalowprofitcannotpermanentlyexist，”andsimilarspeciousplatitudes。[8]Customs，juristictradition，etc。，haveasmuchtodowithdeterminingtheaveragerateofinterestascompetitionitself，insofarasitexistsnotmerelyasanaverage，butratherasactualmagnitude。Inmanylawdisputes，whereinteresthastobecalculated，anaveragerateofinteresthastobeassumedasthelegalrate。Ifweinquirefurtherastowhythelimitsofameanrateofinterestcannotbededucedfromgenerallaws，wefindtheanswerliessimplyinthenatureofinterest。Itismerelyapartoftheaverageprofit。Thesamecapitalappearsintworoles-asloanablecapitalinthelender’shandsandasindustrial，orcommercial，capitalinthehandsofthefunctioningcapitalist。Butitfunctionsjustonce，andproducesprofitjustonce。Intheproductionprocessitselfthenatureofcapitalasloanablecapitalplaysnorole。Howthetwopartieswhohaveclaimtoitdividetheprofitisinitselfjustaspurelyempiricalamatterbelongingtotherealmofaccidentasthedistributionofpercentagesharesofacommonprofitinabusinesspartnership。Twoentirelydifferentelements——labour-powerandcapital——actasdeterminantsinthedivisionbetweensurplus-valueandwages，whichdivisionessentiallydeterminestherateofprofit；thesearefunctionsoftwoindependentvariables，whichlimitoneanother；anditistheirqualitativedifferencethatisthesourceofthequantitativedivisionoftheproducedvalue。Weshallseelaterthatthesameoccursinthesplittingofsurplus-valueintorentandprofit。Nothingofthekindoccursinthecaseofinterest。Herethequalitativedifferentiationasweshallpresentlysee，proceedsratherfromthepurelyquantitativedivisionofthesamesumofsurplus-value。

Itfollowsfromtheaforesaidthatthereisnosuchthingasa”natural”

rateofinterest。Butif，unlikethegeneralrateofprofit，thereisontheonehandnogenerallawtodeterminethelimitsoftheaverageinterest，oraveragerateofinterestasdistinctfromthecontinuallyfluctuatingmarketratesofinterest，becauseitismerelyaquestionofdividingthegrossprofitbetweentwoownersofcapitalunderdifferenttitle；ontheotherhand，therateofinterest——beittheaverageorthemarketrateprevalentineachparticularcase-appearsasauniform，definiteandtangiblemagnitudeinaquitedifferentwayfromthegeneralrateofprofit。[9]

Therateofinterestissimilarlyrelatedtotherateofprofitasthemarket-priceofacommodityistoitsvalue。Insofarastherateofinterestisdeterminedbytherateofprofit，thisisalwaysthegeneralrateofprofitandnotanyspecificrateofprofitprevailinginsomeparticularbranchofindustry，andstilllessanyextraprofitwhichanindividualcapitalistmaymakeinaparticularsphereofbusiness。[10]Itisafact，therefore，thatthegeneralrateofprofitappearsasanempirical，givenrealityintheaveragerateofinterest，althoughthelatterisnotapureorreliableexpressionoftheformer。

Itisindeedtruethattherateofinterestitselfvariesinaccordancewiththedifferentclassesofsecuritiesofferedbyborrowers，andinaccordancewiththelengthoftimeforwhichthemoneyisborrowed；butitisuniformineachoftheseclassesatagivenmoment。Thisdistinction，then，doesnotmilitateagainstafixedanduniformappearanceoftherateofinterest。[11]

Theaveragerateofinterestappearsineverycountryoverfairlylongperiodsasaconstantmagnitude，becausethegeneralrateofprofitvariesonlyatlongerintervals——inspiteofconstantvariationsinspecificratesofprofit，inwhichachangeinonesphereisoffsetbyanoppositechangeinanother。Anditsrelativeconstancyisrevealedpreciselyinthismoreorlessconstantnatureoftheaverage，orcommon，rateofinterest。

