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Title: Letters of David Ricardo to Thomas Robert Malthus, 1810-1823
Author: Ricardo, David
Language: English
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*** Start of this Doctrine Publishing Corporation Digital Book "Letters of David Ricardo to Thomas Robert Malthus, 1810-1823" ***

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  1. PREFACE                                               vii
  2. OUTLINE OF SUBJECTS                                   xix
  3. LETTERS I TO LXXXVIII                               1-240
  4. CHRONICLE                                             241
  5. INDEX                                                 245


The following Letters are printed for the first time from the original
manuscripts, kindly lent for the purpose by Colonel Malthus, C.B. The
representatives of Ricardo have been good enough to make search for the
corresponding letters of Malthus, but without success.

The Collection covers the whole period of the friendship of the two men.
What is of purely private interest (a very small portion) has, as a
rule, been omitted. There is seldom any obscurity in the text; the
handwriting of Ricardo is clear and good. The earlier letters have no
envelopes. The breaking of the seal has frequently torn a page, and
destroyed a word or two. In two cases we have nothing but the fragment
of a letter. But fortunately the bulk of the series has reached us in a
complete state.

These Letters were evidently known to Empson and MacCulloch, whose
references to them are quoted in their proper place. Other letters of
Ricardo, as well as his speeches in Parliament, are quoted here and
there when they illustrate the text or fill up a gap. The Correspondence
with J. B. Say is given at some length, as it is probably little known
to English readers.

The Outline of Subjects will be found to contain only a bare sketch of
the main positions taken up by Ricardo against Malthus in these Letters.
It could not fairly be expanded into an account of both sides of the
argument, for, when we are within hearing of only one of the disputants,
we cannot with fairness believe ourselves to have the whole case before
us. We cannot accept his statement of the terms of the discussion, for,
though he had every desire to be just to his opponent, his cast of mind
was so different that he can hardly be thought to have entered into his
opponent's views with perfect sympathy[1].

These Letters indeed show on almost every page how completely the two
economists differed in their point of view. Beginning in a deep mutual
respect, their acquaintance with each other grew into a very close
intimacy; but it was the friendship of two men entirely unlike in mental
character. Ricardo admits that he had been deeply impressed by the Essay
on Population (p. 107), but thinks that Malthus is apt to miss the true
subject of political economy, the inquiry into the distribution of
wealth, and to confine himself to production, of which nothing can be
made (pp. 111, 175); Malthus seems to his friend to have too strong a
practical bias (p. 96); instead of reflecting on the general principles
that determine (for example) the Foreign Exchanges, he tries to get
light from Jamaica merchants and City bullion dealers (p. 3, cf. 12); he
buries himself in temporary causes and effects instead of looking to
permanent ones (p. 127); he gains his point by a definition instead of
an argument (p. 237) and, perhaps through the same practical bias, he is
too much absorbed in questions of his own College (p. 125), and not
eager enough for political reform (pp. 151, 152). Malthus, Cambridge
Wrangler and Haileybury Professor, was free from any academical bias in
favour of abstract thinking; he had in fact little of the typical
University man except his love of boating (p. 158). Ricardo, a self-made
and largely a self-educated man[2] (though he had neither the pride of
the first nor the vanity of the second), had no traditions that were not
mercantile, and made a large fortune on the Stock Exchange[3]. But, in
his thinking, he was under no slavery to details; he was even conscious
of a strong theoretical bias (p. 96). He was fonder of 'imagining strong
cases' to elucidate a principle, than of adducing actual incidents to
establish it (pp. 164, 167). The very narrowness of his programme
enabled him (as later it enabled Cobden and his school) to seem to
exhaust all the difficulties of the subject, and dispose of them by
plain straightforward proofs. Malthus, who had a less acute logical
understanding, but saw more clearly the real breadth and complexity of
the subject, seemed often more faltering, and less consistent with

Ricardo agreed with his friend in looking, on the whole, at the bright
side of things, and forecasting prosperity for England even in the dark
days of Luddites and Six Acts (pp. 139, 141). They were, both of them,
unready writers, partly from deference to each other's criticism (pp.
20, 23, 117, 125, 155, 159, 207),--partly, in Ricardo's case, from
awkwardness in composition, where he was always, in his own opinion, the
worse man of the two (pp. 104, 108, 145, 208),--partly because the
obscurity of the subject was felt by them to be inconsistent with
dogmatic certainty (pp. 111, 176, 181). But they are free in their
criticism; they never dream of allowing it to affect their good temper
(pp. 175, 240), and they are never afraid to confess mistakes (pp. 20,
184, 207, 231, etc.).

Personally, they agreed in enjoying society and travel, in loving 'law
and order' and hating 'a row' (pp. 64, 208), and in being nowhere so
happy as in their family circle, in Ricardo's case a patriarchally large
one (p. 146). The robust health of Malthus was not shared by his friend
(p. 140), but the latter had more of the qualities of a public man, and
in the House of Commons he was by no means a silent member. Their range
of interests was perhaps equally wide, though Ricardo's bent was to
natural science as Malthus' to mathematics. In politics they were both
in favour of Parliamentary Reform. Francis Place[4], writing in 1832 to
a correspondent who had reproached Political Economists with hostility
to reform, says that the study tends almost necessarily to political
enlightenment, and points to Malthus, Mill, Ricardo, and others in
confirmation. 'Mr. Malthus' (he says) 'was an aristocratic parson when
he first published his Essay on Population ... but in going on with his
work and being obliged to study political economy, his prejudices gave
way before principles, and he became the advocate so far as he dared of
good government. His work contains irrefragable arguments for universal
suffrage, which cannot be overlooked, but must be applied by every
reader who understands the subject; and there are also in his work other
indications of what you and I should call liberal principles[5].' For
myself, Place adds, I have been 'a plain Republican for forty years;'
James Mill is 'as bad as myself.' As to Ricardo: 'He was one of the most
enlightened of reformers I ever knew; he was a man who never concealed
his opinions.' There is no doubt, from all the evidence, what these
opinions were. Ricardo advocated a widely extended suffrage, frequent
parliaments, and especially secret voting. In his speeches in the House
of Commons, which are more than a hundred in number, from the first on
the 25th March, 1819, to the last on the 4th July, 1823, he speaks his
mind plainly not only on the Bank, the Sinking Fund, the currency,
agriculture, the Poor Law, and the tariff, but on the reform of
Parliament, retrenchment, freedom of the press and right of public
meeting. His oratory seems in many respects to have resembled that of
Cobden. The arguments were given with plain directness without elegance
of diction; and they were brought home by matter-of-fact similes from
every-day life or commercial experience. We know from Brougham that his
manner of speaking was earnest, modest, genial, frank, and unaffected;
and, as he only spoke on what he knew, he was always heard with
attention[6], though his sentiments were unpalatable and he was usually
in a hopeless minority.

Bentham claimed to be the spiritual grandfather of Ricardo[7], and
Ricardo may have got his first thoughts on Politics from him and Mill,
as on Economics from Adam Smith; he may also have caught from Bentham
his habit of reasoning abstractly. But the arguments he uses on behalf
of his political opinions are such as to leave the impression that he
reached his politics through his political economy, the former being
only the latter from a different point of view. He seems to construct
his notion of a free government on the lines of his notion of a free
trade. When he takes the unpopular side in the case of the Carliles[8],
imprisoned for blasphemous libel, he is not unfairly described by
Wilberforce as simply 'carrying into more weighty matters those
principles of free trade which he has so successfully expounded' in
other cases. His interest in popular education seems to spring from the
desire that our people may be rightly equipped for industrial
competition. He attends a City dinner to the Spanish Minister at a time
when the European Powers are threatening Spain, and appeals to the
principle of Non-Intervention[9], thus anticipating the Manchester
School and applying _laissez faire_ on the large scale. He applies the
same principles perhaps too abstractly in the case of the Spitalfield
Acts[10], which made the wages of the silkweavers to be fixed by the
Justices instead of by the 'higgling of the market,' and in the case of
the Truck System[11], or payment of wages in kind; but there was much to
justify his hostility to the first, and there was Robert Owen's
successful use of something very like the Truck system in New Lanark to
excuse his defence of the second. He had a statesman's willingness to
accept part where he could not get the whole, and to welcome a
compromise rather than no progress at all. He would not abolish the Corn
Laws at a stroke, but would prepare our agriculturists for the change by
lessening the duty on imports year by year till nothing was left but
10_s._ a quarter, to remain as a 'countervailing duty' roughly equal in
amount to the peculiar burdens of the British agriculturist[12]. Some of
his opponents called him a 'mere theorist'; but this is a common taunt
of men who cannot render a reason against men who can. Even his disciple
MacCulloch thinks that his investigations were 'too abstract to be of
much practical utility[13].' But in his own hands they were not so
abstract that they were divorced from practice, or unmodified by the
needs of each case. Such measures as he recommended in the House were of
great practical utility, and have nearly all been embodied in subsequent
legislation; yet he founded them all on certain general principles which
in the order of his thinking were economical first and political
afterwards. As far as politics are concerned, we find the principles
abstract simply because they are not in our own day the principles most
needed in legislation.

In short, Ricardo's thinking was abstract only in the sense in which
Bentham's was so. They had arrived, by a different road, at the same
political philosophy. Ricardo had a fixed idea of the individual as
being logically prior to society; and the interest of the community only
meant to him the interest of a large number of individuals, the
collection as a whole having no qualities not possessed by each of the
parts, and there being no spiritual bond. Nature (which means in this
case theory instead of history) begins and ends with individuals; Nature
made the individuals, and Man made the groups. Ricardo agreed with
Bentham that 'the community is a fictitious Body, composed of individual
persons who are considered as constituting, as it were, its Members. The
interest of the community then is what? The sum of the interests of the
several members who compose it[14].' We find Ricardo arguing: 'Let me
know what the state of men's interests is, and I will tell you what
measures they will recommend;' and 'that State is most perfect in which
all sanctions concur to make it the interest of all men to be virtuous,'
in other words, to promote the general happiness[15]. Now, to consider
human beings as first and chiefly separate from one another and having a
separate self-interest which rules their action, is certainly to reason
abstractly. But this abstract reasoning of the Philosophical Radicals is
due, in the case of the Economists among them, more to Adam Smith than
to Bentham. Most of them, like Ricardo, had got not only their first
economics but their first lessons in thinking, from the 'Wealth of
Nations.' The 'Wealth of Nations' bore the stamp of that Individualism
which we usually associate with Rousseau. Its author had written,
seventeen years before, a book in which he gave almost exclusive
consideration to the common bond that unites man to man, the power one
man has of putting himself by thought in the place of another, or (in a
wide sense of the word) to sympathy. There is no need to suppose that
Adam Smith had forgotten or recanted the 'Moral Sentiments;' but it is
certainly the case that in the later and greater work, which became the
text-book of Political Economy, he deliberately takes up another point
of view, and presents men as dominated by private interest. With every
allowance for his frequent qualifications ('upon the whole,' 'in many
respects,' etc.), there is no doubt that he there considers 'the natural
effort which every man is continually making to better his own
condition' as a principle of growth and health which owes little or
nothing to State or Society, but is continually transforming them and
bringing good out of their evil. He is fully aware how industry in all
its forms has been affected by the government and civilization of a
people; but he regards industry itself, or the commercial ambition of
the industrious classes, as more potent still. As far as industrial
progress is concerned, he would have said with Bentham that Nature
begins and ends with individuals; in matters of trade he has no
confidence in associations of men, even when they are voluntary. To
him, the really beneficent association is that unintended and
unpreventible organization resulting from the division of labour, the
separation of trades, and the uncontrolled movements of commercial
ambition on the part of individual men. He is careful to say that
Political Economy is not Politics[16]; but he insists that all political
restraints and preferences must be taken away from industry, and 'the
obvious and simple system of natural liberty' will 'establish itself of
its own accord.' It is not surprising that this lesson in individualism
was learned by his successors without the cautions with which the
teacher would have surrounded it. The pupils unconsciously argued as if
political individualism was part and parcel of economical principles,
for it certainly seemed so in the one book of their teacher that they
had been led to study; and, when Bentham made self-interest a leading
principle of politics, Ricardo, to follow him, needed only to make clear
to himself the underlying political basis of his economical ideas. In
Malthus, economical individualism is held in check by a strong devotion
to the principle of nationality, as well as by a wide range of
philosophical and general interests. But to Ricardo political economy is
all in all; the ruling principles of all his thinking are determined for
him by the economical; and the result is individualism in politics as
well as in political economy. The animosity of his critics is perhaps as
often due to their strong dislike of this political philosophy
underlying his doctrines, and derived through Adam Smith from Rousseau,
as to any real or supposed abstractness of the doctrines themselves.

Ricardo's political work has therefore the merits and the defects of the
theory of individualism and policy of _laissez faire_, which crowned its
achievements with the Repeal of the Corn Laws and Navigation Acts. John
Stuart Mill, who was bred an individualist, has left us in his writings
a faithful reflection of the change which has passed over English
politics and English economics in the course of his lifetime, and which
he himself welcomed with some misgivings. We have ceased to believe that
the removal of obstacles is enough to secure the highest good either in
government or in industry. But we must not deny that the Manchester
School and its predecessors were indispensable in their own day.

It is sometimes said that in addition to the faults of his school,
Ricardo had flaws of his own which were due to a certain strong bias of
self-interest[17]. We might answer that his arguments must none the less
stand or fall by their own logic. But there is no reason to suppose any
bias in Ricardo except his peculiar character of mind and cast of
thought. He had the intellectual interest of a reasonable man in getting
the right instead of the wrong answer to a difficult question; and his
selfish interest as a member of the 'propertied' classes was not clear
enough to be a snare to him. 'It would puzzle a good accountant' (he
says in the House[18]) 'to make out on which side my interest
predominated; I should find it difficult myself from the different kinds
of property which I possess (no part funded property) to determine the
question.' He could be chivalrous and even Quixotic on occasion. His
best political friends[19] thought he was Quixotic when he proposed to
levy a high property tax to pay off the National Debt: 'I should
contribute any portion of my own property for the attainment of this
great end if others would do the same[20].' There was chivalry in his
praise of Cobbett's Letter to the Luddites[21]; Cobbett had given him
abuse unmixed with any drop of generosity. We may therefore look in vain
in Ricardo for any feeling of antipathy to landlords or any other body
of men, though he spoke, as in duty bound, against landlords, bank
directors, and all classes of monopolists, whenever they stood in the
way of urgent reforms. Like other men, he not improbably had a lurking
partiality for what had been the main business of his working life. But
in his writings and speeches he gives us not feelings but arguments, and
arguments that cannot be dismissed as feelings in disguise.

In the purely economical works there is more of abstract theory than the
author is ever fully aware. Not only did he as an individualist
habitually regard men as separate competing atoms, and the desire of
wealth as the permanent and dominant motive of men[22]; but he made his
general statements too absolute. He sometimes guarded himself by saying
(as he does in these Letters): What I am laying down is true over any
considerable period of time; the causes to which I point are permanent;
I allow that other causes may prevail for short intervals; temporary
causes may seem to overrule the permanent ones; but I look to the final
settlement. Nevertheless, he admitted more than once in the course of
his career that he had stated the permanent causes too absolutely. The
doctrine of Value is first presented by him as extremely simple,--the
value of a thing depends on the labour employed in producing it. Then,
as we go on, we find this is only true of 'the early stages of society
before much machinery or durable capital is used,' while it is not meant
to be true, even there, of objects that have a 'fancy' value, due purely
to their scarcity. Next, we are told that in modern times the relative
value of two things is affected by the proportions in which fixed
capital and circulating enter into their production; if fixed capital
enters more into one than into another, then a rise of wages will lower
the value of the first, for it will lower the rate of profits, and, as
there are more profits concerned in the first, the value of this first
will fall in relation to the other. This is not all;--if two things are
produced with a like amount of fixed capital, yet, if the durability of
the capital is different, there will be more labour where there is less
durability, and more profits where there is more durability; the things
produced by the more durable fixed capital will be lowered in value by a
rise in wages, which lowers the rate of profit; and so on, _mutatis
mutandis_. In short, value is affected not only by labour, but by the
wages of labour. To these concessions we may add the important change of
view, which (as we know from these Letters) made MacCulloch tremble for
the Ark of his Covenant[23]; we had heard nothing at first but the
praise of machinery as lowering prices and increasing the general
wealth; now we are reminded that the invention of it may for the time
cause serious injury to the working classes[24].

