Ch. III) Causes unconnected with the Balance of Debt Regulating the Nominal Rates of Exchanges.

The Exchange, or rather the nominal Rates of it, affected by any fluctuation in the value of the medium in which the payments are made. (83)

In der Evidence vor dem Committee ganz übersehn in what manner the balance was discharged; in paper or in gold; in paper of unexceptionable security, or in paper of no security at all; in pure gold, or in adulterated gold; in coin entire as when issued from the mint, or in a clipped and mutilated currency, in a mint currency, or in a currency of tokens, that is, of silver pieces, professing to represent a greater weight of silver than they contain. (84)

The Spanish dollars issued by the Bank, at 5sh., contain no more pure silver than 4s. 6d. English ought to contain; they are therefore  Zusatz von Marx.
(by Foster)
called not 5sh., but  Hervorhebung in der Quelle.
for 5s … A promissory note should either have intrinsic value itself, or else be merely representative of it: if it is issued as the value itself, it can be no more valuable than the silver it contains; if issued merely as the representative of value, why go to the expense of having it of such precious materials? (84, Note)

The present pars of exchange were originally computed with a reference to the quantity of the precious metals  Foster: contained in the currencies of the different countries
contained in the different countries
. If the currency of any country has since been altered in its value, the original par of exchange can be no longer the real par, and, if still adhered to in computation, it is merely nominal. (84, 85) If English foot reduced to 11/12 of its present length, 14 French feet would no longer be equal to 15 English feet, as at present, but to 16 English feet and 4 inches. (85)

Par of exchange with Hamburgh z.B. 33 shill. 8 grotes Banko of Hamburgh represent nearly same quantity of precious metals as 1£. in England. If £ St. in England, that is, since the restriction, a pound note of the B.o.E. become becomes purchasable for 4 Spanish dollars f.i., instead of for 4 Spanish dollars + 2 English shillings … the Hamburgh merchants will no longer give as many of their shillings for it, when it can only purchase 4 Spanish dollars … If, under such circumstances, the poundnote should at any one time obtain the same quantity at Hamburgh as formerly, that is, if it should obtain a greater quantity of silver abroad, than it could at home, the only conclusion to be drawn is, that the exchange really is in our favour, though nominally at par; and that if the pound note could procure in exchange the same quantity of silver at home as formerly, it would procure a still greater quantity abroad. (86–88)

If the currency of any country becomes less valuable than formerly, it becomes exchangeable for a less quantity of the currency of any other country, which continues as valuable as formerly. (88)

The Banknote  Hervorhebung in der Quelle.
does not profess to represent any certain value, but a certain weight
of silver
; and therefore if silver had risen 100% if the Banknote did not rise 100% along with it, it would be depreciated. (87 Note)

Die currency of a country kann suffer a change in its value, and a consequent change in its ability to procure a certain quantity of any foreign currency, from different causes. (88, 89)

1)  Hervorhebung in der Quelle.
on coinage
, coin becomes of greater value = value of the precious metals, + the amount of the seignorage. Provided the seignorage does not exceed the expense of coinage; the value of the coin will then be like that of every other article of manufacture, the price of the material together with the price of the labour employed in producing it. Such the decided opinion of A. Smith. Thornton dagegen. (89 Note) This accounts (Sieh J. Stewart Political Economy book IV. ch. II [)] for the exchange formerly appearing to be constantly in favour of France, and against this country. (90, 91)

2) The Worn and degraded coin of any country in which the bills of exchange drawn on it are to be paid … Exchange becomes unfavourable to the extent that its coin has lost in its value … Instance davon. A. Smith sagt: „that before the reformation of the silver coin in King’s King William’s time, exchange between England and Holland, computed according to the standards of their respective mints, was 25 P.Ct. against England; but the value of the current coin of England, as we learn from Mr. Lowndes, was at that time 25% below its standard value.[“] (91, 92)

The debased silver currency of England and Ireland can never affect their exchanges, so long as the £ Sterling contains the same quantity of gold as formerly; because the silver bullion to be remitted in payment of the balance of debt against England, is purchased by the gold coin, and not by the silver. (91, Note)

3) Adulterated coin … the rates of exchange must be against the country, in proportion of to the depreciation of its currency. (92) Sultans z.B. adulterated their coins. 3 great such adulterations in 1770, 1787 and 1796. Before the frauds were resorted to, Turkish Piastre = 2s. 6d. English (contained about the same quantity of silver). In 1767, course of exchange shows, that 8 piastres were given for 1£ St, i.e. 800 for a bill of exchange on London for 100£. In Folge der 3 adulterations, amount of silver in piastre reduced to less than 1/2 of the quantity contained in 1767. Jezt 16 Turkish Piastres (at the present course of exchange) = 1£ St.; i.e. 1600 are paid by a Banker at Constantinople, for a bill of exchange of 100£ on London. (92, 93) Dennoch, in Folge der nature des Levant Commerce, der real exchange stets in favour of Turkey, England the debtor country. (94, 95)

The general character of the trade with Turkey is a barter of a small quantity of English manufactures for a large quantity of Levant produce: difference sent out by England in bullion. (95.  Kommentar von Marx.
Warum wird hiedurch nicht enforced sending out of more commodities, by enhancement in the value of gold, nach Fosters fancy?