Asconcernstheperpetuallyfluctuatingmarketrateofinterest，however，itexistsatanymomentasafixedmagnitude，justasthemarket-priceofcommodities，becauseinthemoney-marketallloanablecapitalcontinuallyfacesfunctioningcapitalasanaggregatemass，sothattherelationbetweenthesupplyofloanablecapitalononeside，andthedemandforitontheother，decidesthemarketlevelofinterestatanygiventime。Thisisallthemoreso，themorethedevelopment，andtheattendantconcentration，ofthecreditsystemgivestoloanablecapitalageneralsocialcharacterandthrowsitallatonceonthemoney-market。Ontheotherhand，thegeneralrateofprofitisneveranythingmorethanatendency，amovementtoequalisespecificratesofprofit。Thecompetitionbetweencapitalists——whichisitselfthismovementtowardequilibrium——consistshereoftheirgraduallywithdrawingcapitalfromspheresinwhichprofitisforanappreciablelengthoftimebelowaverage，andgraduallyinvestingcapitalintospheresinwhichprofitisaboveaverage。Oritmayalsoconsistinadditionalcapitaldistributingitselfgraduallyandinvaryingproportionsamongthesespheres。Itiscontinualvariationinsupplyandwithdrawalofcapitalinregardtothesedifferentspheres，andneverasimultaneousmasseffect，asinthedeterminationoftherateofinterest。

Wehaveseenthatinterest-bearingcapital，althoughacategorywhichdiffersabsolutelyfromacommodity，becomesacommoditysuigeneris，sothatinterestbecomesitsprice，fixedatalltimesbysupplyanddemandlikethemarket-priceofanordinarycommodity。Themarketrateofinterest，whilefluctuatingcontinually，appearsthereforeatanygivenmomentjustasconstantlyfixedanduniformasthemarket-priceofacommodityprevailingineachindividualcase。Money-capitalistssupplythiscommodity，andfunctioningcapitalistsbuyit，creatingthedemandforit。Thisdoesnotoccurwhenequalisationcreatesageneralrateofprofit。Ifpricesofcommoditiesinonespherearebeloworabovethepriceofproduction(whereinwedeliberatelyleaveasidethefluctuationsattendantuponthevariousphasesoftheindustrialcycleineachandeveryenterprise)thebalanceiseffectedthroughtheexpansionorcurtailmentofproduction，i。e。，theexpansionorcurtailmentofthemassesofcommoditiesthrownonthemarketbyindustrialcapitals——causedbyinfloworoutflowofcapitaltoandfromindividualspheresofproduction。Itisbythisequalisationoftheaveragemarket-pricesofcommoditiestopricesofproductionthatdeviationsofspecificratesofprofitfromthegeneral，oraverage，rateofprofitarecorrected。Itcannotbethatinthisprocessindustrialormercantilecapitalassuchshouldeverassumetheappearanceofcommoditiesvis-à；-visthebuyer，asinthecaseofinterest-bearingcapital。Ifperceptibleatall，thisprocessissoonlyinthefluctuationsandequalisationsofmarket-pricesofcommoditiestopricesofproduction，notasadirectfixationoftheaverageprofit。Thegeneralrateofprofitis，indeed，determined1)bythesurplus-valueproducedbythetotalcapital，2)bytheproportionofthissurplus-valuetothevalueofthetotalcapital，and3)bycompetition，butonlyinsofarasthisisamovementwherebycapitalsinvestedinparticularproductionspheresseektodrawequaldividendsoutofthissurplus-valueinproportiontotheirrelativemagnitudes。Thegeneralrateofprofit，therefore，derivesactuallyfromcausesfardifferentandfarmorecomplicatedthanthemarketrateofinterest，whichisdirectlyandimmediatelydeterminedbytheproportionbetweensupplyanddemand，andhenceisnotastangibleandobviousafactastherateofinterest。Theindividualratesofprofitinvariousspheresofproductionarethemselvesmoreorlessuncertain；

butinsofarastheyappear，itisnottheiruniformitybuttheirdifferenceswhichareperceptible。Thegeneralrateofprofit，however，appearsonlyasthelowestlimitofprofit，notasanempirical，directlyvisibleformoftheactualrateofprofit。