It is not difficult for men living two generations after Ricardo, and
having (as he himself expressed it[25]) 'all the wisdom of their
ancestors and a little more into the bargain,' to point out many
unjustified assumptions, many ambiguous terms, and even many wavering
utterances, in Ricardo's 'Principles,' in spite of their appearance of
severe logic. The author's detached practical pamphlets were in those
respects far more powerful than this volume of imperfectly connected
essays on general theory. The flattering importunities of friends had
induced an unsystematic writer to attempt a systematic treatise[26]. The
cardinal doctrine, that of Value, is applied to only one class of cases,
and, even to that, with serious modifications. It was left for later
economists, like Jevons in this country, and Menger and Böhm Bawerk in
Germany, to take up the task of giving a theory of value that will
embrace all cases of it, not excluding those objects that possess a
value 'wholly independent of the quantity of labour originally necessary
to produce them, and varying with the varying wealth and inclinations of
those who are desirous to possess them[27].'

Malthus has left a clear statement of the points at issue between
Ricardo and himself in the Quarterly Review for January, 1824. He
contended against Ricardo that (1) Quantity of Labour is not the chief
cause of Value, but (2) 'Supply and Demand' are more truly so described,
while (3) Competition of Capital, and not fertility of the soil,
determines the rate of profits. But, in regard to the first, he hardly
gives Ricardo sufficient credit for his large concessions. In regard to
the second, he does not realize that supply and demand are vague terms
which can only be made definite by a theory of value itself. In regard
to the third position, if fertility of soil be translated productiveness
of the staple industry, Ricardo's view seems nearer the truth than his
own. The inadequacy of the whole discussion on this third head is
largely due to the fact that economists had not then been pushed by
Socialism into a thorough investigation of Profits and Interest. They
were content to borrow these ideas from every-day commercial life, and
treat them as given ultimate facts needing no explanation. They
therefore never fully accomplished the very first task of Political
Economy, to state the facts as they are, and analyse into its
fundamental laws the existing industrial system of modern nations. Still
less did they fulfil its second task, to estimate the relation of the
industrial system to the larger social and political body in which it
lives and moves and has its being. The peculiar wants and motives of an
individual people, changing, as they do, with the growth of
civilization, must be viewed in their effects upon the production and
distribution of the national wealth, if the truth about the latter is to
be fully known. It is because the older economists did not attempt this
that their discussions, carried on even by their most eminent
representative men, seem to later readers superficial and unreal. But in
their Economics, as in their Politics, they had their own work and not
ours to do; and we must not blame them for not answering questions that
have only very recently occurred to ourselves.


In only two cases do the letters of this collection form groups that
have a subject of their own not discussed at any length in the other
letters. Letters I to XIV are the only ones that discuss at any length
the influence of the Depreciation of the Currency on the Foreign
Exchanges. Letters LXXVIII to LXXXVIII are the only ones that so discuss
the Measure of Value. After these the nearest approach to continuity is
perhaps in Letters LXXI to LXXVII, when Over-production is the chief
subject. But the discussion of Rent, Wages and Profits is not conducted
by chapters as in a book; it follows the course of conversations which
were not recorded, and obeys suggestions that are given in replies lost
to us. We cannot hope to make the propositions on these three heads fall
into a consecutive logical series.

The following analysis of the letters is not meant to be exhaustive.
Ricardo's opinions on the Bank of England (XXXV, etc.) and on the East
India College (XL, etc.), for example, will not be found in it. It is
simply a statement of the chief economical arguments.

In the early letters the correspondence turns chiefly on matters made
prominent at the time (1810 seq.) by the Bullion Committee and Ricardo's
own pamphlet, 'The High Price of Gold Bullion.' Though this pamphlet did
not appear in its separate form till early in 1810, the matter of it had
been published by Ricardo in a series of letters to the 'Morning
Chronicle' beginning in September, 1809. These letters brought their
author into public notice, and they seem to have led Malthus to seek his
acquaintance. The earliest letters (of which Letter I in this collection
was clearly not the first of the whole correspondence) were naturally on
the subjects that first brought the two men together.

Ricardo's main positions as against Malthus are as follows:--

    1. The amount of the currency of a nation is determined for it not
    simply by its size and population but by the nature and extent of
    its trading transactions; and yet, when these elements are given,
    the currency of one nation will stand to the currency of another in
    some ascertainable normal proportion, to alter which is to alter the
    relative value of the currencies affected (VI, VII, X).

    2. Such events as a bad harvest, a change in articles of consumption
    or the transmission of a subsidy abroad, will, by altering the
    relative value of our currency, produce effects on the exchanges
    which, apart from their own specific remedy, are permanent, not
    transitory (I, VII, X).

    3. An increase in the amount of gold and silver in a country will
    lead to an increased use of these metals for general purposes rather
    than to a proportionate fall in their value, there (II, III).

    4. An increase in the value of a nation's exports and imports may
    involve no increase of its wealth or its capital, but may be due to
    a mere change from one set of articles of consumption to another, or
    to a carrying trade with foreign capital (IV).

    5. In any case, such an increase is not the cause, but the effect of
    a change in the currency; it is a sign that money is going from
    where it is cheap to where it is dear (IV, VI, IX, cf. XII and
    XVII), and the Exchanges are an accurate measure of the difference

    6. There has certainly been an increase of wealth in our own country
    in recent years, but it has not necessarily been accompanied with an
    increased rate of profits (V, cf. XX).

In Letters XV to XXI the following are the chief propositions:--

    1. Restrictions on the importation of corn by keeping up the price
    of necessaries have a tendency to lower profits (XV), unless,
    indeed, they are followed by a great reduction of capital (XVI,

    2. The only cause of permanently high or low profits is the facility
    of procuring necessaries, for on that mainly depends the rate of
    wages (XVI, XVIII, XIX, XX, XXI, cf. V, and for qualification LXXIX,

    3. Other causes, such as bad harvests, new taxation, changes in
    demand, or excessive accumulation, are merely temporary (XX, XXI,
    cf. Ricardo's Pol. Econ. and Tax., ch. vi. 'On Profits').

    4. Improvements in agriculture or machinery by increasing
    productiveness permanently increase profits (XX, cf. V and XXIII).

To these may be added--

    5. Consumption and accumulation equally promote demand, and are both
    of them ineradicable tendencies of our nature, the one adding to our
    enjoyments, the other to our power (XIX).

    6. Accumulation increases not only production, but consumption

    7. It is worth while to establish the truth of a principle, even if
    we cannot establish its utility (XXI).

In Letters XXIII to LXVIII, and in LXXVIII to LXXX, the positions are as

    1. By importing cheap foreign corn the public saves the whole
    difference in price (XXIII, XXIV).

    2. It must be allowed that the prices of articles, besides varying
    with the amount of necessary labour bestowed on them, vary with the
    value of their raw material (XXV).

    3. Apart from changes in the currency, a rise in the price of corn
    and a fall in the corn wages of labour, would be a contradiction

    4. It follows from the principle of Population that the rate, as
    distinguished from the amount, of agricultural production, grows not
    greater, but less, when the increase of population drives
    agriculture to the cultivation of poorer soils (XXVII, XXVIII, cf.

    5. This means that the whole cost in corn will be greater in
    proportion to the whole produce of corn, and, though the whole cost
    in money may be less in proportion to the whole produce in money,
    the rate of profits from farming will fall (XXIX).

    6. A tax on home corn raises prices twice over, and should be
    accompanied by a countervailing duty, not necessary in other cases

    7. In order of time, the increased price of corn comes first, and
    the costly cultivation second, but this increase of farmers' profits
    may be due to a fall in general profits that is itself caused by the
    increased price of corn (XXIX).

    8. The progress of wealth has a tendency to lower profits and
    increase rent (XXIX).

    9. Mere increase in quantity of corn will not prevent increase in
    price if the numbers of consumers have increased in equal or greater
    proportion. So it will be one day in America (XXX).

    10. A rise in the price of corn will not be followed by a rise in
    the price of other commodities, but by a fall in profits (XXXI,

    11. An addition of rich land to our island would reduce the price of
    corn by reducing the cost of raising the total supply of corn; and
    it would not raise the value of manufactured goods (XXXII).

    12. High prices, whether caused by depreciation of money or by
    difficulty of production, are not a public benefit; in the first
    case, they are a cause of distress, especially to the working
    classes; in the second, they are a sign but not a cause of
    prosperity (XXXIII, XXXIV).

    13. Facility of production includes skill and appliances as well as
    fertility of soil, and in that sense, when suddenly introduced in a
    fertile country, it would for some time extinguish rent (XXXVI).

    14. There is no real distinction between productiveness of industry
    and productiveness of capital; and in the progress of society both
    of them will diminish, and rents will increase (XXXVI).

    15. Wages do not rise when labour is productive unless the
    productiveness of the labour gives rise to a new capital that
    demands new labour (XXXVII).

    16. There can be no such demand for new labour unless there is a
    reduction in the value of food (XXXVII).

    17. The only permanent cause of diminished demand for capital is the
    increased price of food (XXXVIII).

    18. Low prices are not necessarily a discouragement to production

    19. The need of cultivating less productive soils is the cause of
    higher nominal and lower real wages (XLII), and it is the only cause
    in constant and permanent operation (XLVIII, cf. LXIX).

    20. Profits depend on wages; wages on the supply and demand of
    labour, and on the cost of the labourers' necessaries (XLIX).

    21. Profits will therefore rise if the last are easily produced,
    unless through stationariness of population demand for labour has
    increased (L).

    22. In two lands with equal capital and equal population, but with
    different fertility of soil, profits would differ in favour of the
    more fertile (L).

    23. The rate of interest is no sure indication of the rate of
    profits; and a low rate of interest may co-exist with a low rate of
    wages and a high rate of profits (LXIII).

    24. Profits cannot be said to depend on 'the proportion which
    capital bears to labour,' for, where profits were lowest, most
    capital would be needed to produce a given return, and, where
    highest, least, in proportion (LI).

    25. By a rise in the value of money it is possible (though not
    probable) that a reduced cost of labour, materials, and machinery
    might be followed by an increase instead of a reduction, in their
    money value (LXIII).

    26. A dearth may increase profits and wealth by making labour cheap

    27. Free trade in corn may increase the amount of profits more than
    a policy of Restriction may increase the amount of Rents (LXVII, cf.

    28. Rent is always a transfer, and never a creation of wealth (LIII,

    29. There cannot be two rates of profit at the same time in the same
    country (LXXVIII), nor under free trade could there be a very
    different rate in different countries, the cost of necessaries and
    therefore the rate of wages being brought nearly to a level,
    allowance being made for differences between one country and another
    in regard to the standard of living (LXXIX). It seems impossible
    that under free trade a fertile country, unless agriculture were its
    sole and only industry, and its capital were small, would long
    continue to sell its corn at the high prices of its less favoured
    rivals; the prices would fall to cost price (LXXX).

In Letter LXV, and in Letters LXIX to LXXVII, the positions are as

    1. Natural Price should not be described as depending, like Market
    Price, on Supply and Demand, for it can never permanently fall below
    or rise above the expenses of production (LXV).

    2. A universal over-production is impossible (LXXII, LXXVII), and a
    glut of particular articles may be cured by a cessation in the
    production of those articles (LXXII); a 'superior genius' might so
    lay out our capital even now, that all might be prosperous

    3. It is not demand, but supply, which regulates value, and supply
    is itself determined by comparative cost of production (LXXIII,

    4. If all labour and capital were devoted to production of
    necessaries, there might then be an over-supply or general glut, of
    them; but in no other case is such a glut possible (LXXIV, LXXVII).

    5. Over-production tends to cure itself by destroying profits, and
    thereby removing the producer's motive for production. But
    production could not go on when this point had been reached, and
    therefore the over-production could not last (LXXVI).

    6. The remedy would be not the greater consumption of non-producers,
    but the payment of lower wages, which means the securing of higher
    profits by the producers. When wages are excessive, the labourers
    are the unproductive consumers, and the employers who pay them are
    thereby causing instead of curing the over-production (LXXVI,

    7. A diminished demand for labour may mean, not the employment of
    fewer men, but the payment of lower wages (LXXVII).

In Letters LXXVIII to LXXXVIII the positions are:--

    1. It is better to take, as a Measure of Value, some foreign
    commodity [like gold], the cost of producing which is nearly
    invariable, than to estimate either by the amount of labour or by
    the amount of corn or of other goods generally that will be
    purchased by the article measured (LXXVII, LXXVIII).

    2. There is nothing in the said labour which fits it to be a better
    measure of value than anything else; but, on the contrary, to use it
    as a measure is to involve ourselves in paradoxes (LXXXIII, LXXXV to

    3. There cannot be an absolute or universal measure of value, for
    there is no uniformity in the conditions under which commodities are
    produced, the time taken and the proportion and durability of the
    capital employed being, for example, very different (LXXXIV).





                                  STOCK EXCHANGE, _25th Feb., 1810_.


I have just time, after a very busy day, to tell you that I will
endeavour to get Mr. Mushet[28] to meet you at my house at breakfast on
Sunday morning. At any rate I shall expect you, and, if Mushet is
engaged, I shall be able to tell you whether he will meet us on Monday
or Tuesday in the City. He is exceedingly obliging, and would I am sure
not mind trouble if he could contribute to throw light on the subject of
exchanges, yet I think he will not be inclined to publish anything under
his own name as he gave great offence to the higher powers on a former

You have clearly stated the point of difference now between us; I think
we never so well understood each other before. There are some causes
which operate on the exchange which are in their nature of transitory
duration; there are others which have a more permanent character. If we
agree that a change of taste in one country for the commodities of the
other,--and the transmission of a subsidy will produce certain effects
on the exchange,--the only question between us is as to their duration.
I am of opinion that they will operate for a very considerable time and
that in fact recourse is not had to bullion but as a last resort.

I cannot believe that you give a correct account of your habits of
application any more than you did of your memory when I last saw you.
From all my observations I should have been led to the very opposite
conclusions from those which you have formed; and I believe most of your
friends would be of my opinion. When you have once fairly begun, I
expect that you will advance at a giant's pace.

I beg you to remember me kindly to Mrs. Malthus.

                                  I am, my dear Sir,
                                           Yours very truly,
                                                      DAVID RICARDO.


                                   STOCK EXCHANGE, _22 March, 1810_.


Mrs. Ricardo is expecting Mrs. Malthus to accompany her on Friday next
to Knyvett's concert, and will, I am sure, be very much disappointed at
the information which I am to give her that she will not be able to
accompany you to town. I will not however quite give up all hopes of
seeing her.

You must positively not think of leaving us before Tuesday. I have
engaged several of your friends to meet you at dinner on Monday, and I
not only advance my own claims but those of Mr. Wishaw[29], Mr.
Sharp[30], Mr. Tennant[31], and Mr. Dumont[32].

I have been making enquiries concerning a bullion merchant. I find that
the trade is mostly carried on by a class of people not particularly
scrupulous in their modes of getting money, and I am told that they
would not be very communicative, particularly on the subject of their
_exports_. There are however some well-informed merchants who know a
great deal of the trade without themselves being actively engaged in it,
to whom I hope I shall be able to introduce you.

I do not admit that if you were to double the medium of exchange it
would fall to half its former value, not even if you were also to double
the quantity of metal which was the standard of such medium. The
consumption would increase in consequence of its diminished value, and
the fall of its value would be regulated precisely by the same law as
the fall in the value of indigo, sugar, or coffee.

Mr. Mushet will dine with us on Sunday. What do you think of Mr.
Vansittart's financial talents?

                                           Yours very truly,
                                                      DAVID RICARDO.

