Money and Price. A Critics Rejoinder and our Reply.
Mr. A. E. Jacomb, writing under above heading, fondly imagines that he replies to Rimington, whereas he does nothing of the sort. His greatest coup is a slip on my part wherein, by accident, I inverted the exchange rate of the £1 to the Dollar. Such cheap scoring is beneath contempt; and Mr. Jacomb would have shone indeed if he had succeeded in proving his case that a revolutionary change in the cost of reproduction did not affect the price of a commodity.
Jacomb expresses surprise that gold has price. Later on he says that an ounce of gold is coined into money expressed by the figure £3 17s. 10½d. In to-day’s paper, December 14th, 1927, I see that gold is quoted at £4 4s. 11½d. per ounce. Then he proceeds to mix gold up with currency, and asks, “What, then, is the monetary expression of money?”; of course, that depends upon what the money is made of. The golden sovereign contains gold that actually contains, and is a concentrated embodiment of a large amount of human labour power. Silver and copper coins, say 20s. or 240 pence, do not contain anything like as much. Their relations in exchange are arbitrary, and outside of the countries in which they are in use, their value, which consists entirely of the metals of which they are composed, would be represented as such, unless they could be returned to the country of origin. Of course, it will be meaningless to Jacomb that gold is £4 4s.11½ per ounce, and that it is a bad price; for taking £3 17s. 10½d. as the pre-war price, it means about 8 per cent. rise, whereas, according to the Index figure, other commodities are up 65 per cent. on pre-war. As the various Governments do not appear to contemplate a return to a gold currency, its price may grow even relatively worse, which may account for the Americans dumping it back again.
Price is the monetary expression of exchange value, and there is no divine hand that determines that the monetary expression shall be gold. Look at Germany during the inflation period ; prices equated to a printing press. It needed a mathematician with prophetic genius to know when to hold and when to part with goods— any old metal would have been preferable.
I have an idea that Governments have lost their faith in gold; the fact that it is being hawked to-day at £4 4s. 11½d. makes it look fishy. According to the book, it should be a lot more per ounce. Apparently the most, powerful monopoly, the gold interests, has been broken. The price, £3 17s. 10½d. per ounce, in pre-war days must either have left them a huge margin, else they have struck King Solomon’s deposits, and maybe that in time gold will function in place of aluminium as cooking utensils.
Next he questions my statement that commerce could not operate by a transference of gold without half the population being engaged in gold extraction. I should have said an enormous number, not half; for I do not know exactly how much labour power is necessary to raise a ton of gold. Nevertheless, I had previously stated that the amount of gold held by the banks only fractionally covered the paper in circulation, and when you come to consider that currency is but the small change of commerce, just imagine what would transpire if every business transaction meant that the purchaser handed over to the vendor a gold equivalent; why, we should have gold going about on drays, else the price of gold would get so far away from its value that an ounce would buy a battleship and the Gold Interests would buy a few planets with the surplus value.
Really, my dear Jacomb, you do try one’s patience when you ask such a ridiculous question, “What, then, is the golden equivalent of a hundred loaves of bread after they have passed into consumption?” and I feel that I am justified in saying that the golden equivalent of a hundred loaves of bread to-day must have considerably depreciated since the introduction of fixed nitrogen as a fertiliser. It would be difficult to get at the back of Rimington’s mind if one accepted Jacomb’s imputation of what I said in my criticism. Then he arrives at his greatest triumph, my slip in the inversion of the exchange rate of the Dollar to the £1, and after his ignorant guffaw, he impudently says that I said that their exchange rate had nothing to do with what they would buy in their respective countries. It is an assumption that these Governments will buy gold, but goods they are always ready to exchange for goods, provided that there is a margin and they keep a day to day tab on the exchange rate, i.e., how much goods the money will buy in each country. Some German firms actually quote to English buyers in American dollars; they have not faith in a constant purchasing power of the currency of either coantries, which is rather strange in view of the recent drop of the dollar to 4.88½. That is why I prefer to say that the value of currency is determined by whatever other commodities it will buy in its own country than gold. Its use value as currency has departed, and it appears to be an economic fifth wheel. Jacomb not only misquotes my criticism, but claims my arguments as his own, and then brazenly fastens his absurdities on me. He asks who is right; surely there are some S.P.G.B’ers. capable of putting him out of his misery, but do not let him dodge away. Is he correct in his economic interpretation in his article, “Should we produce more?”? (October, 27th, “S.S.”) I contend he is utterly wrong.
