IV. Apart from the joint stock organisations, credit gives

the individual capitalist -- or him who plays the part of capitalist — an absolute control, within certain limits, over the capital, and consequently over the labour, of others. This capital, which a man really — or according to public opinion — possesses, becomes the basis for flie superstructure of credit. This is especially true of the wholesale trade. That, which is risked by the speculating wholesale tradesman is not his own, but social property. The catchword of the origin of capital being found in saving also becomes wholly obsolete; for the tradesman in question demands precisely that others should save for him.
The cooperative factories of the working-classes are, within the old form of production, the first positive breach of that form; although they naturally manifest every- where in their organisation the defects of the existing state of things. But, in them, the antagonism between capital and labour has been suppressed, although at first only in so far as the labourers, in their capacity of cooperators, become their own capitalists. The coopera- tive factories in question show us how a new mode of pro- duction develops naturally out of the old one, once a certain degree of development of the productive forces, and of the corresponding forms of production, has been reached.
The capitalist joint stock undertakings are, ju§t like the cooperative factories, stepping-stones leading from the capitalist to the social system of production; in the former,
26(1 CHAITI-.K XXIII.
the antagonism has been negatively, in the latter, positively suppressed.
Bank capital consists of (1) cash, either gold or notes, (2) scrip securities.1 The latter, in turn, may be divided into two categories, viz:
1. Commercial papers, bills of exchange; the latter are «floating values*, which become due from time to time; in the discounting of such bills (/. e. their payment in advance, before maturity), banking business properly so-called consists.
2. Public securities, such as treasury notes, shares of all kinds, in short scrip bearing interest, but which differ essentially from bills of exchange. Mortgages can be reckoned among such scrip.
The capital thus composed is subdivided into the in- vested capital of the banker himself and the deposits. In the case of banks issuing notes, the latter constitute a third subdivision.
For the present we shall leave deposits and notes out of consideration.
The form assumed by capital bearing interest causes every definite and regular income to appear as interest on capital, whether the income in question derives from capital or not. In the same way every value-sum appears as capital as soon as it is not spent as income /'. c. it appears as main sum contrasting with the possible or real interest which it can bear.
The matter is simple. Let us assume the average rale of interest to be fi per cent yearly. A sum 'of .">()() shillings I'.Y) would thus yield 25 shillings every year, if trans- formed into capital bearing interest. Every fixed yearly in- come of 25 shillings is thus regarded as Hie interest on a capital of £ 2f>. But this is a pure illusion, except in the case that the source from which the 2.1 shillings derive is susceptible of being transferred — whatever thai source itself may be, whether a mere right of ownership or debt claim, or a real means of production such as landed estate.
Let us take, for example, the public debt and labour- wages:
From here mi vol. Ill, part
CREDIT AND BANKS. 261
The State must pay its creditors every year a certain quantity of interest for the borrowed capital. The creditor cannot, in this case, give notice to his debtor to pay, but he can only sell his claim. The capital itself has been consu- med, spent by the Staate. It exists no longer. What the creditor of the State has in hands is (1) a promissory note signed by the State for, say £ 5; (2) thanks to this pro- missory note a claim on the yearly State revenue, /. e. on the product of taxation, for a certain amount, say 5 shillings or 5 per cent; (3) he can sell this promissory note, if he wishes, to any other person. But in all these cases the capital, which is supposed to yield the interest paid by the State, is purely illusory and fictitious capital. Not only has the sum originally lent to the State ceased to exist; but it was never intended to invest that sum as capital.
Let us now come to labour power. Labour wages are here regarded as interest, and consequently labour power is considered as the capital which yields this interest. For in- stance, if a year's wages amount to £ 50 and the rate of interest is 5 per cent, the annual labour power is equal to a capital of £ 1000. The capitalist way of thinking attains here its highest pinnacle of absurdity. This foolish idea is, of course, disproved by two circumstances; firstly, the la- bourer must work in order to obtain his «interest»; and se- condly, he cannot convert the «capital value» of his labour power into cash by transferring it.
This method of calculation is termed «capitalisation». Every regular income is capitalised by reckoning it — on the basis of the average rate of profit --as the amount which a capital lent at such a rate would yield. The last traces of any connection with the real process of the utilisa- tion of capital are thus lost sight of; and the idea gains ground that capital undergoes, in some mysterious way, a sort of process of self-utilisation.