    NOTE.--Speaking in the House of Commons on Agricultural Distress,
    on May 7, 1822, Ricardo gives an illustration which bears on some
    points in the foregoing and following letters: 'Suppose my own case.
    I am possessed of a considerable quantity of land, the whole
    unburthened with a single debt. Now according to the honourable
    member (Mr. Attwood) I and the tenants on that land would have only
    been injured to the amount of the increase which the change in the
    value of money has made in the burthen of taxation; but we are in
    point of fact injured much more.' 'The superabundant supply' has
    caused a sinking in the value of corn greater than in proportion to
    the additional quantity itself. To understand why, take the case of
    a commodity introduced for the first time, say a particular kind of
    superfine cloth: 'If 10,000 yards of this cloth were imported,
    under such circumstances, many persons would be desirous of
    purchasing it, and the price consequently would be enormously high.
    Suppose this quantity of cloth to be doubled; the aggregate value of
    the 20,000 yards would be much more considerable than the aggregate
    value of the 10,000 yards, for the article would still be scarce and
    therefore in great demand. If the quantity of cloth were to be again
    doubled, the effect would still be the same, for, although each
    particular yard of the 40,000 would fall in price, the value of the
    whole would be greater than that of the 20,000. But, if they went on
    in this way increasing the quantity of the cloth until it came
    within the reach of the purchase [_sic_] of every class in the
    country, from that time any addition to its quantity would diminish
    the aggregate value. This argument would apply to corn. Corn is an
    article which is necessarily limited in its consumption, and, if you
    went on increasing it in quantity, its aggregate value would be
    diminished beyond that of a smaller quantity. I make an exception in
    favour of money. If there were only £100,000 in this country, it
    would answer all the purposes of a more extended circulation; but,
    if the quantity were increased, the value of commodities would alter
    only in proportion to the increase, because there is no necessary
    limitation of the quantity of money [wanted].' (Cf. Letter III, p.
    3.) So on June 12th he says: 'Quantity regulates the value of
    everything,' though it is also true (he says in a speech of May 9,
    1822) 'that the price of every commodity is constituted by the wages
    of labour and the produce [_sic_] of stock.'


                                   STOCK EXCHANGE, _24 March, 1810_.


I have left you quite free for Friday, but I regret that your
engagements will not conveniently allow you to come to us on that day.
We shall expect you on Saturday morning. I hope Mrs. Malthus' visit will
not be deferred longer than the next meeting of the King of Clubs[33].

It appears to me that you ascribe the difference in the variations of
price which would probably be the effect of doubling the quantity of
coffee, sugar, or indigo, on [the] one hand, or of doubling the quantity
of the precious metals on the other, to a wrong cause. Coffee, sugar,
and indigo are commodities for which, although there would be an
increased use if they were to sink much in value, still, as they are not
applicable to a great variety of new purposes, the demand would
necessarily be limited; not so with gold and silver. These metals exist
in a degree of scarcity, and are applicable to a great variety of _new_
uses; the fall of their price, in consequence of augmented quantity,
would always be checked, not only by an increased demand for those
purposes to which they had before been applied, but to the want of them
for entirely new employments. If they were in sufficient abundance, we
might even make our tea-kettles and saucepans of them. It is to this
essential difference between these commodities, and not to the
circumstance of one of them being employed as a circulating medium, that
I should attribute the different effects which would follow from the
augmentation of their quantity. In any point of view however I do not
see how it bears materially on the question between us, namely whether
the precious metals are frequently resorted to for the payment of debts
between countries when no disturbance has taken place in the amount or
proportion of the currency.

I wonder as you do that the stocks have not felt the effects of Mr.
Vansittart's vigorous system. The delay which has taken place in
creating new stock, the good news from abroad, and, above all, the want
of reflection in the mass of stockholders may be considered as the

                                           Ever truly yours,
                                                      DAVID RICARDO.

    NOTE.--'The King of Clubs' is described in the Life of Sir James
    Mackintosh, (by his son,--2nd ed. 1836), vol. i. p. 137 (under date
    1800): 'As an agreeable rallying point in addition to the ordinary
    meetings of a social circle, a dinner-club (christened "The King of
    Clubs" by Mr. Robert Smith [Bobus, brother of Sydney Smith]), was
    founded by a party at his [Mackintosh's] house, consisting of
    himself [Mackintosh] and the five following gentlemen, all of whom
    still survive:--Mr. Rogers, Mr. Sharp, Mr. Robert Smith, Mr.
    Scarlett, and Mr. John Allen. To these original members were
    afterwards added the names of many of the most distinguished men of
    the time; and it was with parental pride and satisfaction that he
    received intelligence some time after of their "being compelled to
    exclude strangers and to limit their numbers, so that in what way
    'The King of Clubs' eats, by what secret rites and institutions it
    is conducted, must be matter of conjecture to the ingenious
    antiquary, but can never be regularly transmitted to posterity by
    the faithful historian."'--The biographer adds in a note that the
    Club was suddenly dissolved in the year 1824. Some of the most
    distinguished members are enumerated, among them Ricardo (l. c. p.
    138 _n._). To judge by a letter of Mackintosh to Sharp on 29th June,
    1804, the Club at that date included (besides the writer and his
    correspondent) only Sydney Smith, Scarlett, Boddington, the poet
    Rogers, Whishaw, and Horner (Mack. Life, vol. i. 209). The time of
    meeting seems to have been the first Saturday of every month. See
    below Letter XLIV, but cf. XLIII. Add Memoirs of Horner, i. 193,
    under date April 1802, and Holland's Memoir of Sydney Smith i. 91,


                                            LONDON, _10 Aug., 1810_.


On my return to London, after a short excursion to Tunbridge Wells, I
found your obliging letter.... On further reflection I am confirmed in
the opinion which I gave with regard to the effect of opening new
markets or extending the old. I most readily allow that since the war
not only the nominal but the real value of our exports and imports has
increased; but I do not see how this admission will favour the view
which you take of the subject.

England may have extended its carrying trade with the capital of other
countries. Instead of exporting sugar and coffee direct from Guadaloupe
and Martinique to the continent of Europe, the planters in those
colonies may first export them to England, and from England to the
continent. In this case the list of our exports and imports will be
swelled without any increase of British capital. The taste for some
foreign commodity may have increased in England at the expense of the
consumption of some home commodity. This would again swell the value of
our exports and imports, but does not prove a general increase of
profits nor any material growth of prosperity.

I am of opinion that the increased value of commodities is always the
effect of an increase either in the quantity of the circulating medium
or in its power, by the improvements in economy [in] its use
[_sic_][34],--and is never the cause[35]. It is the diminished value, I
mean nominal value, of commodities, which is the great cause of the
increased production of the mines; but the increased nominal value of
commodities can never call money into circulation. It is certainly an
effect and not a cause. I am writing in a noisy place; you must
therefore excuse all blunders. I must offer the same apology for my two
half sheets[36]. I did not like to copy the first half over again.

With best compliments to Mrs. Malthus, I remain,

                                       Yours very sincerely,
                                                      DAVID RICARDO.


                                    STOCK EXCHANGE, _17 Aug., 1810_.


... I cannot deny myself the pleasure of accepting your kind invitation
for Saturday next. I will be with you at the usual hour.

That we have experienced a great increase of wealth and prosperity since
the commencement of the war, I am amongst the foremost to believe; but
it is not certain that such increase must have been attended by
increased profits, or rather an increased rate of profits, for that is
the question between us. I have little doubt however that for a long
period, during the interval you mention[37], there has been an increased
rate of profits, but it has been accompanied with such decided
improvements of agriculture both here and abroad, for the French
Revolution was exceedingly favourable to the increased production of
food, that it is perfectly reconcileable to my theory. My conclusion is
that there has been a rapid increase of capital, which has been
prevented from showing itself in a low rate of interest by new
facilities in the production of food. I quite agree that an increased
value of particular commodities occasioned by demand has a tendency to
occasion an increased circulation, but always in consequence of the
cheapness of some other commodities. It is therefore their cheapness
which is the immediate cause of the introduction of additional money.

I have not been home since I received your letter. I will look at the
passage you refer me to in Adam Smith[38], and will consider of the
other matters in your letter, so as to be prepared to give you my theory
when we meet.

The facts you have extracted from Wetenhall's tables are curious[39],
and are hardly reconcileable to any theory. I attribute many of them to
the state of confusion into which Europe has been plunged by the extent
and nature of the war; and it would be quite impossible to reason
correctly from them without calculating what the state was of the real
as well as the computed exchange during the periods referred to. Pray
make my best respects to Mrs. Malthus, and believe me,

                                                Truly yours,
                                                      DAVID RICARDO.



I lose no time in answering your obliging letter and endeavouring as far
as lies in my power to remove the very few objections which prevent us
from being precisely of the same opinion on the subject of money and the
laws which regulate its value in the countries which have constant
commercial intercourse with each other. I have no view in this
discussion but that which you have avowed, the circulation of truth; if
therefore I should fail to convince you, and you should express your
opinions in print, it is immaterial to me whether you mention my name or
not. I trust you will do that which shall most fully tend to establish
the just principles of the science.

There does not appear to me to be any substantial difference between
bullion and any other commodity as far as regards the regulation of its
value and the laws which determine its exportation or importation. It is
true that bullion, besides being a commodity useful in the arts, has
been adopted universally as a measure of value and a medium of exchange;
but it has not on that account been taken out of the list of
commodities. A new use has been found for a particular article;
consequently there has been an increased demand for it and an augmented
supply. This new use has made every man a dealer in bullion; he buys it
to sell it again, and the general competition of all these dealers will
as surely, and as strictly, regulate its value in every country, as the
competition of the same or other dealers will regulate the value of all
other commodities. I have your sanction for calling every purchaser of
commodities a dealer in bullion; and, though in the language of
commercial men the sellers of money are in all cases called purchasers,
it is not on that account less true that they are sellers of one
commodity and purchasers of another. The nature of corn was not changed
by the discovery that a new use might be made of it by fermentation and
distillation; and, if we should hereafter discover that it might be used
for a hundred other purposes, contributing to the comforts and
enjoyments of mankind, the demand for it would increase, and its price
would in the first instance be considerably augmented; but this would be
the only change it would undergo; it would continue to be imported and
exported by the same rules as every other commodity. I have no doubt
that on this point we should not differ; it remains therefore for you to
show why the new uses, to which gold has been applied in consequence of
its being adopted as the money of the world, should exempt it from the
general law of competition, and why it should not certainly and
invariably (invariably only as that term is applied to other
commodities) seek the most advantageous market.

It is probable that the word 'redundancy' has not been happily chosen by
me to express the impression made on my mind of the cause of an
unfavourable balance of trade; but on looking over the article in the
Review[40] I find that you use it precisely in the sense in which I wish
to convey my meaning, for you admit that a relatively redundant
currency may be, and frequently is, a cause of an unfavourable balance
of trade; but you contend that it is not the only cause. Now I, so
understanding the word, contend that it is the invariable cause. This
relative redundancy may be produced as well by diminution of goods as by
an actual increase of money (or which is the same thing by an increased
economy in the use of it) in one country; or by an increased quantity of
goods or by a diminished amount of money in another. In either of these
cases a redundancy of money is produced as effectually as if the mines
had become more productive. I do not deny that temporary fluctuations do
occur in the value of the precious metals; on the contrary I maintain
that those fluctuations never cease; but I attribute them all to one
cause, namely a redundancy of the currency produced in one of the ways
above mentioned, and not to the demand for particular commodities. These
demands are in my opinion regulated by the relative state of the
currency; they are not causes but effects. You appear to me not
sufficiently to consider the circumstances [which] induce one country to
contract a debt to another. [In] all the cases you bring forward you
always suppose the [deb]t already contracted, forgetting that I
uniformly contend that it is the relative state of the currency which is
the motive to the contract itself. The corn, I say, will not be bought
unless money be relatively redundant; you answer me by supposing it
already bought and the question to be only concerning the payment. A
merchant will not contract a debt for corn to a foreign country unless
he is fully convinced that he shall obtain for that corn more money than
he contracts to pay for it, and, if the commerce of the two countries
were limited to these transactions, it would as satisfactorily prove to
me that money was redundant in one country as that corn was redundant in
the other. It would prove too that nothing but money was redundant. If
indeed sugar were exported by some other merchant, the debt for corn
would be paid without the exportation of money, and I should say that
sugar was the redundant commodity; and the exportation of sugar, the
more redundant commodity, by diminishing the aggregate amount of
commodities, would raise the value of money, so that in a short time
money would, if corn continued to be imported and sugar exported, no
longer be redundant even as compared with corn. Your observation is
just, concerning the extra expenses attending the exportation of bulky
commodities; but in all these discussions we must suppose these expenses
to make part of the price of the commodity; our comparison is made on
the prices at which the importer could afford to sell them, and those
prices necessarily include expenses of every sort. I do not think that
the knowledge of the computed exchange of Jamaica would throw any light
on the subject in dispute[41]. I will, however, endeavour to learn every
particular concerning it, and hope to be able on Saturday next to pay
you a visit in Hertfordshire, when we will further discuss these seeming

                 I am, dear Sir, with great respect,
                                      Your obedient Servant,
                                                      DAVID RICARDO.

THROGMORTON STREET, _18th June, 1811_.



I have been so much engaged since I had the pleasure of receiving your
letter that I have not had an opportunity of answering it till this

The information which you are desirous of obtaining respecting the
premium on bills in Jamaica from the year 1808 to the present period, I
will endeavour to procure, but, as these transactions all take place in
Jamaica, and as the merchants here are frequently not acquainted with
the prices at which the bills remitted to them are negociated, I am not
sure that I shall be successful.

I very much regret that there is so little probability of our finally
agreeing on the subject which has lately engaged our attention. The
definition which you give of the word 'redundant,' as applied to the
currency, is not satisfactory to me. Though it should be allowed that
the rise in the price of one commodity, in the case of a scarcity of
corn, should be accompanied with a fall in the prices of all others, why
should a redundancy of currency be impossible under such circumstances?
The currency must, I apprehend, be considered as a whole, and as such
must be compared with the whole of the commodities which it circulates.
If then it be in a greater proportion to commodities after than before
the scarce harvest, whilst no such alteration has taken place in the
proportions between money and commodities abroad, it appears to me that
no expression can more correctly describe such a state of things than a
'relative redundancy of currency.' Under these circumstances not only
money but every other commodity would become comparatively cheap as
compared with corn, and would therefore be exported in return for the
corn which would be in demand in this country. By relative redundance
then I mean, relative cheapness, and the exportation of the commodity I
deem, in all ordinary cases, the proof of such cheapness. Indeed, from
one who allows that the amount of money employed in any country is
regulated by its value, and might therefore be comparatively redundant
though it consisted only of a million, or deficient though it amounted
to a hundred millions, I should not have expected any difference of
opinion on the comparative cheapness of money being the only
satisfactory proof of its redundance. If however I thought that the
difference between us was as to the correct use of a word, I should
immediately yield the point in dispute, but I am persuaded that we do
not agree in the principle. You are of opinion that a bad harvest will
raise the price of corn, but will lower in some degree the prices of
other commodities. Whether it would or would not do so is not material;
but, if your opinion is correct, then I say there would be no
exportation of money, because money would not be the cheapest exportable
commodity. If, before the deficient harvest, money was at the same value
in any two countries, that is to say all their exportable commodities
without exception were at the same prices in both, then, according to
your view of the question, after the scarcity the prices of all
commodities would fall in the country where such scarcity occurred.
Whilst then the prices were unequal in the two countries, commodities
only would be exported in exchange for corn, and there would be no
question between us, because we differ as to the cause of the
exportation of money. You have indeed said that there may be a glut of
commodities in the foreign market. What! a glut of commodities with a
dearer price! impossible,--these two circumstances are incompatible. If
the price of any commodity had been £20 in both countries and in
consequence of the bad harvest it had been lowered to £15 in one of
them, there could not be a glut of that commodity in the other country
till it had there also fallen to £15. Not only must the price of one
commodity fall in the foreign market, but the prices of all (because you
suppose them all to have fallen in England) before money could be
exported in exchange for corn, and then I would allow that money would
be exported, but even then it would be so only because it was more cheap
on the whole, as compared with commodities in the exporting country, and
this I contend is the proof of its relative redundance. You maintain
that money is rendered cheap by a bad harvest as compared with corn
only, but with all other commodities it is dearer than before,--and
then, what appears to me very inconsistent, you insist that this
commodity thus rendered scarce and dear will be exported, though, before
it had increased in value, it had no tendency to leave us, whilst too
there are commodities which have undergone an opposite change, which
from being dearer have become cheaper, and which will nevertheless be
obstinately retained by us. This is a mode of reasoning which I cannot

With respect to the other point, namely, that the exchange accurately
measures the depreciation of the currency[43], I cannot but humbly
retain that opinion notwithstanding the high authorities against me. I
do not mean to contend that a convulsed state of the exchange, such as
would be caused by a subsidy granted to a foreign power, would
accurately measure the value of the currency, because a demand for bills
arising from such a cause would not be in consequence of the natural
commerce of the country. Such a demand would therefore have the effect
of forcing the exports of commodities by means of the bounty which the
exchange would afford. After the subsidy was paid the exchange would
again accurately express the value of the currency. The same effects
would follow, as in the case of a subsidy, from the foreign expenditure
of Government. These have a natural tendency to create an unfavourable
exchange, yet if the demand for bills is regular it is surprising how
this bounty on exportation will be reduced by the competition amongst
the exporters of commodities. I am of opinion that in the ordinary
course of affairs, if, from any of the circumstances so often mentioned,
there should be a slight alteration in the value of the currencies of
any two countries, it will speedily be communicated to the exchange;
and, if such a state of things should permanently continue, the exchange
has no tendency to correct itself. The fact however appears to be that
there is no degree of permanence in the proportions between the
currencies and the commodities of nations,--they are subject to constant
fluctuations always approaching an absolute level but never really
finding it. I hope I have not wearied you with the defence which I have
endeavoured to make for the opinions which I have imbibed. I assure you
that I am not obstinately attached to any system, but am ready to
relinquish any views I may have taken as soon as I am satisfied that
they are incorrect. I shall not fail attentively to consider the
chapters in Sir J. Steuart's work which you have mentioned[44]. I hope
before the summer is over to pay you a visit at Hertford.