Inemphasisingthisdifferencebetweentherateofinterestandtherateofprofit，westillomitthefollowingtwopoints，whichfavourconsolidationoftherateofinterest:1)thehistoricalpre-existenceofinterest-bearingcapitalandtheexistenceofatraditionalgeneralrateofinterest；2)

thefargreaterdirectinfluenceexertedbytheworld-marketonestablishingtherateofinterest，irrespectiveoftheeconomicconditionsofacountry，ascomparedwithitsinfluenceontherateofprofit。

Theaverageprofitdoesnotobtainasadirectlyestablishedfact，butratheristobedeterminedasanendresultoftheequalisationofoppositefluctuations。Notsowiththerateofinterest。Itisathingfixeddailyinitsgeneral，atleastlocal，validity-athingwhichservesindustrialandmercantilecapitalsevenasaprerequisiteandafactorinthecalculationoftheiroperation。Itbecomesthegeneralendowmentofeverysumofmoneyof£；100toyield£；2，3，4，5。Meteorologicalreportsneverdenotethereadingsofthebarometerandthermometerwithgreateraccuracythanstockexchangereportsdenotetherateofinterest，notforoneoranothercapital，butforcapitalinthemoney-market，i。e。，forloanablecapitalgenerally。

Inthemoney-marketonlylendersandborrowersfaceoneanother。Thecommodityhasthesameform-money。Allspecificformsofcapitalinaccordancewithitsinvestmentinparticularspheresofproductionorcirculationarehereobliterated。Itexistsintheundifferentiatedhomogeneousformofindependentvalue-money。Thecompetitionofindividualspheresdoesnotaffectit。Theyareallthrowntogetherasborrowersofmoney，andcapitalconfrontsthemallinaform，inwhichitisasyetindifferenttotheprospectivemannerofitsinvestment。Itobtainsmostemphaticallyinthesupplyanddemandofcapitalasessentiallythecommoncapitalofaclass——somethingindustrialcapitaldoesonlyinthemovementandcompetitionofcapitalbetweenthevariousindividualspheres。Ontheotherhand，money-capitalinthemoney-marketactuallypossessestheform，inwhich，indifferenttoitsspecificemployment，itisdividedasacommonelementamongthevariousspheres，amongthecapitalistclass，astherequirementsofproductionineachindividualspheremaydictate。Moreover，withthedevelopmentoflarge-scaleindustrymoney-capital，sofarasitappearsonthemarket，isnotrepresentedbysomeindividualcapitalist，nottheownerofoneoranotherfractionofthecapitalinthemarket，butassumesthenatureofaconcentrated，organisedmass，which，quitedifferentfromactualproduction，issubjecttothecontrolofbankers，i。e。，therepresentativesofsocialcapital。Sothat，asconcernstheformofdemand，loanablecapitalisconfrontedbytheclassasawhole，whereasintheprovinceofsupplyitisloanablecapitalwhichobtainsenmasse。

Thesearesomeofthereasonswhythegeneralrateofprofitappearsblurredandhazyalongsidethedefiniteinterestrate，whichmayfluctuateinmagnitude，butalwaysconfrontsborrowersasgivenandfixedbecauseitvariesuniformlyforallofthem。Justasvariationsinthevalueofmoneydonotpreventitfromhavingthesamevaluevis-à；-visallcommodities。Justasthedailyfluctuationsinmarket-pricesofcommoditiesdonotpreventthemfrombeingdailyreportedinthepapers。Sotherateofinterestisregularlyreportedas”thepriceofmoney。”Itisso，becausecapitalitselfisbeingofferedhereintheformofmoneyasacommodity。