Even there where the promissory note — in the security - does not, as in the case of the public debt, represent ab- solutely fictitious capital, its capital value is purely illu- sory. The shares of railway, mining and shipping com- panies represent real capital, namely, the capital invested in those undertakings. But such capital has not a double exis- tence — on the one hand as capital value of the shares,
262
on the other as capital effectively invested in the under- takings. It exists only in this latter shape, and the share is nothing but a right of ownership to the surplus-value made by it.
The scrip is saleable, and consequently becomes a com- modity; the movement and fixation of the latter's price are peculiar. The price of the shares of an undertaking rises in the measure in which its profits increase. If the nominal value of the share (/. e. the sum invested, which the share originally represented) be £ 5, and if the profit of the undertaking increases from 5 fo 10 per cent, the share's value rises to £ 10, other circumstances remaining identical, and the rate of interest being 5 per cent. The contrary is the case if the profit diminishes. But if the utilisation of the effective capital remain the same; or if, as in the case of the public debt, no real capital be available, the price of the scrip rises or falls in inverse ratio to the rate of interest. If the latter rise from 5 to 10 per cent, a security which guarantees 5 shillings interest henceforth represents but a capital of T)0 shillings. If the rate of interest falls i per cent, the same security represents a capital of Ji 10. In times when the money market is depressed, these securi- ties will fall twofold in price; firstly because the rate of ^t rises, and secondly, because they will be thrown in large quantities on the market.
All such scrip represents, in fact, nothing but accumu- lated claims, rights of ownership to future production.
The greater part of Bankers' capital is thus purely ficti- tious, and consists of debt claims (bills of exchange), State securities (representing former capital) and shares (drafts drawn on future increments).
With the development of the credit system, theiv all capital appears to be doubled, or sometimes even trebled, because the claims for debts and the rights to ownership, which always represent but one and the same capital, are to be found in various hands and under various forms. A large part of the capital alleged to be available is mere phantasmagoria. This holds true, also, of the «reserve fund •>, in which we had thought to grasp at last something solid.
(Illustration furnished by Friedrich 1'iigcls: In Novem- ber ISO^ the ir> largest London banks had a reserve fund
CREDIT AND BANKS. 263
of nearly £ 28000000 all told, of which £ 3000000 at the outside was available as cash in their safes. The remain- der consisted of their credit balances at the Bank of Eng- land. But the latter itself had, in the same month, always less than £ 16000000 as cash reserve.)
The bank system is, from the standpoint of formal orga- nisation, the most artificial and highly evolved product which capitalist society is capable of producing. Hence, the immense influence exercised by an institution like the Bank of England on trade and industry, although the real movement of these latter are quite outside the sphere of activity of the former, who maintains a passive attitude towards it. True, the form of a general bookkeeping and of a general distri- bution of the means of production on a social scale comes hereby into existence; but only the form. We have seen that the average profit of the individual capitalist, or of every particular capital, is not determined by the surplus-labour which this capital appropriates first-hand; but by the quan- tity of total surplus-value appropriated by the totality of capital, aqd out of which each particular capital draws its dividend only as a proportional part of that totality. This social character of capital is not completely realised, until the full development of credit and banking. On the other hand, the effects of that development are more far-reaching still. The system of credit and banks places all the moment- arily unemployed capital of society at the disposal of the productive and commercial capitalists, so that neither he who lends nor he who utilises that capital are its owner or its creator. The system thus suppresses the private aspect of capital and implies per se — but only per se — the sup- pression of capital itself. Through the medium of the banks, the repartition of capital is taken out of the hands of private capitalists and usurers, and is transformed into a special so- cial function. But precisely on account of this, credit and banks constitute at the same time the instruments par excel- lence for impelling the capitalist system of production beyond its own natural limits; and become powerful means for pro- ducing crises and promoting fraud.
There is, finally, no doubt that credit will serve as a powerful lever during the transition from capitalist pro- duction to the system of production by social labour; but only as an element taken in conjunction with other radical
264 CHAPTER
transformations of the mode of production itself. On the other hand, the fallacies regarding the miraculous socialising in- fluence of credit and banks are due to complete ignorance of the laws of capitalist production, and of the credit system which is one of the forms of that mode of production.