                                     I am, dear Sir,
                                       Yours very sincerely,
                                                      DAVID RICARDO.

NEW GROVE, MILE END, _17 July, 1811_.



I hoped long ere this to have had the pleasure of seeing you in London.
I am anxious for an opportunity of introducing Mrs. Malthus and Mrs.
Ricardo to each other, and I shall certainly claim the half promise
which Mrs. Malthus made me on that subject when I experienced your
hospitality at Hertford. We have few engagements, and have a bed always
at your disposal, so that I shall hope on your very first visit to
London you will favour me by occupying it.

A friend of mine has been writing on the subject of bullion. I take the
liberty of sending you the MS[45]. If you could look over it and give me
your opinion of it you will much oblige me. He would be induced to
prepare it for the press if he thought that the mode in which the
argument is put is more likely to silence our adversaries and convince
those who are not our adversaries than the mode in which it has been put
by any other person. Should you be so engaged that you cannot devote
your attention to it at the present time, use no ceremony with me, but
return the MS. by the coach, directed to me at No. 16 Throgmorton
Street. With best respects to Mrs. Malthus,

                                     I am, dear Sir,
                                           Yours very truly,
                                                      DAVID RICARDO.

STOCK EXCHANGE, _17th Oct., 1811_.


                              THROGMORTON STREET, _22nd Oct., 1811_.


I am exceedingly obliged to you for the trouble which you have taken in
looking over the papers which I sent you, and for the remarks which you
have made upon them. Notwithstanding your flattering encouragement I
think I shall not have sufficient confidence again to address the
public;--the object which I had in view is completely attained,--the
public attention has been awakened, and the discussion is now in the
most able hands. I regret, however, that you cannot bring yourself to
subscribe to my doctrine respecting the exchange being influenced by no
other causes but by the relation which the amount of currency bears to
the uses for which it is required in the different nations of the
earth. This may proceed from your interpreting my proposition somewhat
too rigidly. I wish to prove that if nations truly understood their own
interest they would never export money from one country to another but
on account of comparative redundancy. I assume indeed that nations in
their commercial transactions are so alive to their advantage and
profit, particularly in the present improved state of the division of
employments and abundance of capital, that in point of fact money never
does move but when it is advantageous both to the country which sends
and the country that receives that it should do so. The first point to
be considered is, what is the interest of countries in the case
supposed? The second what is their practice? Now it is obvious that I
need not be greatly solicitous about this latter point; it is sufficient
for my purpose if I can clearly demonstrate that the interest of the
public is as I have stated it[46]. It would be no answer to me to say
that men were ignorant of the best and cheapest mode of conducting their
business and paying their debts, because that is a question of fact not
of science, and might be urged against almost every proposition in
Political Economy. It rests with you therefore to prove that a case can
exist where it may become the _interest_ of a nation to pay a debt by
the transmission of money rather than in any other mode, when money is
not the cheapest exportable commodity,--when money (taking into account
all expenses which may attend the exportation of different commodities
as well as money) will not purchase more goods abroad than it will at
home. You appear to me to have repeatedly admitted that it is the
relative prices of commodities which regulates their exportation. Is it
not then as certain that money will go to that country where the major
part of goods are cheap, as that goods will go to any other country
where the major part are dear? I say the major part, because if the
cheapness of one half of the exportable commodities be balanced by the
dearness of the other half, in both countries, it is obvious that the
commerce of such countries will be confined to the exchange of goods
only. When you say that money will go abroad to pay a debt or a subsidy,
or to buy corn, although it be not superabundant, but at the same time
admit that [it] will speedily return and be exchanged for goods, you
ap[pear to me] to concede all for which I contend, namely, that [it
will] be the _interest_ of both countries, when money is not
superabundant in the one owing the debt, that the expense of exporting
the money should be spared, because it will be followed by another
useless expense,--sending it back again.

If in any country there exists a dearness of importable commodities and
no corresponding cheapness of exportable commodities, money in such
country is above its natural level and must infallibly be exported in
payment of the dear commodities,--but what does this state of things
indicate but an excess of currency, and it may surely be correctly said
that money is exported to restore the level not to destroy it. I ought
to apologise for again troubling you with my opinions, but you have
drawn me into it. I shall be happy to renew our conversation on these
disputed points as soon as you can make it convenient to visit us in
London, and I trust it will not be long before Mrs. Malthus and you will
favour us with your company. On some future day I shall have great
pleasure in again visiting you at Hertford.

                                     I am, dear Sir,
                                           Yours very truly,
                                                      DAVID RICARDO.


                             NEW GROVE, MILE END, _22nd Dec., 1811_.


I write to you, in the first place, to remind you that Mrs. Ricardo and
I fully depend on having the pleasure of Mrs. Malthus' and your company
at Mile-end in the next month, when we hope that our endeavours to make
your visit comfortable will induce you to make a long stay with us. In
the second place, I am desirous of correcting some of the errors in the
papers which I left with you and which I have been enabled to discover,
as I have many others, by the ingenious arguments with which you have
opposed my conclusions. In my endeavours to trace the effects of a
subsidy[47] in forcing the exportation of commodities, I stated, if I
recollect rightly, that it would occasion, first, a demand for bills;
secondly, an exportation of all those commodities the prices of which
already differed so much, in the two countries, as to require only the
trifling stimulus which the first fall in the exchange would afford;
thirdly, a real alteration in the relative state of prices, viz. a rise
in the exporting and a fall in the importing country,--in a degree too
to counterbalance the advantage from the unfavourable exchange; and
lastly, a further fall of the exchange and a consequent exportation of
an additional quantity of goods and then of money till the subsidy were
paid. It appears, then, that if the subsidy were small it would be
wholly paid by the exportation of commodities, as the fall in the
exchange would be sufficient to encourage _their_ exportation, but not
sufficient to encourage the exportation of money. If the exportation of
money were in the same proportion as the exportation of commodities,
that is to say, supposing the commodities of a country to be equal to
100, and its money equal to two, then if not less than one fiftieth of
the exports in payment of the subsidy consisted of money, prices would
after such payment be the same as before in both countries, and,
although the exchange must have fallen to that limit at which the
exportation of money became profitable, it would immediately have a
tendency to recover, and would shortly rise to par; but it is precisely
because less than this proportion of money will be exported that the
exchange will continue permanently unfavourable and will have no
tendency to rise, more than it will have to fall.

I believe you admit, that in the case of an augmentation of 2 per cent.
to our currency, although it were wholly metallic, the prices of
commodities would rise in this country 2 per cent. above their former
level, and that such rise being confined to this country alone it would
check exportation and encourage importation; the consequence of which
would be a demand for bills and a fall in the exchange. This rise of
prices and fall of the exchange, proceeding from what you do not object
to call a redundant currency, would not be temporary but permanent,
unless it were corrected by a reduction of the amount of the currency
here, or by some change in the relative amount of the currencies of
other countries. That these would be the effects of a direct
augmentation of currency, I believe, you, with very few qualifications,
admit. Now, as a bad harvest or the vote of a subsidy tend [_sic_] to
produce the very same effects, namely, a relative state of high prices
at home, accompanied by an unfavourable exchange, they admit only of the
same cure,--and, as in the case of an augmentation of currency the
exchange would have no tendency to rise, neither would it in the case of
a subsidy, the unfavourable exchange being in both instances produced by
a redundant currency, or in more popular language by a relative state of
prices which renders the exportation of money most profitable[48]. I
have uniformly maintained that the money of the world is distributed
amongst the different countries according to their commerce and
payments, and that, if in any country it should from any cause happen to
exceed that proportion, the excess would infallibly be exported to be
divided amongst the other countries. I have, however, always supposed
that my readers would understand me to mean that this would be strictly
the fact only if money could be exported free from all expense. If the
expenses of exporting money to France be 3 per cent., to Vienna 5 per
cent., to Russia 6 per cent., and to the East Indies 8 per cent., the
currency of England may exceed its natural level as compared with those
countries by 3, 5, 6, and 8 per cent. respectively, and consequently the
exchange may permanently continue depressed in th[ose pr]oportions. If
an excess of currency once occurs, [the unfa]vourable exchange must
continue till some alterati[on in] the relative amount of currency. The
circumstances which [may] occasion such an alteration are numerous, and
are fully detailed in the papers which I left with you. To the precise
agreement between the effects of an augmented currency and the effects
of a subsidy I most particularly request your attention, as on such
agreement depends the whole success of the argument which I am advancing
in favour of my opinion that an unfavourable exchange has no tendency to
correct itself. It may be urged that the relative state of high prices
at home occasioned by an augmentation of currency is the natural effect
of such a cause, but that this is not the case in a subsidy; that the
exportation of commodities in payment of a subsidy is forced, and that
it will produce a glut in the foreign market, but that after the subsidy
is paid and the necessity for exportation shall cease prices will rise
in the foreign market to their former rate. This however will not be
true. Commodities may rise in a trifling degree abroad, but cannot
regain their former rate unless the exchange should also rise to par,
but this it can never do whilst the demand for bills do[es] not exceed
the supply. Now, as the prices of foreign commodities in the home
market, which could not have been supplied in the usual abundance during
the operation of the subsidy when we had a large balance to pay, would
fall, and would be in greater demand from the moment that our
commodities would be received in exchange, the exportation of our goods
would be balanced by the importation of foreign goods, and the sellers
of bills would neither exceed nor fall short of the purchasers. These
are the substance of the amendments which I wish to make to my paper,
which is now so faulty that I shall be glad to have it returned to me.
Have the goodness to bring it with you when you come to town.

                             I am, dear Sir,
                                    Yours with great esteem,
                                                      DAVID RICARDO.


                                       LONDON, _29th, August, 1812_.


I intend leaving town this evening for Ramsgate, where I think I shall
stay about a fortnight, so that I cannot accept your kind invitation for
Saturday next; but I hope it will not be long before I bend my steps
towards your hospitable roof. If on Saturday the 19th of September you
should be quite disengaged and it should be every way convenient to you
and Mrs. Malthus, I shall be glad to take tea with you on the evening of
that day. I shall be obliged to quit you on the Monday morning. I hope I
need not say that I shall be exceedingly sorry if I put you to the least
inconvenience and that it will be equally agreeable to me to visit you
on any Saturday after the 19th if I am not engaged to go to Ramsgate.

Perhaps you will be so good as to write a few lines directed to the
Stock Exchange a few days previously to the 19th as I shall certainly be
in town at that time. I am obliged to you for the interest you take in
the price of Omnium. It appears to be in a very thriving condition. Mr.
Goldsmid[50] informs me that at the period of the improvement in the
exchange about Christmas last there were no importations, as far as he
knows, of gold from France. A small quantity was imported from Lisbon. I
have consulted Wetenhall's list[51], and the following appear to be the
variations in the exchange and the price of gold about Christmas last.

  |          |          |             |             |
  |          | Exchange | Doubloons,  | Portuguese  |
  |          |   with   |  per oz.    |    gold,    |
  |          | Hamburg. |             | [per. oz.]  |
  |          |          |             |             |
  |          |          |             |             |
  |   1811.  |          | £ _s._ _d._ | £ _s._ _d._ |
  | Nov.  29 |  24      | 4  15   0   |             |
  | Dec.   3 |  24·6    |             | 4  18   6   |
  |  "     6 |  24·6    | 4  14   6   | 4  18   6   |
  |  "    13 |  25      | 4  15   6   |             |
  |  "    20 |  25      |             | 4  19   0   |
  |  "    31 |  27·6    |             |             |
  |   1812.  |          |             |             |
  | Jan.   3 |  27·6    | 4  14   0   | 4  18   6   |
  |  "    31 |  27·6    |             | 4  18   6   |
  | Feb.  21 |  28      |             | 4  17   0   |
  | Mar.  20 |  29      |             | 4  15   6   |
  |  "    31 |  29·4    | 4  14   6   | 4  13   6   |
  | April 21 |  29·4    | 4  17   6   | 4  17   6   |
  | June   5 |  28·6    |             | 4  18   6   |
  | July  31 |  28·9    | 4  19   0   | 5   0   0   |
  | Aug.  28 |  28·9    | 5   0   0   |             |
  |          |          |             |             |

The price of dollars yesterday was 6/3½ per oz., higher by one penny
than any price ever yet quoted. I should think that a very trifling rise
more will send the tokens out of circulation. We will speak on our old
subject when we meet. I am now in great haste and must therefore
conclude. Pray make my kind compliments to Mrs. Malthus,

                        And believe me, my dear Sir,
                                           Yours very truly,
                                                      DAVID RICARDO.

[At the end is written in pencil in Malthus's handwriting, 'Was any
bullion imported from Hamburg in March?']


                                            LONDON, _17 Dec., 1812_.


I have written to Mr. Thornton[52] to request him to meet you at dinner,
at my house, on any day most convenient to him, after Saturday and
before Thursday, but I have not had his answer in time for this day's
post. I will send you a line at the King of Clubs. I shall only ask Mr.
Sharp to meet us. Will you not stay with us whilst you are in town? I
assure you it would be quite convenient, and it would afford me great
pleasure. If Mrs. Malthus accompany you it will be still more agreeable,
and I am desired by Mrs. Ricardo to add her solicitations to my own.

On many points connected with our old question we are I believe
agreed,--though there is yet some difference between us. I have not
lately given it so much consideration as you have,--and I always regret
that I do not put down in writing, for I have a very treacherous memory,
the chief points of difference that occur in our discussions. I cannot
help thinking that there is no unfavourable exchange which may not be
corrected by a diminution in the amount of the currency, and I consider
this to afford a proof that the currency must be redundant for a time at
least. Whilst the exchange is unfavourable it is always accompanied,
though not always caused, by an excess of currency. With best respects
to Mrs. Malthus,

                                  I am, my dear Sir,
                                           Yours most truly,
                                                      DAVID RICARDO.

... As I was about leaving the city I received Mr. Thornton's answer. He
is engaged on Wednesday and Thursday, and has fixed on Monday for our
meeting, but he wishes us to meet at his house as there is to be a
debate in the House of Lords on the Bullion question, and he is not sure
that his presence may not be necessary in the Commons. I will settle
this point with him, and if you do not hear from me I shall expect you
at my house on Monday, if you do not agree to come on Saturday evening.

    NOTE.--Thomas Tooke, in his 'History of Prices and of the State
    of the Circulation from 1839 to 1847' (publ. 1848)[53], refers to
    this dispute between Ricardo and Malthus, on the relation of the
    currency to the balance of trade, and quotes long extracts from
    the article of Malthus in the Edinburgh Review, where (as in this
    correspondence[54]) Malthus maintains that the precious metals are
    continually used in payments made by one country to another even if,
    till that moment, the currencies of both have been at their usual
    level. The view of Ricardo is that nothing but the state of the
    currency can influence the foreign exchanges. As late as 1840
    statesmen clung to the idea that the Directors of the Bank of
    England could only operate on the exchanges by increasing or
    diminishing the circulation[55]. Tooke (followed later by Newmarch,
    hardly a less authority) sides with Malthus, and thinks that
    Ricardo's reply to him, in the Appendix to the Tract on Bullion, is
    'little more than a repetition in varied forms of expression,
    according to the phraseology peculiar to the theory in question, of
    the axiom that gold will not be exported unless it is cheaper than
    another commodity, assuming consequently the fact to have been that
    all commodities were at that time dearer in this country than they
    were abroad, and relatively to gold;'--whereas it appears[56] that
    between 1809 and 1811 the bulk of commodities were at a far higher
    price (measured in gold) on the Continent than in England; the
    'continental system' had forced vast stores of goods to lie
    unsaleable in England for want of physical ability, on the part of
    the merchants of them, to land them on the Continent, though they
    did their best to smuggle them by way of Heligoland or Turkey into
    Germany and the door of Portugal was ajar. Coffee was unsaleable in
    England at 6_d._ the pound, and at the same time it was fetching
    4_s._ or 5_s._ on the Continent. Napoleon used to look at the
    English price current, and, if he found gold dear and coffee cheap
    in England, he was satisfied that his Berlin and Milan decrees were
    well carried out, while the English saw only another proof that the
    Bank was extending its issues overmuch. Tooke and Malthus agreed
    that the difference between the market price and the mint price of
    gold bullion was the full measure of the depreciation of the
    currency; but the 'ultra-bullionists' would not stop there. Tooke,
    like Ricardo on another occasion (see Letter XLII), had to 'write a
    book to convince' them, namely his 'Thoughts and Details on the High
    and Low Prices of the last Thirty years,' (1823).