F. L. RIMINGTON.
Mr. Rimington makes no attempt whatever to answer my questions : “What is the monetary expression of money?” and “How is the fall in the price of gold to which my critic refers expressed ?” The nearest he gets to answering the first is to say that it “depends upon what the money is made of,” and to follow with a rigmerole about silver and copper coins, which is quite beside the point, because, in this country, silver and copper coins are not money. Since this coinage does not contain value (past labour) corresponding to its face value, it cannot be the measure of value of other commodities, and, as Marx says (“Critique of Political Economy,” p. 164), “a commodity thus becomes money only in its combined capacity of a measure of value and medium of circulation.” In this country, then, money is gold ; and now I will show the ridiculousness of my critic’s position by quoting his own words. He said (“S.S.,” December, 1927, p. 54) : “price” is “merely an indication of the relative value of each commodity to the amount of gold contained in the £1 sterling.” On this showing, then, the “price” Mr. Rimington quotes for an ounce of gold (£4 4s. 11½d.) “is merely an indication of the relative value of ‘that’ commodity to the amount, of gold contained in the” ounce of gold which is coined into £3 17s. 10½ d. ! The two ounces of gold, then, are different. One has more value in it than the other. Well, sovereigns are not particularly hard to get, and it is quite legal to melt them down. Mr. Rimington can make his fortune by melting them. When he has stripped his sovereigns of their uniforms, and converted them into plain ounces of gold, he can take those ounces of gold to the Bank of England, where he will get £3 17s. 9d. for them—a loss of 1½d. Or he can recover in full at the Mint, who pay £3 17s. 10½d., but in that case he will have to wait for his money. Mr. Rimington is still challenged to show how the fall in the price of gold which he claims has taken place can be expressed, and before he takes up the challenge, let him square his answer with his statement that price “is merely an indication of the relative value of each commodity to the amount of gold contained in the £1 sterling.”
Mr. Rimington’s errors were so numerous and palpable in his first letter that I am afraid I missed the central idea of his attack, which was contained in the words, “goods exchange for goods . . . price was merely an indication of the relative value of each commodity to the amount of gold contained in the £1 sterling.” “Goods exchange for goods ” — ye Gods ! Mr. Rimington is himself so mixed that I offer no apology for not being able to disentangle his meaning from his inconsistencies at the first attempt. He is mystified by the market quotation, £4 4s. 11½d. per ounce, of gold and the mint “price,” £3 17s. 10½d., and can only think that the latter figures are mere reckoning figures, which have lost all touch with the actual value of gold. Only in this way can he arrive at the result that the writer was wrong when he stated that, if all producers doubled their output, prices would remain the same. Mr. Rimington sees in gold bullion something different to that which is represented by the £1 sterling. He loses sight of his own definition of price, quoted above, and imagines that gold produced at half the expenditure of labour-power is going to fall to half the “price” of gold sterling. In other words, the figures representing gold sterling are no longer what they pretend to be, and gold finds itself in fluctuating relations therewith. “Goods exchange for goods” ! Gold is no longer in the picture ! At one time it was £3 17s. 10½d. per ounce, but at present it is £4 4s. 11½d., and some day it may be, say, £1 10s. per ounce ! How does this agree with my critic’s definition of price as “an indication of the relative value of each commodity to the amount of gold contained in the £1 sterling”? Mr. Rimington is in a terrible muddle, and all because he cannot realise that the ounce of gold, whatever its value, that is, whatever labour-time is necessary to its production, is still an ounce of gold, and exactly the weight of £3 17s. 10½d. in gold coin.
Surely I could not myself have found an illustration more shattering to Mr. Rimington’s view than that supplied by himself when he says: “Look at Germany during the inflation period ; prices equated to a printing press.” As a matter of fact, “prices equated” to the infinitesimal amount of gold behind the “printing press.” This in itself shows what becomes of prices when there is not a solid backing of gold behind its tokens.
I am sorry my critic is angry because I poked fun at his bloomer—though it was only six words. But doesn’t his mistake show that he doesn’t carefully read what he has written? And now I am accused of misquoting my opponent. Referring to myself, he writes, “He impudently says that I said that their exchange rate had nothing to do with what they would buy in their respective countries.” The statement Mr. Rimington says I attributed to him was my own statement, not his, and was clearly enough written for anyone to understand who has had the education my critic shows evidence of. But if he falsely says I misquoted him, I can show that he misquoted me, for he says that I try his patience when I ask “such a ridiculous question, ‘What, then, is the golden equivalent of a hundred loaves of bread when they have passed into consumption?'” My words were, “… what would become, will my critic tell us, of the golden equivalent of a hundred loaves of bread when the latter were consumed?” Quite a different question. These examples show that my critic not only is careless with regard to what he himself writes, but does not carefully read the replies of his opponents. To carry on a debate in such a manner is an abuse of the hospitality of these columns little short of disgusting. He need not fear that I wish to escape. If any of my statements are wrong, I know my duty to the Cause of Socialism too well to delay their retraction.
A. E. JACOMB.