Capital III, Chapter 19 - Part 3

The money, used in all of these transactions, that comprise this process, may be either used as means of circulation, i.e. it is immediately handed over in exchange for some commodity, or else as a means of payment, i.e. it is a form of credit, payment for a commodity already bought, or as a pre-payment for one to be bought, or else to cover the outstanding balance between exchanges.

“In both cases the capitalist has to pay out money constantly to many persons, and to receive money continually from many persons. This purely technical operation of disbursing and receiving money is in itself labour which, as long as the money serves as a means of payment, necessitates drawing up payment balances and acts of balancing accounts. This labour is a cost of circulation, i.e., not labour creating value. It is shortened in being carried out by a special section of agents, or capitalists, for the rest of the capitalist class.” (p 316)

As well as all of the technical operations already mentioned, another function is the safe-keeping of money hoards. As with merchant's capital, it, therefore, becomes obvious that these costs of circulation can be reduced by concentrating their performance in the hands of a relatively small number of specialists, on the same basis of a division of labour, and the performance of these functions on a large scale.

“A further division of labour takes place within it, both through division into various independent branches, and through segmentation of work within these branches (large offices, numerous book-keepers and cashiers, and far-reaching division of labour). Paying and receiving money, settling accounts, keeping current accounts, storing money, etc. — all this, dissociated from the acts necessitating these technical operations, makes money-dealing capital of the capital advanced for these functions.” (p 317)

The functions carried out by this capital arise from the different uses of money and money-capital. In the “Contribution to The Critique of Political Economy”, Marx had described how money arises as universal equivalent form of value, even before commodity production and exchange is established, as a result of “the exchange of products between different communities.” (p 317)

Its in these kinds of international trading that money-dealing first develops, partly because of the existence of different coinage in different countries. Merchants have always needed foreign coinage to buy in foreign markets, and had to convert foreign coins received from sales in foreign markets. Otherwise, they have had to obtain gold or silver, as world money, to conduct such business.

Out of such business arose the Exchange Banks.

“Exchange transactions, in the sense of mere notes of payment to travellers from a money-changer in one country to a changer in another country, developed back in Rome and Greece out of the actual money-changing.” (p 318)

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