                                          LONDON, _30th Dec., 1813_.


I have been amusing myself for one or two evenings in calculating the
exchanges, price of gold, etc., at Amsterdam, and I enclose the result
of my labour. I have every reason to believe that my calculations are
correct,--though I am somewhat puzzled at the profit which there
appears to be on the importation of gold from Amsterdam, if the prices
there be quoted correct [_sic_]. If the difference were the other way,
we might ascribe it to the money of Holland not being so good as it
ought to be by the mint regulations; but in the present instance for
guilders, as good as they are coined, gold can be bought 9-1/2 per cent.
cheaper than in London. I am told that gold which cannot be exported has
sunk considerably in price although gold that may be exported keeps its
price. I fully expect that foreign gold will be lower.

We have had a continuance of foggy weather ever since Monday. We are
obliged to burn candles during the day, and at night it is with the
greatest difficulty we can find our way to our homes. I hope you are
more fortunate and breathe a clearer atmosphere. We shall expect you in
Brook Street on your next visit to London. Have the goodness to write
the day before you come. With best wishes to Mrs. Malthus,

                                     I am, dear Sir,
                                           Yours very truly,
                                                      DAVID RICARDO.


Columns 11 and 12 will show on inspection whether silver be passing from
London to Amsterdam or from Amsterdam to London. Suppose the price of
silver in London to be 6_s._ 7_d._ and the exchange with Amsterdam
28_s._ Against 6_s._ 7_d._ in column 11 the par of exchange is 29·41 in
column 12; consequently being at 28 it is unfavourable to Amsterdam, and
silver can be exported from Amsterdam to London with a profit of 5 per
cent. If under the same circumstances the exchange had been 31, silver
could have been exported to Amsterdam with a profit of 5 per cent.

Columns 8, 9 and 10 will show from which country gold may be profitably
exported. Suppose the price of gold in Amsterdam to be 16 per cent.
premium, the agio 3 per cent., the exchange with London 31, and the
price of gold in London £5 10_s._, from which country would gold be
exported and with what profit?

Against 16 per cent. in column 1 the par of exchange in column 8 is
39·64, and against £5 10_s._ the price of gold in London in column 9 the
multiplier ·708 stands in column 10. 39·64 multiplied by ·708 gives
28·06 as the par for bank notes; therefore, when the exchange is at 31,
it is unfavourable to Holland, and gold may be exported from thence with
a profit of 10-1/2 per cent. nearly. Or thus: an oz. of standard gold,
when the marc could be bought at 16 per cent. premium at Amsterdam,
would cost 154·3 Flemish shillings banco, when the agio was 3 per cent.,
which reduced into English money at 31 [Flemish] shillings per £
sterling will give £4 19_s._ 6-3/4_d._ But it will sell in London for £5
10_s._ which is a profit of 10-1/2 per cent. nearly.

  Table Key

    1: Price of gold at Amsterdam. Premium on _f._ 355 per marc.
    2: Value of a marc in current guilders.
    3: Corresponding price of an oz. of standard gold in London.
    4: Corresponding price of an oz. of standard silver in London.
    5: Value of an oz. of standard gold in Flemish current shillings.
    6: Value of an oz. of standard gold in Flemish Banco shillings.
          Agio 3 p.c.

  |      1       |    2     |     3[57]   |   4     |     5    | 6[58] |
  |              |          |£ _s._  _d._ |         |          |       |
  | Par _f._ 355 |_f_ 355   |             | 68·00   |   137    | 133   |
  |              |          |             |   pence |          |       |
  | 1 p.c. prem. |    358·55|             | 67·32   |   138·4  | 134·3 |
  | 2       "    |    362·10|             | 66·67   |   139·8  | 135·7 |
  | 3       "    |    365·65|             | 66·02   |   141·3  | 137·2 |
  | 4       "    |    369·20|             | 65·38   |   142·5  | 138·6 |
  | 5       "    |    372·75|             | 64·76   |   143·9  | 139·8 |
  | 6       "    |    376·30|             | 64·15   |   145·3  | 141·1 |
  | 7       "    |    379·85|             | 63·55   |   146·6  | 142·5 |
  | 8       "    |    383·40|             | 62·96   |   148    | 143·9 |
  | 9       "    |    386·95|             | 62·39   |   149·3  | 145·3 |
  |              |    389·37|3 17  10-1/2 | 62      |   150·3  | 146·0 |
  |10       "    |    390·50|3 18   1     |         |   150·7  | 146·3 |
  |11       "    |    394·05|3 18  10     |         |   152·1  | 147·6 |
  |12       "    |    397·60|3 19   6-1/2 |         |   153·5  | 149·0 |
  |13       "    |    401·15|4  0   3     |         |   154·8  | 150·3 |
  |14       "    |    404·70|4  0  11-1/2 |         |   156·2  | 151·7 |
  |15       "    |    408·25|4  1   8     |         |   157·5  | 152·9 |
  |16       "    |    411·80|4  2   4-1/2 |         |   158·9  | 154·3 |
  |17       "    |    415·35|4  3   0-1/2 |         |   160·3  | 155·6 |
  |18       "    |    418·90|4  3   9     |         |   161·7  | 157·0 |
  |19       "    |    422·45|4  4   5-1/2 |         |   163·1  | 158·3 |
  |20       "    |    426   |4  5   2     |         |   164·5  | 159·6 |
  |21       "    |    429·55|4  5  10-1/2 |         |   165·8  | 161·0 |

  Table Key

    7: Real par of exchange in Flemish current shillings per £ sterling
          in gold.
    8: Real par of exchange in Flemish Banco shillings per £ sterling in
          gold. Agio 3 p.c.
    9: When the price of gold in London in bank notes is
   10: The bullion par must be multiplied by
   11: Price of standard silver in London in bank notes per oz.
   12: Par of exchange with Amsterdam in Banco. Agio 3 p.c.

  |     7     |      8      |      9      |  10  |    11    |    12    |
  |           |             | £ _s._ _d._ |      |_s._ _d._ |          |
  |      35·20|    34·17    |             |      |          |          |
  | (1.) 35·55|    34·51    | 4   0   0   | ·973 | 5    2   |   37·48  |
  | (2.) 35·90|    34·85    | 4   1   0   | ·961 | 5    3   |   36·88  |
  | (3.) 36·25|    35·19    | 4   2   0   | ·949 | 5    4   |   36·60  |
  | (4.) 36·61|    35·54    | 4   3   0   | ·938 | 5    5   |   35·75  |
  | (5.) 36·95|    35·87    | 4   4   0   | ·927 | 5    6   |   35·21  |
  | (6.) 37·31|    36·22    | 4   5   0   | ·916 | 5    7   |   34·68  |
  | (7.) 37·66|    36·56    | 4   6   0   | ·905 | 5    8   |   34·17  |
  | (8.) 38·01|    36·90    | 4   7   0   | ·895 | 5    9   |   33·67  |
  | (9.) 38·36|    37·24    | 4   8   0   | ·885 | 5   10   |   33·19  |
  |      38·61|    37·48    |             |      |          |          |
  |(10.) 38·71|    37·58    | 4   9   0   | ·875 | 5   11   |   32·72  |
  |(11.) 39·06|    37·92    | 4  10   0   | ·865 | 6    0   |   32·27  |
  |(12.) 39·62|    33·27    | 4  11   0   | ·856 | 6    1   |   31·84  |
  |(13.) 39·77|    38·62    | 4  13   0   | ·838 | 6    2   |   31·42  |
  |(14.) 40·12|    38·96    | 4  15   0   | ·820 | 6    3   |   30·98  |
  |(15.) 40·48|    39·30    | 4  17   0   | ·803 | 6    4   |   30·58  |
  |(16.) 40·83|    39·64    | 4  19   0   | ·786 | 6    5   |   30·17  |
  |(17.) 41·18|    39·98    | 5   0   0   | ·779 | 6    6   |   29·79  |
  |(18.) 41·54|    40·32    | 5   2   0   | ·764 | 6    7   |   29·41  |
  |(19.) 41·89|    40·67    | 5   4   0   | ·749 | 6    8   |   29·04  |
  |(20.) 42·24|    41·02    | 5   6   0   | ·735 | 6    9   |   28·69  |
  |(21.) 42·59|    41·36    | 5   8   0   | ·721 | 6   10   |   28·33  |
  |           |             | 5  10   0   | ·708 | 6   11   |   27·99  |
  |           |             |             |      | 7    0   |   27·66  |
  |           |             |             |      | 7    1   |   27·32  |
  |           |             |             |      | 7    2   |   27·02  |
  |           |             |             |      | 7    3   |   26·71  |
  |           |             |             |      | 7    4   |   26·40  |
  |           |             |             |      | 7    5   |   26·11  |
  |           |             |             |      | 7    6   |   25·82  |


                                             LONDON, _1 Jan., 1814_.


Having finished a table for the Hamburgh exchanges, similar to that
which I have already sent you for Holland, I thought you might like to
have a copy of it[59]. In this as well as in the other the result is not
quite satisfactory; for example, at the present time I believe the
exchange with Hamburgh is quoted 28_s._ and the price of dollars 6_s._
11-1/2_d._ By the table it appears that with [such] a price of dollars
the exchange at par would be 25_s._; consequently it is now unfavourable
to Hamburgh 12 per cent., which appears to me to be excessively high. In
fact, under the present circumstances, there can be no intercourse with
Hamburgh, and the quotation must be only nominal. Mrs. Ricardo and I
leave London to-morrow early for Bradford; from thence we intend going
to Gatcomb[60], and expect to be in town again on Thursday. I hope we
shall soon see you. With best wishes to Mrs. Malthus,

                                     I am, dear Sir,
                                           Yours very truly,
                                                      DAVID RICARDO.

  Table Key

    A: Price of a ducat or 53 grains of fine gold in marks banco.
    B: Price of an oz. of standard gold in Flemish shillings banco.
    C: Par of exchange with London in Flemish shillings banco per £
          sterling of gold.
    D: Corresponding price of an oz. of standard silver in London in
    E: Corresponding price of an oz. of standard gold in London in £,
    F: When the price of gold in London in bank-notes is per oz.
    G: The bullion par of exchange must be multiplied by
    H: When the price of dollars in London is per oz.
    I: The par of exchange in silver is

  |  A |   B   |   C  |   D  |   E  |     F      | G  |   H     |   I  |
  |    |       |      |      |      | £ _s._ _d._|    |_s._ _d._|      |
  |5·39|119·33 | 30·60| 70·97|      | 4   0   0  |·973| 4 11-1/2| 35·08|
  |5·45|120·66 | 30·94| 70·19|      | 4   1   0  |·961| 5  1    | 34·22|
  |5·51|121·99 | 31·28| 69·43|      | 4   2   0  |·949| 5  2-1/2| 33·39|
  |5·57|123·32 | 31·63| 68·68|      | 4   3   0  |·938| 5  4    | 32·61|
  |5·63|124·65 | 31·97| 67·95|      | 4   4   0  |·927| 5  5-1/2| 31·87|
  |5·69|125·98 | 32·33| 67·23|      | 4   5   0  |·916| 5  7    | 31·15|
  |5·75|127·31 | 32·68| 66·53|      | 4   6   0  |·905| 5  8-1/2| 30·47|
  |5·81|128·64 | 33·03| 65·84|      | 4   7   0  |·895| 5 10    | 29·82|
  |5·87|129·96 | 33·37| 65·17|      | 4   8   0  |·885| 5 11-1/2| 29·19|
  |5·93|131·29 | 33·72| 64·51|      | 4   9   0  |·875| 6  1    | 28·59|
  |5·99|132·62 | 34·07| 63·86|      | 4  10   0  |·865| 6  2-1/2| 28·02|
  |6·05|133·95 | 34·42| 63·23|      | 4  11   0  |·856| 6  4    | 27·46|
  |6·11|135·28 | 34·76| 62·61|      | 4  13   0  |·838| 6  5-1/2| 26·93|
  |6·17|136·61 | 35·08| 62   | 3·893| 4  15   0  |·820| 6  7    | 26·42|
  |6·23|137·92 | 35·42|      | 3·931| 4  17   0  |·803| 6  8-1/2| 25·93|
  |6·29|139·25 | 35·76|      | 3·968| 4  19   0  |·796| 6 10    | 25·46|
  |6·35|140·57 | 36·11|      | 4·005| 5   0   0  |·779| 6 11-1/2| 25   |
  |6·41|141·89 | 36·45|      | 4·043| 5   2   0  |·764| 7  1    | 24·55|
  |6·47|143·21 | 36·79|      | 4·081| 5   4   0  |·749| 7  2    | 24·13|
  |6·53|144·54 | 37·14|      | 4·119| 5   6   0  |·735|         |      |
  |6·59|145·86 | 37·48|      | 4·157| 5   8   0  |·721|         |      |
  |6·65|147·19 | 37·83|      | 4·195| 5  10   0  |·708|         |      |
  |6·71|148·51 | 38·18|      | 4·233|            |    |         |      |
  |6·77|149·84 | 38·52|      | 4·270|            |    |         |      |
  |6·83|151·17 | 38·87|      | 4·308|            |    |         |      |
  |6·89|152·50 | 39·22|      | 4·346|            |    |         |      |

    N.B.--3 marks are equal to 8 Flemish shillings banco. When dollars
    are 4_s._ 11-1/2_d._, standard is 2-1/2_d._ more. When 6_s._ 1_d._,
    3_d._ more. When 7_s._, 3-1/2_d._ more.


[Addressed to Penr[h]yn Arms, Bangor, North Wales.]

                                            LONDON, _26 June, 1814_.


... I cannot partake of your doubts respecting the effects of
restrictions on the importation of corn in tending to lower the rate of
interest. The rise of the price or rather the value of corn without any
augmentation of capital must necessarily diminish the demand for other
things even if the prices of those commodities did not rise with the
price of corn, which they would (tho' slowly) certainly do. With the
same capital there would be less production and less demand. Demand has
no other limits but the want of power of paying for the commodities
demanded. Everything which tends to diminish production tends to
diminish this power. The rate of profits and of interest must depend on
the proportion of production to the consumption necessary to such
production,--this again essentially depends upon the cheapness of
provisions, which is after all, whatever intervals we may be willing to
allow, the great regulator of the wages of labour. Nothing can tend more
effectually to diminish the demand abroad for our manufactures than to
refuse to import corn and other commodities which we [had] usually taken
in exchange for such manufactures. If we rigorously refused to import
any [foreign] commodity whatever, I firmly believe that we should soon
cease to export any commodity, even if we made gold an exception to the
general rule. Our money would stand at a higher level than in other
countries, but there are limits beyond which it could not go. All trade
is at last a trade of barter, and no nation will long buy unless it can
also sell,--nor will it long sell if it will not also buy. If by
adopting such policy [_sic_] a country were to enhance the value of the
raw materials which it consumed, of which corn is the principal, it
would thereby lower the rate of interest. If otherwise, it might be
deprived of many luxuries and many comforts, or might enjoy them in less
abundance, but the rate of interest would not fall. This is a
repetition, you will say, of the old story, and I might have spared you
the trouble of reading at 200 miles distance what I had so often stated
to you as my opinion before; but you have set me off, and must now abide
the consequences. I never was more convinced of any proposition in
Political Economy than that restrictions on importation of corn in an
importing country have a tendency to lower profits. Remember me kindly
to Mrs. Malthus.

                                           Yours very truly,
                                                      DAVID RICARDO.


                                          _25th July, 1814_.