Thefixationofitspriceisthusafixationofitsmarket-price，aswithallothercommodities。Therateofinterest，therefore，alwaysappearsasthegeneralrateofinterest，assomuchmoneyforsomuchmoney，asadefinitequantity。Therateofprofit，ontheotherhand，mayvaryevenwithinthesamesphereforcommoditieswiththesameprice，dependingondifferentconditionsunderwhichdifferentcapitalsproducethesamecommodity，becausetherateofprofitofanindividualcapitalisnotdeterminedbythemarket-priceofacommodity，butratherbythedifferencebetweenmarket-priceandcost-price。Andthesedifferentratesofprofitcanstrikeabalance——firstwithinthesamesphereandthenbetweendifferentspheres——onlythroughcontinualfluctuation。

(Noteforlaterelaboration。)Aspecificformofcredit:Itisknownthatwhenmoneyservesasameansofpaymentinsteadofameansofpurchase，thecommodityisalienated，butitsvalueisrealisedonlylater。Ifpaymentisnotmadeuntilafterthecommodityhasagainbeensold，thissaledoesnotappearastheresultofthepurchase；ratheritisthroughthissalethatthepurchaseisrealised。Inotherwords，thesalebecomesameansofpurchase。Secondly:titlestodebts，billsofexchange，etc。，becomemeansofpaymentforthecreditor。Thirdly:thecompensationoftitlestodebtsreplacesmoney。

FOOTNOTES[1]”Thenaturalrateofinterestisgovernedbytheprofitsoftradetoparticulars。”

(Massie，l。c。，p。51。)

[2]Atthispointthemanuscriptcontainsthefollowingremark:”Thecourseofthischaptershowsthatitispreferable，beforeanalysingthelawsofthedistributionofprofits，toascertainfirstthewayinwhichthedivisionofquantitybecomesoneofquality。Tomakeatransitionfromthepreviouschapter，weneedbutassumethatinterestisacertainindefiniteportionofprofit。”

[3]”Inthefirstperiod，immediatelyafterpressure，moneyisabundantwithoutspeculation；inthesecondperiod，moneyisabundantandspeculationsabound；

inthethirdperiod，speculationbeginstodeclineandmoneyisindemand，inthefourthperiod，moneyisscarceandapressurearrives。”(Gilbart，APracticalTreatiseonBanking，5thed。，Vol。I，London，1849，p。149。)

[4]Tookeexplainsthis”bytheaccumulationofsurplus-capitalnecessarilyaccompanyingthescarcityofprofitableemploymentforitinpreviousyears，bythereleaseofhoards，andbytherevivalofconfidenceincommercialprospects。”(HistoryofPricesfrom1839till1847，London，1848，p。54。

[5]”Anoldcustomerofabankerwasrefusedaloanupona£；200，000bond；

whenabouttoleavetomakeknownhissuspensionofpayment，hewastoldtherewasnonecessityforthestep，underthecircumstancesthebankerwouldbuythebondat£；50，000。”([H。Roy]TheTheoryoftheExchanges。

TheBankCharterActof1844，etc。，London，1869，p。50。)

[6]Sincetherateofinterestisonthewholedeterminedbytheaveragerateofprofit，inordinateswindlingisoftenboundupwithalowrateofinterest。

Forinstance，therailwayswindleinthesummerof1844。TherateofinterestoftheBankofEnglandwasnotraisedto3%until16thOctober，1844。

[7]JG。Opdyke，forinstance，inhisTreatiseonPoliticalEconomy(NewYork，1851)makesaveryunsuccessfulattempttoexplaintheuniversalityofa5%rateofinterestbyeternallaws。Mr。KarlArndisstillmorenaiveinDienaturgemä；sseVolkswirtschaftgegenü；berdemMonopoltengeistunddemKommunismus，etc。，Hanau，1845。Itisstatedthere:”Inthenaturalcourseofgoodsproductionthereisjustonephenomenon，which，inthefullysettledcountries，seemsinsomemeasuretoregulatetherateofinterest；thisistheproportion，inwhichthetimberinEuropeanforestsisaugmentedthroughtheirannualgrowth。Thisnewgrowthoccursquiteindependentlyoftheirexchange-value，attherateof3or4to100。”

