Whereasduringthedeterminationofpricestheexchange—valueofallcommoditiesisnominallyturnedintoaquantityofgoldofthesamevalueandinthetwoseparatetransactions,M——CandC——M,thesamevalueexiststwice,ontheonehandintheshapeofcommoditiesandontheotherintheformofgold;yetgoldasamediumofcirculationisdeterminednotbyitsisolatedrelationtoindividualstaticcommodities,butbyitsdynamicexistenceinthefluidworldofcommodities。Thefunctionofgoldistorepresentthetransformationofcommoditiesbyitschangesofplace,inotherwordstoindicatethespeedoftheirtransformationbythespeedwithwhichitmovesfromonepointtoanother。Itsfunctionintheprocessasawholethusdeterminestheactualamountofgoldincirculation,ortheactualquantitywhichcirculates。
Commoditycirculationistheprerequisiteofmoneycirculation;money,moreover,circulatescommoditieswhichhaveprices,thatiscommoditieswhichhavealreadybeenequatednominallywithdefinitequantitiesofgold。
Thedeterminationofthepricesofcommoditiespresupposesthatthevalueofthequantityofgoldwhichservesasthestandardmeasure,orthevalueofgold,isgiven。Accordingtothisassumption,thequantityofgoldrequiredforcirculationisinthefirstplacedeterminedthereforebythesumofthecommodity—pricestoberealised。Thissum,however,isinitsturndeterminedbythefollowingfactors:1。thepricelevel,therelativemagnitudeoftheexchange—valuesofcommoditiesintermsofgold,and2。thequantityofcommoditiescirculatingatdefiniteprices,thatisthenumberofpurchasesandsalesatgivenprices。[2]Ifaquarterofwheatcosts60s。,thentwiceasmuchgoldisrequiredtocirculateitortorealiseitspriceaswouldberequiredifitcostonly30s。Twiceasmuchgoldisneededtocirculate500quartersat60s。asisneededtocirculate250quartersat60s。Finallyonlyhalfasmuchgoldisneededtocirculate10quartersat100s。asisneededtocirculate40quartersat50s。Itfollowsthereforethatthequantityofgoldrequiredforthecirculationofcommoditiescanfalldespiterisingprices,ifthemassofcommoditiesincirculationdecreasesfasterthanthetotalsumofpricesincreases,andconverselytheamountofmeansofcirculationcanincreasewhilethemassofcommoditiesincirculationdecreasesprovidedtheiraggregatepricesrisetoanevengreaterextent。ThusexcellentinvestigationscarriedoutingreatdetailbyEnglishmenhaveshownthatinEngland,forinstance,theamountofmoneyincirculationgrowsduringtheearlystagesofagrainshortage,becausetheaggregatepriceofthesmallersupplyofgrainislargerthanwastheaggregatepriceofthebiggersupplyofgrain,andforsometimetheothercommoditiescontinuetocirculateasbeforeattheiroldprices。Theamountofmoneyincirculationdecreases,however,atalaterstageofthegrainshortage,becausealongwiththegraineitherfewercommoditiesaresoldattheiroldprices,orthesameamountofcommoditiesissoldatlowerprices。
Butthequantityofmoneyincirculationis,aswehaveseen,determinednotonlybythesumofcommodity—pricestoberealised,butalsobythevelocitywithwhichmoneycirculates,i。e。,thespeedwithwhichthisrealisationofpricesisaccomplishedduringagivenperiod。Ifinonedayoneandthesamesovereignmakestenpurchaseseachconsistingofacommodityworthonesovereign,sothatitchangeshandstentimes,ittransactsthesameamountofbusinessastensovereignseachofwhichmakesonlyonecircuitaday。[3]Thevelocityofcirculationofgoldcanthusmakeupforitsquantity:
inotherwords,thestockofgoldincirculationisdeterminednotonlybygoldfunctioningasanequivalentalongsidecommodities,butalsobythefunctionitfulfilsinthemovementofthemetamorphosesofcommodities。