I am writing to you from Gatcomb, where I arrived with S---- as my
companion yesterday afternoon. To enable me to quit London at the time I
did I was obliged to bestow an unusual degree of attention to business
of all sorts, and, though I had written a letter to you in answer to
your last before I left Brook Street, I was so dissatisfied with it that
I could not resolve to send it. I shall, I fear, succeed no better now,
but you shall have it whatever it may be, as, if I defer writing any
longer, you may have quitted Bangor before my letter arrives there[61].
It appears to me that you have changed the proposition on which we first
appeared to differ. The proposition advanced by you, if I recollect
right, was that restrictions on the importation of corn would not lower
the rate of profits and interest, but now you add--or rather your
argument leads to that conclusion,--'if the consequence of such
restriction be a great reduction of capital.' So amended I should not
object to the proposition,--but I think it material that causes should
be kept distinct, and their due effects ascribed to each. Restrictions
on the trade of corn, if capital suffers no diminution, will occasion a
fall in the rate of profits and interest. A reduction of capital
independently of restrictions on importation of corn will have a
tendency to raise profits and interest,--but there is no necessary
connection between these two operating causes, as they may at the same
time be acting together or entirely in opposite directions. Effective
demand, it appears to me, cannot augment or long continue stationary
with a diminishing capital; and your question why if this were true
profits rise at the commencement of a war? does not, I think, bear any
connection with the argument, because profits will augment under a
diminution of capital and produce, if demand though diminished does not
diminish so rapidly as capital and produce. For the opposite reason
profits will diminish when capital and produce increase. This is totally
independent of the rate of production, and often, I think, may
counteract the effects which usually follow, and in the long run will
almost always follow, from increasing or diminishing capital. You say
that 'the proportion of production to the consumption necessary to such
production seems to be determined by the quantity of accumulated capital
compared with the demand for the products of capital, and not by the
mere difficulty and expense of procuring corn.' It appears to me that
the difficulty and expense[62] of procuring corn will necessarily
regulate the demand for the products of capital, for the demand must
essentially depend on the price at which they can be afforded, and the
prices of all commodities must increase if the price of corn be
increased. The capitalist 'who may find it necessary to employ a hundred
days' labour instead of fifty in order to produce a certain quantity of
corn' cannot retain the same share for himself unless the labourers who
are employed for a hundred days will be satisfied with the same quantity
of corn for their subsistence that the labourers employed for fifty had
before. If you suppose the price of corn doubled, the capital to be
employed, estimated in money, will probably be also nearly doubled,--or
at any rate will be greatly augmented; and, if his monied income is to
arise from the sale of the corn which remains to him after defraying the
charges of production, how is it possible to conceive that the rate of
his profits will not be diminished? I hope you continue to enjoy
yourself amidst the wild scenery with which you are encompassed.--The
weather here is delightful, and I am as happy as I can be, separated
from the whole family (except S----) and surrounded by upholsterers,
carpenters, etc....

                                           Yours very truly,
                                                      DAVID RICARDO.

I believe that in this sweet place I shall not sigh after the Stock
Exchange and its enjoyments.


                                      GATCOMB PARK, _11 Aug., 1814_.


I received your letter last Sunday, and in the evening of that day Mrs.
Ricardo and the rest of my family arrived here. I have been showing them
all the beauties of this place, and my time has been pretty well
engrossed by them these three last days.... The fall in Omnium is I
believe to be attributed to our continued expenses, and the expectation
of another loan before the payments on the present are completed. The
present state of the Exchanges seem[s] to indicate a real fall in the
value of foreign currencies; it cannot be attributed to any change of
taste for particular commodities, or any other caprice. I expected that
Peace would lower the value of foreign currency, but I confess not in
the degree which has taken place. It leaves the question between us
undecided--namely, whether the exchange is not operated upon solely by
the relative preponderance of currency. Peace has rendered the currency
of the continent much more efficacious to the business to be done.

With regard to our present question, we differ as to effects which must
_necessarily_ follow from restrictions on the importation of foreign
corn. I do not think that a diminution of capital is a _necessary_, but
a probable effect. We agree as to the consequences which will attend a
diminution of capital, but I should say that a real diminution of
capital will diminish the work to be done, and consequently will affect
the wages of labour, and the demand for food. In the case supposed,
restrictions on importation of corn, encouragement is given to the
further cultivation of our own land,--but _if_ accompanied by a
diminution of capital a discouragement is also given to the cultivation
of the land, and whether profits rise or fall must in my opinion depend
upon the degree of these contra-operating causes. It is true that the
woollen or cotton manufacturer will not be able to work up the same
quantity of goods with the same capital if he is obliged to pay more for
the labour which he employs, but his profits will depend on the price at
which his goods when manufactured will sell. If every person is
determined to live on his revenue or income, without infringing on his
capital, the rise of his goods will not be in the same proportion as the
rise of labour, and consequently his percentage of profit will be
diminished if he values his capital, which he must do, in money at the
increased value to which all goods would rise in consequence of the rise
of the wages of labour. In such case I should say that the effective
demand had diminished, because the same quantity of commodities could
not be annually consumed. If the same quantity of commodities continued
to be consumed, then it must be evident that it would be at the expense
of capital. In such case capital would diminish faster than demand,
which would tend to keep up profits. But how long will [people] continue
to indulge in luxuries at the expense of a continual diminution of
capital? It is the road to ruin, and, though frequently persisted in by
a few individuals, it is not often found to be the folly of nations. On
the contrary, if any causes interrupt the progress of nations, if
restrictions on their trade, or expensive wars, tend to diminish their
capital, at such times more economy is practised, and, as Adam Smith has
observed, the profusion of governments is counteracted by the frugality
of individuals. If so, I cannot be incorrect in saying that, though for
a short period capital and produce may diminish faster than demand,--yet
in the long run effective demand cannot augment or continue stationary
with a diminishing capital. You say, what I did not before understand
you to admit, 'that the whole amount of demand will from advanced prices
diminish of course, but the proportion of demand to supply, which is
always the main point in question, as determining prices and profits,
may continue to increase, _as it does in all countries the capital of
which is retrograde_;' but I do not agree even to this explanation, and
it appears to me to be at variance with an opinion which I have often
heard you express, viz. The temptation to save from revenue to augment
capital is always in proportion to the rate of profits, and, if from
accumulation of capital profits and interest should fall very low
indeed, at that point accumulation would nearly stop, because it would
be almost without an object. In this opinion I most cordially agree, and
I cannot help thinking that it is at variance with the above sentence
which I have quoted from your letter. I maintain, as I think you have
done, that consumption as compared with production is always greatest
where capital is most accumulated. Diminish the capital of England one
half, and you undoubtedly augment profits, but it will not be in
consequence of a greater proportion of demand but of a greater
proportion of production; demand as compared with production could
hardly fail to diminish. Individuals do not estimate their profits by
the material production, but nations invariably do. If we had precisely
the same amount of commodities of all descriptions in the year 1815 that
we now have in 1814, as a nation we should be no richer; but, if money
had sunk in value, they would be represented by a greater quantity of
money, and individuals would be apt to _think_ themselves richer. I
shall be in town either next week or the week after. I wish you would
return here with me. We would discuss these important points in our
shady groves. With kind regards to Mrs. Malthus,

                                          I am, yours truly,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, MINCHIN HAMPTON,
                                          _30th Aug., 1814_.


I left London on the 19th, the day before your letter arrived there,
having dispatched all my business in four days. The appearance of the
Omnium was not sufficiently inviting to induce me to protract my stay
longer than was absolutely necessary. David[63], who is come to pass
his holidays with us, brought me your letter. I regret that I shall not
see you for some time, as you cannot come here, and I shall not have it
in my power at present to visit Hail[e]ybury. I expected to have a great
deal of leisure time in the country, but as yet I have not had any.
Walking and riding with my family, and friends who have visited us, have
entirely occupied me; besides which, the only room in my house which is
not finished is the library, owing to the tedious time which they have
taken to fix my bookcases.

I think if we could talk together we should not _very_ much differ on
the question which has lately engaged us; our principal difference is
about the permanence of the effects. It will often happen that the
scarcity of a commodity or the increasing demand for it will for a time
increase profits; but it is not therefore correct to say that, where
profits are high, they are so because the demand for produce is great
compared with supply. There are many other causes which will occasion
profits to be permanently high. There may be two countries, in one of
which, from bad government and the consequent insecurity of property, or
from the little disposition to saving in the people, profits may be
permanently high and interest at 12 per cent., whilst in the other,
where these causes do not operate, profits may be permanently low and
interest at 5 per cent. It would surely be incorrect to say that the
cause of the high profits was the greater proportion of demand for
produce, when in both countries the supply would be or might be
precisely equal to the demand and no more. In America profits are higher
than in England, and yet I can have no doubt that the proportion of
supply to demand is greater in the former country. I think it must
necessarily be so in all countries which are most rapidly increasing in
riches, for from whence do riches come but from production
preponderating over consumption? Profits are sometimes high when corn is
scarce and dear; but this arises from the stimulus which the high prices
give to industry. If the population could immediately accommodate itself
to the scanty supply, no such effects would follow; and in fact they
only continue till time has gradually equalised them.

I sometimes suspect that we do not attach the same meaning to the word
'demand.' If corn rises in price, [you] perhaps attribute it to a
greater demand. I should [attribute it to] a greater competition. The
demand cannot, I think, be said to increase if the quantity consumed be
diminished, although much more money may be required to purchase the
smaller than the larger quantity. If it were to be asked what the demand
was for port-wine in England in the years 1813 and 1814, and it were to
be answered that in the first year she had imported 5000 pipes, and in
the next 4500, should we not all agree that the demand was greater in
1813? Yet it might be true that double the quantity of money was paid
for the 4500 pipes.

Have you read the report of the Lord[s'] Committee on the Corn question?
It discloses some important facts; but how ignorant the persons giving
evidence appear to be of the subject as a matter of science! The
Editor's remarks too are very unworthy of his paper.

... With best compliments to Mrs. Malthus,

                                          I am, yours truly,
                                                      DAVID RICARDO.

    NOTE.--The 'Editor' was Lord Hardwicke, who moved for the Committee
    10th June, 1814, and presented its report to the House on 23rd Nov.
    1814. See Hansard, under date Feb. 17, 1815, p. 796; Ann. Register
    1815, Gen. Hist. p. 130. The reports were 'ordered to be printed'
    25th July, 1814. The first was on a single sheet, and was simply a
    complaint that the Committee could not take evidence; the second
    reported that they had heard evidence, but thought that before any
    certain conclusions could be reached the inquiry must go on further.
    There is a copiously annotated copy of them in the 'Place'
    Collection in the British Museum.


                                     GATCOMB PARK, _16 Sept., 1814_.


... I agree with you that, when capital is scanty compared with the
means of employing it, from whatever cause arising, profits will be
high. Whether temporarily or permanently must of course depend upon
whether the cause be temporary or permanent. It is, however, very
important to ascertain what the causes are which make capital scanty
compared with the means of employing it, and how far, when ascertained,
they may be considered temporary or permanent.

It is in this inquiry that I am led to believe that the state of the
cultivation of the land is almost the only great permanent cause. There
are other circumstances which are attended with temporary effects of
more or less duration and frequently operate partially on particular
trades. The state of production from the land, compared with the means
necessary to make it produce, operates on all, and is alone lasting in
its effects.

We agree too that effectual demand consists of two elements, the _power_
and the _will_ to purchase; but I think the will is very seldom wanting
where the power exists, for the desire of accumulation will occasion
demand just as effectually as a desire to consume; it will only change
the objects on which the demand will exercise itself. If you think
that, with an increase of capital, men will become indifferent both to
consumption and accumulation, then you are correct in opposing Mr.
Mill's idea[64], that in reference to a nation supply can never exceed
demand; but does not an increase of capital beget an increased
inclination for luxuries of all descriptions? and, though it appears
natural that the desire of accumulation should decrease with an increase
of capital and diminished profits, it appears equally probable that
consumption will increase in the same ratio. Exchanges will be as active
as ever; the objects only will be altered. If demand _appears_ more
active where capital is scarce, it is only because the _power_ to
purchase is comparatively greater. Wherever capital is scanty, the
necessaries of life are cheap, if the country is commonly fertile; and,
as capital and population increase, the necessaries of life rise in
price, and thus is the power of purchasing, though really greater,
comparatively less. In a country with little comparative capital, the
value of the yearly produce may very rapidly increase; and, if it be
said to be in consequence of the greatness of demand, I should contend
that in such country the demand would not be limited in the same degree
by a want of power as in a country abounding in capital, and merely
because provisions would not rise in the same proportion in the two
countries. If half as much corn [again] as usual were produced next
year, a great part of it would undoubtedly be wasted; and the same might
be said of any commodities which we might be ingenious enough to name:
but the real question is this--If money should retain the same value
next year, would any man (if he had it) want the will to spend half as
much again as he now does? and, if he did want the will, would he feel
no inclination to add the increase of his revenue to his capital and
employ it as such? In short, I consider the wants and tastes of mankind
as unlimited. We all wish to add to our enjoyments or to our power.
Consumption adds to our enjoyments, accumulation to our power, and they
equally promote demand.

Mrs. Ricardo and I are going this morning to Cheltenham, which is
eighteen miles distant from us; we shall return to-morrow.

Mr. Smith[65], whom I met at your house, lives about nine miles from

... I hope you recollect that we are not quite twenty-eight miles from
Bath. You and Mrs. Malthus might, I think, give us the pleasure of your
company for a few days during your Christmas vacation[66], and might at
the same time visit your friends; but as you have seen them so lately
you would give us great pleasure if you would give us the whole of your
time. Mrs. Ricardo, who is standing by me, has made me express myself in
a more than usually bungling manner. She unites with me in kind regards
to Mrs. Malthus.

                                       Yours very sincerely,
                                                      DAVID RICARDO.


                                    GATCOMB PARK, _23rd Oct., 1814_.


On the day that you were writing your last letter to me, I was
travelling to London with Mrs. Ricardo, where my business detained me a
little more than a week. On my return your letter was delivered to me. I
am sorry that you cannot make it convenient to pay us a visit at
Christmas. I shall however depend on your not allowing any common
occurrence to prevent you and Mrs. Malthus from favouring[67] us with
your company during your next summer vacation. I hope you will not
repent having set me the example of using a larger sized paper. If you
are tired with my long letter, you only will be to blame for it.

It does not appear to me that we very materially differ in our ideas of
the effects of the facility or difficulty of procuring food on the
profits of stock. You say that I 'seem to think that the state of
production from the land compared with the means necessary to make it
produce is almost the sole cause which regulates the profit of stock and
the means of advantageously employing capital.' This is a correct
statement of my opinion, and not, as you have said in another part of
your letter and which essentially differs from it, 'that it is the
_quantity_ of produce compared with the expense of production that
determines profits.' You, instead of allowing the facility of obtaining
food to be almost the sole cause of high profits, think it may be safely
said to be the main cause, and also a difficulty of acquiring food the
main cause of low profits. There appears to me to be very little
difference in these statements. You infer that my doctrine is not
correct because improvements may take place in agriculture or
manufactures, because new leases may not be granted precisely at the
time of the rise in the price of raw produce, and because the price of
labour may not rise without delay in the same proportion. But
improvements in agriculture or in machinery which shall facilitate or
augment production will according to my proposition increase profits
because 'it will augment production compared with the means necessary
to that production.' The same may be said of the wages of labour not
rising in the same proportion as the price of produce. As for old leases
affecting the question, you will observe that in calculating the profits
made by agriculture we must estimate leases at the value which they bear
at the time of the calculation and not at the value agreed upon at an
antecedent period. If the question were concerning the profits of a
manufactory or distillery for example, we should calculate such profits
according to the then value of barley, although a few individual
distillers might have been so fortunate as to purchase their barley when
it was 25 per cent cheaper. These points then are expressly allowed for
in my proposition, and are by no means at variance with it. You add to
your statement [']that in the interval between the two extremes (of high
profits and low profits caused by facility or difficulty of procuring
food) considerable variations may take place, and that practically no
country was ever in such a state as not to admit of increase of profits
on the land for a period of some duration, from the advanced price of
raw produce.' I agree that variations will take place because the means
of obtaining produce are not always equally expensive; and, if they
should be, the produce itself may become more valuable, and in either
case profits will vary. But even during these temporary variations the
great cause, namely the accumulation of capital, may be paving the way
for permanently diminished profits. It appears to me important to
ascertain what the causes are which may occasion a rise in the price of
raw produce, because the effects of a rise, on profits, may be
diametrically opposite. A rise in the price of raw produce may be
occasioned by a gradual accumulation of capital, which by creating new
demands for labour may give a stimulus to population and consequently
promote the cultivation or improvement of inferior lands; but this will
not cause profits to rise but to fall, because not only will the rate of
wages rise, but more labourers will be employed without affording a
proportional return of raw produce. The whole value of the wages paid
will be greater compared with the whole value of the raw produce
obtained. A rise of raw produce may proceed from one or more bad
seasons, which will undoubtedly increase profits because the price of
produce would rise considerably more than in the proportion of the
deficient quantity, and would therefore be much ahead of the price
[_sic_] of production. An advanced price of raw produce may also proceed
from a fall in the value of currency, which would raise the price of
produce, for a time, more than it would wages, and would therefore raise
profits. Both these you will allow are temporary causes, no way
affecting the principle itself but merely disturbing it in its progress.
Restrictions on importation of raw produce may cause a rise in its price
which will be permanent or temporary according as the bad policy which
dictated the restrictive law may be permanent or temporary. In the first
instance profits will be raised; but they will ultimately fall below
their former level. From what I have said it will appear that I am of
opinion that a permanent rise in the rate of profits on land is never
preceded by a rise but by a fall in the price of raw produce; and,
though profits may be raised by a rise of the price of produce, they
will generally ultimately settle at a rate lower than that from which
they started. The converse of this, as it regards low prices of produce,
I hold to be equally true. I should be glad to have your sentiments on
this point. There may be other causes of high price, which do not at
present occur to me.