(Howqueerthattreesshouldseetotheirnewgrowthindependentlyoftheirexchange-value！)”Accordingtothisadropintherateofinterestbelowitspresentlevelintherichestcountriescannotbeexpected”(p。124)。

(Hemeans，becausethenewgrowthofthetreesisindependentoftheirexchange-value，howevermuchtheirexchange-valuemaydependontheirnewgrowth。)Thisdeservestobecalled”theprimordialforestrateofinterest。”

Itsdiscoverermakesafurtherlaudablecontributioninthisworkto”ourscience”asthe”philosopherofthedogtax。”[MarxironicallycallsK。

Arndthe”philosopherofthedogtax”becauseinaspecialparagraphinhisbook(§；88，5。420-24)headvocatedthattax——Ed。]

[8]TheBankofEnglandraisesandlowerstherateofitsdiscount，always，ofcourse，withdueconsiderationoftherateprevailingintheopenmarket，inaccordancewithimportsandexportsofgold。”Bywhichgamblingindiscounts，byanticipationofthealterationsinthebank-rate，hasnowbecomehalfthetradeofthegreatheadsofthemoneycentre”——i。e。，oftheLondonmoney-market。([H。Roy]TheTheoryoftheExchanges，etc。，p。113。)

[9]”’Thepriceofcommoditiesfluctuates’continually；theyareallmadefordifferentuses；themoneyservesforallpurposes。Thecommodities，eventhoseofthesamekind，differaccordingtoquality；cashmoneyisalwaysofthesamevalue，oratleastisassumedtobeso。Thusitisthatthepriceofmoney，whichwedesignatebytheterminterest，hasagreaterstabilityanduniformitythanthatofanyotherthing。”(J。Steuart，PrinciplesofPoliticalEconomy，Frenchtranslation，1789，IV，p。27。)

[10]”Thisruleofdividingprofitsisnot，however，tobeappliedparticularlytoeverylenderandborrower，buttolendersandborrowersingeneral……

remarkablygreatandsmallgainsaretherewardofskillandthewantofunderstanding，whichlendershavenothingatalltodowith；forastheywillnotsufferbytheone，theyoughtnottobenefitbytheother。Whathasbeensaidofparticularmeninthesamebusinessisapplicabletoparticularsortsofbusiness；ifthemerchantsandtradesmenemployedinanyonebranchoftradegetmorebywhattheyborrowthanthecommonprofitsmadebyothermerchantsandtradesmenofthesamecountry，theextraordinarygainistheirs，thoughitrequiredonlycommonskillandunderstandingtogetit；

andnotthelenders’，whosuppliedthemwithmoney……forthelenderswouldnothavelenttheirmoneytocarryonanybranchoftradeuponlowertermsthanwouldadmitofpayingsomuchasthecommonrateofinterest；andthereforetheyoughtnottoreceivemorethanthat，whateveradvantagesmaybemadebytheirmoney。”(Massie，1。c。，pp。50，51。)

[11]Bank-rate5%

Marketrateofdiscount，60days’drafts35/8%

Ditto，8months’31/2%

Ditto，6months’35/16%

Loanstobill-brokers，daytoday1to2%

Ditto，foroneweek3%

Lastrateforfortnight，loanstostockbrokers43/4to5%

Depositallowance(banks)31/2%

Ditto(discounthouses)3to31/4%

HowlargethisdifferencemaybeforoneandthesamedayisshownintheprecedingfiguresoftherateofinterestoftheLondonmoney-marketonDecember9，1889，takenfromtheCityarticleoftheDailyNewsofDecember10。

Theminimumis1%，themaximum5%。[F。E。]

Capital，Vol。3，Chapter23KarlMarxCAPITALVol。III

THEPROCESSOF

CAPITALISTPRODUCTIONASAWHOLEPartV

DIVISIONOFPROFITINTOINTERESTANDPROFIT

OFENTERPRISE。

INTEREST-BEARINGCAPITALCHAPTER23