 Nummerierung von Marx.
A paper circulating medium may be depreciated either through discredit or excess. (97)

whatever causes shall make  Zusatz von Marx.
(in Irland z.B.)
the possessor of cattle, linen, corn, bullion, guineas, or any other object of intrinsic value, to consider the Irish Banknote as equivalent to 1/2 of its nominal value, in exchange for them, will produce the same effect in the possessor of an English Banknote, or of a bill of exchange on London.  Kommentar von Marx.
Hence zeigt sich im Wechselkurs.

When depreciation does at least ensue (von addition to circulating medium), hat es nicht an exact proportion to the amount of the addition made, because the increased industry which it had produced demanded an increase of circulating medium. (100)

There is a happy mean between very small and an immoderate increase  Zusatz von Marx.
(of Gold)
, which, while it encourages industry, does not give rise to depreciation … it was always the interest, both of the bankers and the merchants, to increase the circulating medium as much as possible; but as often as depreciation through excess ensued, it became the interest of the merchants to force the bankers, by a run on them for gold, to diminish the circulating medium until that depreciation ceased. (102)

the banking system … seems to have a necessary tendency to increase the quantity of circulating medium; but … so long as it is well regulated  Zusatz von Marx.
(Note convertible)
it never can increase it beyond the amount demanded by the increased industry, which it likewise will have occasioned. ([102, ]103)

 Zusammenfassung von Marx in eigenen Worten.
Fall des Wechselkurses in Frankreich in Folge der Assignaten
. Febr. 1789 Exchange not quite 8% against Paris; it fell gradually until March 1793, als zu 100% dagegen. (106) (The Exchange with Paris is computed in the French crown of 3 livres, estimated at 291/4d. English money, which is the par between the 2 countries. l.c. note.)

A paper convertible into the precious metals at the will of the holder … can no more become abundant than the precious metals themselves; for all that is superfluous of it will immediately be converted into the precious metals, and go abroad. This appears to be the principal use of gold and silver in the circulating medium of a great commercial country; – merely to keep steady the „measure of value“. (108)

Jezt, seit restriction: The notes once issued now, vestigia nulla retrorsum; they remain in circulation; and their amount being thus increased, the value of any given portion then becomes diminished. (109)

The Bank of England, exempted from the obligation of paying in cash, has the power of becoming to this country a New Peru, possessing mines of inexhaustible fertility, which enable it at its pleasure to augment in amount, and reduce in value, the circulating medium of this country in any conceivable  Hervorhebung in der Quelle.
; and this it may effect without ever issuing its paper, except upon the most perfect security. (111)

Another ground of the opinion which has been advanced, that the Bank issues  Hervorhebung in der Quelle.
be excessive according to the present mode in which they are made, is, that the  Hervorhebung in der Quelle.
supply follows
, and does not  Hervorhebung in der Quelle.
the demand. (111) Aber: 1) the discounting of merchants’ bills is not the only mode in which the notes of the B.o.E. come into circulation. (112) 2) If the supply of the circulating medium falling short of the demand for it, could prevent its depreciation, silver would not have lost its value in consequence of the discovery of Peru, since, abundant as the supply was, it certainly fell short of the demand of the Spaniards. (112) So hier a demand for a quantity of Bank notes similar to that which the Spaniards felt for silver. (l.c.)

U.a: By law the Bank are obliged to discount at 5%; but during war it is almost always possible to make more than 5% of money. If a merchant, under such circumstances, could obtain discounts to the amount of the security he could give, the issues of notes would soon amount to all the security that could be given, i.e. the value of all the fee-simple of all the lands in the kingdom, the purchase of all the personal property, including the amount of the national debt etc (113)

Die Bank kann jezt nur noch judge ob ihr paper is really excessive: 1) durch den average market price of gold, und 2) the average rate of foreign exchanges. (114) 3l. 17s. 101/2d. of Bank paper professes to represent an ounce of gold: yet 4l. 1sh. of bank paper must be given for it. No seignorage in England paid for the coinage. Also the difference between 4l. 1s. und 3l. 17s. 101/2d. seems to be the measure of the depreciation of English bank paper, as compared mit gold; that is, not quite 3l. per cent. (115)


  • Inhaltsverzeichnis von Friedrich Engels
  • Heft II. 1869
  • The Daily News, 20. Mai 1869
    • Notiz
      • Kaufmannsrechnung. (Continuatio)
      • John Leslie Foster, (of Lincoln’s Inn): An Essay on the Principle of Commercial Exchanges. London. 1804.
      • Ch. Lyell. Principles of Geology. 7th ed. London 1847.
      • Otto Hausner: Vergleichende Statistik von Europa (Lemberg. 1865) II. Band.
      • Michael Thomas Sadler. M.P.: Ireland; its Evils and their Remedies. 2nd ed. London. 1829