I allow that no country ever was or can be in such a situation as not to
admit of increase of profits on the land, because there is no country
which is not liable to lose or waste part of its capital; there is no
country which is not liable to bad seasons, to depreciated currency, to
a real fall in the value of the precious metals, and to other accidents
which will, some permanently and some temporarily, raise profits. You
observe that in rich countries profits are often much higher, and in
poor countries much lower than according to my theory, to which I reply
that profits are very much reduced in the poor country by enormous
wages; the wages themselves may be considered as part of the profits of
stock, and are frequently the foundation of new capital. In rich
countries wages are low, too low for the comforts of the labourers; too
large a portion of the gross produce is retained by the owner of stock
and is reckoned as profit.

I am not aware that I have underrated the effect of the wants and tastes
of mankind on profits; they frequently occasion large profits on
particular commodities for short periods, but they do not, I think,
often operate on general profits, because they do not often influence
the growth of raw produce. Adam Smith, in Book V, ch. i, p. 134[68],
concisely expresses what appears to me correct, of the effects of demand
on the price of commodities. I go much further than you in ascribing
effects to the wants and tastes of mankind; I believe them to be
unlimited. Give men but the means of purchasing, and their wants are
insatiable. Mr. Mill's theory is built on this assumption. It does not
attempt to say what the proportions will be to one another of the
commodities which will be produced in consequence of the accumulation of
capital, but presumes that those commodities only will be produced which
will be suited to the wants and tastes of mankind, because none other
will be demanded.

The very term 'accumulation of capital' supposes a power somewhere to
employ more labour; it supposes the total income of the society to be
increased, and therefore to create a demand for more food and more
commodities. You ask 'whether we can furnish to persons of the same
incomes a great additional quantity of commodities without lowering the
price so much compared with the price of production as to destroy the
effective demand for such a supply, and consequently to check its
continuance to the same extent.' We answer this is not our case; we are
speaking of larger incomes, not of the same incomes; and instead of
anticipating a fall in the price of commodities we should expect a rise,
because the fall of profits which generally follows accumulation is in
consequence of the increase in the price of production, compared with
the price of produce, although they would both undoubtedly rise. You
appear to think, indeed you say, 'that you know no other cause for the
fall of profits which generally takes place from accumulation than that
the price of produce falls compared with the expense of production, or
in other words, that the _effective_ demand is diminished;' and by what
follows you seem to infer that commodities will not only be relatively
lower but really lower; and this is in fact the foundation of our
difference with regard to the theory of Mr. Mill.

You will by this time feel that you have enough if not too much.

                                                Yours truly,
                                                      DAVID RICARDO.

    NOTE.--The passage of the Wealth of Nations is as follows:--'The
    East India Company represented in very strong terms what had been at
    this time [1730] the miserable effects, as they thought them, of
    this competition [between themselves and the Old East India Company
    and private traders]. In India, they said, it raised the price of
    goods so high that they were not worth buying; and in England, by
    overstocking the market, it sunk their price so low that no profit
    could be made by them. That by a more plentiful supply, to the
    great advantage and conveniency of the public, it must have reduced
    very much the price of India goods in the English market cannot well
    be doubted; but that it should have raised very much their price in
    the Indian market seems not very probable, as all the extraordinary
    demand which that competition could occasion must have been but as a
    drop of water in the immense ocean of Indian commerce. The increase
    of demand, besides, though in the beginning it may sometimes raise
    the price of goods, never fails to lower it in the long run. It
    encourages production, and thereby increases the competition of the
    producers, who, in order to undersell one another, have recourse to
    new divisions of labour and new improvements of art, which might
    never otherwise have been thought of. The miserable effects of which
    the company complained were the cheapness of consumption and the
    encouragement given to production: precisely the two effects which
    it is the great business of political economy to promote.'


                                      GATCOMB PARK, _18 Dec., 1814_.


Since I received your last letter I have been unexpectedly called from
home, besides having had friends staying with me, which have prevented
me from writing sooner. I have been twice to Bath and once to
Cheltenham, and have also been as far as Devonshire, to the old Abbey
which Mr. Bentham[69] at present inhabits. I accompanied M. Say, the
author of Économie Politique, on a visit to him and Mr. Mill[70];--and,
had it not been for the incessant rain, we should have had a very
pleasant excursion. M. Say came to me here from London at the request of
Mr. Mill, who wished us to be acquainted with each other. He intends
seeing you before he quits this country. He does not appear to me to be
ready in conversation on the subject on which he has very ably
written,--and indeed in his book there are many points which I think are
very far from being satisfactorily established,--yet he is an unaffected
agreeable man, and I found him an instructive companion.

We intend to be in London in the middle of January, and have little
doubt that we shall return here quite time enough to receive a visit
from Mrs. Malthus and you next summer vacation, so I trust you will not
project an excursion to any other quarter.

I perceive that we are not nearly agreed on the subject which we have
been lately discussing. I have been endeavouring to get you to admit
that the profits on stock employed in manufactures and commerce are
seldom permanently lowered or raised by any other cause than by the
cheapness or dearness of necessaries, or of those objects on which the
wages of labour are expended. Accumulation of capital has a tendency to
lower profits. Why? because every accumulation is attended with
increased difficulty in obtaining food, unless it is accompanied with
improvements in agriculture; in which case it has no tendency to
diminish profits. If there were no increased difficulty, profits would
never fall, because there are no other limits to the profitable
production of manufactures but the rise of wages. If with every
accumulation of capital we could tack a piece of fresh fertile land to
our Island, profits would never fall. I admit at the same time that
commerce, or machinery, may produce an abundance and cheapness of
commodities, and if they affect the prices of those commodities on which
the wages of labour are expended they will so far raise profits:--but
then it will be true that less capital will be employed on the land, for
the wages paid for labour form a part of that capital. A diminution of
the proportion of produce, in consequence of the accumulation of
capital, does not fall wholly on the owner of stock, but is shared with
him by the labourers. The whole amount of wages paid will be greater,
but the portion paid to each man will in all probability be somewhat

I do not recollect ever having allowed that an extension of foreign
commerce will take capital from the land, unless we were an exporting
country as far as regards corn, in which case my proposition would be
true, namely that the rate of profits can never permanently rise unless
capital be withdrawn from the land. I am not sanguine about the
principle, if true, being of any use; but that is another
consideration;--its utility has nothing to do with its truth, and it is
the latter only which I am at present anxious to establish. I cannot
agree with you when you say that 'without supposing capital to be taken
from the land the throwing of new objects of desire into the market will
increase the value of the whole mass of commodities in the country,
estimated either in money, or in corn and labour,'--and it is because I
think that there will not be a greater value of commodities to be
exchanged for the raw produce, or for money, that I conclude no
increased profits will anywhere be made. If the mass of commodities be
increased we diminish their exchangeable value as compared with those
things whose quantity is not augmented. If we double the quantity, or
rather double the facility of making stockings, we diminish their value
one half, as compared with _all_ other commodities. If we do the same
with regard to hats and shoes, we restore the accustomed relations
between stockings, hats, and shoes, but not with respect to other
things. It is here, I think, that our difference rests, and I hope soon
to hear all that you have to advance in favour of your view of the

M. Say, in the new edition of his book, p. 99, vol. i, supports, I
think, the very [same] doctrine that demand is regulated by production.
Demand [is] always an exchange of one commodity for another. The
shoemaker when he exchanges his shoes for bread has an effective demand
for bread, as well as the baker has an effective demand for shoes,--and,
although it is clear that the shoemaker's demand for bread must be
limited by his wants, yet whilst he has shoes to offer in exchange he
will have an effective demand for other things,--and if his shoes are
not in demand it shows that he has not been governed by the just
principles of trade, and that he has not used his capital and his labour
in the manufacture of the commodity required by the society,--more
caution will enable him to correct his error in his future production.
Accumulation necessarily increases production and as necessarily
increases consumption. Accumulation of _produce_, if properly selected,
_may_ always be accumulation of _capital_, and it cannot fail to be
worth more than it cost, estimated in corn or labour,--and this I think
would be true although all our soldiers, sailors, and menial servants
were employed in productive labour. It appears to me that the
consideration of money value may be the foundation of our difference on
this point.

I must leave room for a request which I hope you will not refuse. I
dined a little while ago at Mr. Smith's, whom I first met at your house.
Mrs. Smith told me that she had a collection of the handwriting of a
great number of men who had distinguished themselves by their writings,
and she wished that I would give her a letter of yours to add to her
collection. Knowing that I had many which would not discredit you, I
assented; but after I came home I thought I had no right to do it
without your consent--which I hope you will not refuse. I should be
sorry to disappoint her, and should really cut a poor figure in making
my apologies if I did; yet, as my opinion, that I should not do it
without your consent, is confirmed by Mrs. Ricardo, I must falter out
my excuses if you are inexorable. With kind regards to Mrs. Malthus,

                                     I am, ever yours truly,
                                                      DAVID RICARDO.

    NOTE.--Of Ricardo, Bentham used to say: 'I was the spiritual father
    of Mill, and Mill was the spiritual father of Ricardo; so that
    Ricardo was my spiritual grandson. I was often _tête à tête_ with
    Ricardo. He would borrow a sixpenny book instead of buying it. There
    was an _épanchement_ between us. We used to walk together in Hyde
    Park, and he reported to me what passed in the House of Commons. He
    had several times intended to quote the 'Fragment'; but his courage
    failed him as he told me. In Ricardo's book on rent there is a want
    of logic. I wanted him to correct it on these principles; but he was
    not conscious of it, and Mill was not desirous. He confounded _cost_
    with _value_. Considering our intercourse it was natural he should
    give me a copy of his book;--the devil a bit!' (Life by Bowring in
    Works, vol. x. p. 498.) Then follows a letter to Ricardo, in which
    Bentham compliments him on his political progress: 'I told Burdett
    you had got down to _trienniality_, and were wavering between that
    and annuality, where I could not help flattering myself you would
    fix,--also, in respect of extent, down to _householders_, for which,
    though I should prefer universality on account of its simplicity and
    unexclusiveness, I myself should be glad to compound.' The
    suggestion of stinginess made by Bentham in the passage quoted is
    sufficiently rebutted by Bentham's own biographer, who tells us
    Ricardo was one of those who guaranteed the funds for Bentham's
    Chrestomathic School (Bentham, Works, x. p. 484), and by James Mill
    (Biography, p. 191), when he speaks of Ricardo's unwillingness to
    accept payment for his article (Sinking Fund) in the Encyclopædia
    Britannica on the grounds that, first, it was not worth payment,
    second, payment was no part of his inducement to write it.

    The influence of Bentham on Ricardo's general ways of thinking is
    discussed elsewhere. In economical theory (if we judge Bentham by
    his 'Manual of Political Economy,' which was written some years
    before this time, though not published in England till long
    afterwards) there was no more than a general agreement between the
    two men.


                                      GATCOMB PARK, _13 Jan., 1815_.


I am pleased to learn that you are busy writing with a view to immediate
publication[72]. The public pay a most flattering attention to anything
from your pen, and you are not fulfilling your duty to society if you do
not avail yourself of this disposition to endeavour[73] to remove the
cloud of ignorance and prejudice, which everywhere exists on the
subjects which have particularly engaged your time and reflection. I
hope your notes on Adam Smith are in great forwardness, and that they
will soon follow the smaller publications which you are now preparing. I
expect that they will not only be very useful in giving correct notions
to the public, but also in calling the attention of those who are well
informed in the science of political economy to many points which have
hitherto escaped their consideration.

I cannot help thinking that Lord Lauderdale was mistaken (and I believe
you hold the same opinion as him), in supposing the farmer to lie under
any particular disadvantage from not having the monopoly of the home
market, whilst so many other trades were enjoying that benefit. You will
agree that the monopoly of the home market is eventually of no great
advantage to the trade on which it is conferred. It is true that it
raises the price of the commodity by shutting out foreign competition,
but this is equally injurious to all consumers, and presses no more on
the farmer than on other trades. If monopolies tend to raise the price
of labour, the inconvenience must be suffered by all who employ labour,
and will therefore not be particularly injurious to the farmer or
landlord. If all the monopolies of the home market were immediately
abolished, there would be at least as much disposition to import
corn:--if so they do not interfere with the natural course of the corn
trade. Lord Lauderdale, with his opinion of the effect of monopolies,
is, I think, quite consistent in recommending a duty on the importation
of corn.

I thought you maintained that the high or low profits on commerce were
totally independent of the amount of capital which might be employed on
the land, consequently that high profits might continue as long as
commerce was prosperous, whether that was for twenty or for a hundred
years. I now understand you to say, that the profits of commerce may
take the lead, and may regulate the profits of agriculture for a period
of some duration, possibly for twenty years.

I have always allowed that under certain circumstances profits on
agriculture might be diverted from their regular course for short
periods, so that we only appear to differ with respect to the duration
of such profits; instead of twenty years I should limit it to about four
or five.

If with the same labour we could obtain double the quantity of tin from
the mines in Cornwall, after prices had found the[ir l]evel, would the
value of the whole mass of commodities be increased in England? Should
we obtain the same quantity of deals from Norway in exchange for a given
quantity of tin as we now do? Although the mass of commodities both in
the markets of Norway and in those of England would increase by the
greater abundance of tin, or of some other commodity, if the labour
employed in procuring tin were diverted to other objects, yet the
estimated value of all their commodities in corn, money, or any article
but tin, would, it appears to me, continue unaltered. It is sufficient
that deals can be purchased cheaper in Norway than elsewhere to
determine a portion of foreign trade to that quarter, although it should
yield no more profits than those of other trades.

On the supposition which you have made of a great foreign demand for our
raw produce, there can be no question that more capital would be
employed on the land, and I think profits would fall. Such a demand
cannot exist in the present situation of the world. Raw produce is
always imported into the relatively rich country, and never exported
from it, but on occasions of dearth or famine. I have no doubt that, if
the free importation of corn is allowed into this country, inasmuch as
it will direct foreign capital to foreign land, it will tend to lower
foreign profits, and if all the earth were cultivated _with equal skill_
up to the same standard, the rate of profits would be everywhere the
same, though the superior industry and ingenuity of particular countries
might secure to them a greater abundance of other commodities....

Your club meets, I think, on the 28th.... Pray take a bed at our

                                                Truly yours,
                                                      DAVID RICARDO.


[Headed by Malthus in pencil, _Feb. 1815_. Post Office mark, _Feb. 6_.]


I have now read with great attention your essay on the rise and progress
of Rent[74], with a view of selecting every passage which might afford
us subject for future discussion. It is no praise to say that all the
leading principles in it meet with my perfect assent, and that I
consider it as containing many original views which are not only
important as connected with rent, but with many other difficult points,
such as taxation, etc., etc.

I cannot, however, help regretting that you did not consider separately
the relations of rent with the profits of stock and the wages of labour.
By treating of the joint effect of the two latter on rent you have, I
think, not made the subject so clear as it might have been made.

There are some parts in the essay with which I cannot agree. One of
these is the effects of improvements, whether in the practice of
agriculture or in the implements of husbandry, on rent. They appear to
me in their immediate effects to be beneficial to the farmer only and
not to the landlord. All the augmented produce obtained, or the saving
in obtaining the same quantity of produce is, I think, wholly to the
advantage of the farmer, and that the landlord only benefits remotely
from it, as it may encourage accumulation and the cultivation of poorer
lands. I think too that rents are in no case a creation of wealth; they
are always a part of the wealth already created, and are enjoyed
necessarily, but not on that account less beneficially to the public
interest, at the expense of the profits of stock[75].

