CHAPTER II.

the depreciated value of gold and silver, i. e. before the revolution affected the general price level. Hence, concludes Hume, who, quite contrary to the principles of his philosophy, generalizes indiscriminately from imperfectly observed facts, prices of commodities or the value of money depend not on the total amount of money to be found in the country, but rather on the quantity of gold and silver which is actually in circulation; but in the long run all the gold and silver in the country must be absorbed by circulation in the form of coin.¹²² It is clear that if gold and silver have a value of their own, then, apart from all other laws of circulation, only a definite quantity of gold and silver can circulate as the equivalent of commodities of a given value. If, therefore, every quantity of gold and silver which happens to be in a country must enter the sphere of exchange of commodities as a medium of circulation without regard to the total value of the commodities, then gold and silver have no intrinsic value and are in fact no real commodities. That is Hume’s third “necessary consequence.” He makes commodities enter the process of circulation without price and gold and silver without value. That is the reason why he never speaks of the value of commodities and of gold, but only of their relative quantities. Locke had already said that gold and silver had merely an imaginary or conventional value; the first brutal expression of opposition to the assertion of the monetary “system” that gold and silver alone have true value. That gold and silver owe their character of money to the function they perform in the social process of exchange is interpreted to the effect that they owe their own value and therefore the magnitude of their value to a social function.¹²³ Gold and silver are thus worthless things, which, however, acquire a fictitious value within the sphere of circulation as representatives of commodities. They are converted by the process of circulation not into money, but into value. This value of theirs is determined by the proportion between their own volume and that of the commodities, since the two must balance each other. Thus, Hume makes gold and silver enter the world