Viewing rents in this light, it follows that I must withdraw the
concession which I was inclined to make when you first started the
question 'whether, in importing corn at a cheaper price than we could
grow it, the whole difference of price was saved, or whether some
abatement should not be made from the advantage for the loss of rent?'
as I now decide[d]ly think that the whole difference of price would be
gained without any deduction whatever. The arguments then of those who
contend for a free trade in corn remain in their original full force, as
rents are always withdrawn from the profits of stock. I will try, if I
have a little leisure, to put my thoughts on this subject on paper, and
shall attempt to show that the effects of a tax and of rent are very
different as far as regards importation. It may be economical to grow
corn if its price is raised merely by taxation, as by importing it a
part of the tax would be wholly lost to the country [import]ing it. No
such consideration should influence us [with regar]d to rent being lost.

I differ, as you know, as to the effects of taxation on the growth of
produce. You appear to me not quite consistent in admitting, as you
unequivocally do, that the last portion of land cultivated yields
nothing more than the profits of stock, no rent, and yet to maintain
that taxes on necessaries or on raw produce fall on the landlord and not
on the consumer.

... I have paid Wettenhall £2 8_s._ for two years' lists, but it has
since occurred to me that I paid him and you paid me for one year, and
therefore that only one year can be due to him. If so, let me know, that
I may get back £1 4_s._

                                                 Ever yours,
                                                      DAVID RICARDO.


                                                  _10th Feb., 1815._


I shall accept your kind invitation, and intend being with you on
Saturday evening at the usual time. We can then talk over the points on
which we differ. I will bring with me the papers on which I have been
busy since you left London, and in which my objections are more fully
stated than can be done in the compass of a letter[76].

In the case of the Scotch farmers who made such large profits on their
capital during the latter part of their leases[77], they appear to me to
have been enjoying rent, arising not from improvements in agriculture,
but from poorer land being taken into cultivation. If their leases had
expired sooner, rent would have been increased long before on those
farmers. It would be desirable to know what the rent on those farms was
when the lease was originally granted, or rather what proportion it bore
to the capital then employed and what the proportion of rent is to the
capital now employed.

The effects of monopoly cannot, I think, be felt till no more land can
be advantageously cultivated. You have yourself said, and I very much
admire the passage[78], that the last portion of capital employed on the
land yields only the common profits of stock, and does not afford any
rent. If so, corn, like everything else, is regulated in its price by
the cost of production, and every other portion of capital employed on
the land is reduced to the same level of profits only because no more
capital can be employed with more advantage, and all which it anywhere
yields more is rent and not profit.

I have read the Appendix[79] also with great attention, and cannot help
thinking that you have quite thrown off the character of impartiality to
which, in the Observations, I thought you fairly entitled. You are
avowedly for restrictions on importation; of that I do not complain. It
is not easy to estimate justly the dangers to which we may be exposed.
Those who are for an open trade in corn may underrate them, and it is
possible that you may overrate them. It is a most difficult point to
calculate these dangers at their fair value; but in an economical view,
although you have here and there allowed that we might be benefited by
importing cheap rather than by growing dear, you point out many
inconveniences which we should suffer from the loss of agricultural
capital and from other causes, which would make it appear as if even
economically you thought we ought to import corn,--such is the
approbation with which you quote from Adam Smith of [_sic_] the benefits
of agriculture over commerce in increasing production[80], and which I
cannot help thinking is at variance with all your general doctrines.

Your observations on the advantages (and therefore on the injustice to
other classes) which the stockholder would reap from a low price of corn
are, I think, very correct; but I do not think these objections should
stand in the way of the general good. They, the stockholders, have at
different periods suffered much, and, if the sinking fund be now
appropriated to other services[81], another striking injustice will be
added to the long list. I meant to write only a few lines and have
filled a long letter....

                                           Yours very truly,
                                                      DAVID RICARDO.


                                          LONDON, _9th March, 1815_.


My acquaintance lies so little amongst political economists that I have
very few opportunities of knowing whether what you consider as my
peculiar opinions have any supporters, or indeed are read or attended
to. As for my own judgment on the subject, it is perhaps too partial to
merit attention; but after my best efforts not to be biassed in favour
of my own opinions, I continue to think them correct.

I would indeed rather modify what I said concerning the stationary state
of the prices of commodities under all the variations of the price of
corn, either from wealth on the one hand or the importation from foreign
countries or improvements in agriculture on the other. I made no
allowance for the altered value of the raw material in all manufactured
goods[82]. They would, I think, be subject to a variation in price not
on account of increased or diminished wages, but on account of the rise
or fall in the price of the raw produce which enters into their
composition, and which in some commodities cannot be inconsiderable. It
is a matter of mortification to me that my execution has been so faulty;
I was too much in a hurry, and have not made my meaning intelligible
even to those who are familiar with such subjects, much less to those
who skim over these matters.

Since I have seen you I received a note from Mr. Edward West, who is the
author writing under the title of a Fellow of University College; he
speaks in favour of my opinions of course, because they are very similar
to his own. I have read his book with attention, and I find that his
views agree very much with my own. He is a barrister, a young man, and
appears very fond of the study of political economy. Mr. Brougham has, I
think he said, promised to introduce him to you. Mr. Jacob[83] has
handled both him and me rather roughly; but he will not condescend to
argue with us. I shall be very easy if he is the most formidable
opponent that is to attack me, for he seems totally ignorant of the
scientific part of the subject.

The opposition to the bill[84] is more formidable than I expected, but
they appear so determined in the House of Commons, that I suppose it
will finally pass. I regret that the people should have proceeded to
acts of riots and outrage. I am too much a friend to good order to wish
to succeed through such means, besides that I am persuaded that they
hurt rather than promote the object which they and I have in view.

I wish you could have dined with me on Saturday. I expect Mr.
Phillips[85] and Mr. Dumont; it would be a very agreeable surprise to me
if you should join our party. Perhaps you may be inclined to come to
London and wil[l] take a bed in Brook Street. Do if you can [and] do not
think it necessary to write on purpose to say you cannot. I shall fully
depend on your staying with us when you come to the next club.

Sir F. Burdett and some others think that the high price of our corn is
owing to enormous taxation, and that it ought not nor cannot fall
without oppression to the landholders till our debt is diminished. If I
could convince myself that any part of the price of corn was owing to
taxation, I should be in favour of a protecting duty to that amount.
But, if he were right, the high price would not be accompanied by high
rents or by the cultivation of inferior lands. These I consider as
unequivocal marks of the high price being caused by wealth and a
scarcity of fertile land. Indeed my theory leads me to think that no
taxes but those directly on the land or on its produce would raise the
price of corn, and even such taxes would have no effect if all
exportable commodities were taxed in the same degree, for a tax on
exportable commodities in a country which imports corn does not act very
differently from a duty on the importation of corn. Kind regards to Mrs.

                                                 Ever yours,
                                                      DAVID RICARDO.


                               UPPER BROOK STREET, _14 March, 1815_.


I have read Mr. Torrens' pamphlet[87] and think it on the whole a very
able performance. I differ with him in most of his views in chap. 2,
part 2, with many of the 3rd chap., and with a few in the remainder of
the work. I am glad to hear that you are going to make some observations
on it[88]. I think he is an adversary worthy of your pen, and the
friends of truth cannot fail to profit by the discussion. With regard to
any remarks on my opinions, you must be governed by your own discretion.
If those opinions are wrong, I should like to see them refuted, but,
thinking as I do that they are in all essential points founded on
correct principles, I ask for no mercy. I do not care how severely they
are attacked; there is nothing you could say of them which would hurt
me, if what you said did not express contempt, and that I know you do
not feel for me. Act therefore towards me as if I were a perfect
stranger, and notice me or not as you think best.

I cannot hesitate in agreeing with you that, if from a rise in the
relative value of corn less is paid for fixed capital and wages, more of
the produce must remain for the landlord and farmer together; this is
indeed self-evident, but is really not the matter in dispute between us,
and I cannot help thinking that you overlook some of the circumstances
most important connected with the question. My opinion is that corn can
only permanently rise in its exchangeable value when the real
expenses[89] of its production increase. If 5000 quarters of gross
produce cost 2500 quarters for the expenses of wages, etc., and 10,000
quarters cost double, or 5000 quarters, the exchangeable value of corn
would be the same; but, if the 10,000 quarters cost 5500 quarters for
the expenses of wages, etc., then the price would rise 10 p.c., because
such would be the amount of the increased expenses. A rise of the price
of corn and a fall in the corn price of labour is [_sic_] in my opinion
incompatible, unless it be owing to something in the currency; and it is
not necessary to enquire here what effects that would produce. Observe
that I do not question that each individual labourer may receive a less
corn price of labour, because I believe that would be the case, but I
question whether the whole corn amount of wages, etc., paid for the
cultivation of the land can be diminished with an increase of the
exchangeable value of corn. If no more labourers were employed and the
price of corn rose, your proposition could not be disputed; but the
cause of the rise of the price of corn is solely on account of the
increased expense of production.

I have lost Lord Lauderdale's pamphlet[90], or rather it has been taken
from my office. If I can get another, it sha[ll] accompany this. The
improvement[s] in agriculture I believe have had more effect in
kee[ping] down r[ents] than we have ever imagined. On my theory they
fully account for rents being no higher; on yours they would tell the
other way.

I meant to reproach you when I saw you [for[91]] speaking of Mr. Jacob's
pamphlet with so much [praise[91]] as you did when Mr. Basevi[92] asked
your opinion of it. I am glad you allow he is very deficient in
scientific knowledge.

You will see by what I have said that a rise in the price of corn is
always in my opinion accompanied by a less material surplus produce; but
it may be of equal value as compared with other things. Of this produce
the landlord gets so large a share that in spite of the rise of produce
the situation of the farmer is constantly getting worse.

                                           Yours very truly,
                                                      DAVID RICARDO.


                                           LONDON, _17 March, 1815_.


If your statement[93] was correct, this extravagant consequence would
follow from it: That in proportion as population increased and worse
land was brought under cultivation, the proportion of produce to the
corn expenses of procuring it would increase. If we now had twenty
millions of quarters with an expense of five millions of quarters, we
should when we expended ten millions of quarters obtain more than
forty[94], notwithstanding that in the latter period many more than
double the quantity of hands were employed in cultivation in consequence
of the poorer quality of the land. If this be true, the principle of
population is false, because the more you increase the people, the
greater surplus of abundance will appear. Your statement is however very
ingenious, and carries a great deal of plausibility with it; but I think
you err in supposing it possible that the proportion of the whole corn
expenditure to the produce obtained can fall, with an increase of the
price of corn. The two are incompatible; either the whole corn expenses
of production will be increased or not. If they be, the price of corn
will rise; but, if they be not, I can see no reason for a rise in the
price of corn. I admit that it is only the last portion of capital
employed on the land which will be attended with an increased corn
expense; but, unless it renders the whole produce together at an
increased expense, the price of produce will not rise. Suppose the
produce of the country ten millions of quarters with the price at £4 per
quarter, the number of labourers employed two-and-a-half millions, each
receiving two quarters of corn annually as wages. Suppose too that the
population increases and five millions of quarters more are required,
but that it cannot be obtained with less labour than that of two
millions of men. If we suppose the price to increase in proportion to
the number of men employed, it will rise to £4 16_s._, because to raise
ten millions of quarters an average of three millions of men would be
now required instead of two-and-a-half millions. Suppose now each man to
consume one quarter annually for food and to exchange the remainder for
other necessaries. Fourteen bushels will be sufficient wages for
him[95]; the expenditure of corn for wages will then be for fifteen
millions of produce 7.875.000, and for ten millions 5.250.000. Before,
it was only five millions; consequently the proportion of surplus
produce has diminished.

In making this calculation I have very much favoured your view of the
question, because the price of corn would not, I think, rise in
proportion to the greater number of men employed but to the greater
amount of wages paid; it would not therefore rise to £4 16_s_., but to
£4 4_s_., because as 5 : 5-1/4 :: £4 : £4 4_s_. But, if the price was
only £4 4_s_., more corn would be required by the labourer than fourteen
bushels, that calculation being founded on a greater exchangeable value
of corn. It appears too that your statement if true does not account for
the less proportion of the population now emp[loyed upon] the land,
because you always suppose more men to [be employed] but at less corn
wages. It can never happen, I think, that profits can fall and encourage
the cultivation of poor [land in] the manner assumed in my table without
a rise in the price of corn. It is by the rise of the price of corn that
all other profits are regulated to agricultural profits. If the price of
corn remained low, money wages would not rise, and general profits could
not fall. If it be true that capital has become more and more productive
on the land, it can, I think, only be accounted for on the supposition
that great improvements have taken place in agriculture, and that wages
have been kept moderate by the improvements in those manufactures which
supply the poor with the necessaries on which a part of their wages are

What a dreadful change in our political horizon has occurred within a
few days[96]! Will it be possible to remain at peace if Bonaparte
establishes himself as sovereign of France? The prospect is very gloomy.

                                             ... Ever yours,
                                                      DAVID RICARDO.


                                           LONDON, _21 March, 1815_.


On no subject that we have been lately discussing have we so materially
differed as on the one now occupying our attention. Your position, if
established, would, I think, overturn both your theory of rent and
population, for I understand you to maintain that the higher the price
of corn rises, in consequence of more men being employed on the poorer
land, the greater will be, not only the surplus produce after paying the
labourers, but the ratio of that surplus produce to the whole capital
employed on the land. If this be true there is no check to the increase
of population, and food can be increased in a ratio exceeding that at
which mankind increase. Your statement requires that with every
additional labourer not only an equal increase but a greater increase of
surplus produce should be obtained. More labourers may then be employed
without limit, and rent and profit together must not only increase, but
increase in a geometrical progression. I am sure I am correct in thus
stating your proposition, because if as you say the whole corn expense
of production per quarter will be diminished with every rise of price,
the surplus must increase in a geometrical ratio with the capital
employed. If you meant only that the surplus produce would increase with
every accumulation of capital on the land, though in a diminishing ratio
to the capital employed on the land, that is not only advanced, but
strenuously maintained as the groundwork of my theory, and is the basis
also on which my table is formed. You have misapprehended a passage in
my last letter. I certainly never said, nor ever thought, that any good
reason could be given for an increased number of men being required to
produce precisely the same quantity of corn from precisely the same
land. What I said was that, if at one period the number of labourers
required to produce ten millions of quarters of corn was two-and-a-half
millions of men, and at another, in consequence of increased demand,
fifteen millions of quarters could not be produced with a portion of
worse land at a less cost of labour than that of four-and-a-half
millions, at this latter period a production of ten millions would
require three millions of men, because fifteen is to four-and-a-half as
ten to three, and if we supposed the price of corn under such
circumstances to increase in the proportion of 2-1/2 to 3, a supposition
much more favourable to your view of the question than we should be
obliged to concede, yet that it would not support the conclusions to
which you arrive, but, on the contrary, would prove my theory to be the
correct one. If the calculation had been made, as you think would have
been more correct, on an increase from ten millions to ten-and-a-half
millions, the result would have been the same, but we should be puzzled
with the decimals or fractions which must be employed on such a
supposition. I agree with you 'that the natural price of corn depends
entirely upon the price of the last addition, and it does not matter
whether with regard to the old land a capital yields 50 per cent. rent
and profit or 20 per cent. In either case the price of corn on such land
has nothing to do with the cost of production.' I do not see how the
admission of this fact can assist your argument, which relates only to
the ratio of the surplus produce to the whole capital employed.

I cannot conceive by what argument you could shew that it might be
possible that the addition of another labourer on the land would not pay
his expenses, although not more than a quarter of the population were
employed upon the land. Allowing, as I most fully do, that no pressure
can destroy rents, yet as the last portions of capital employed on the
land pay no rent, it is to me inconceivable that there would be no
inducement to employ more labourers whilst their average production
should be three times more food than they could themselves consume. If
the whole of this surplus, after maintaining in the most frugal manner
the owners of stock, were absorbed by the landlords as rent, they would
increase their revenue, and employ more labourers on the land, if any
among them saved any part of his income and lent it at the common rate
of interest. I am sorry you do not come to town for the next club.

                                                Yours truly,
                                                      DAVID RICARDO.


                                         LONDON, _27th March, 1815_.


No particular event which I recollect ever occasioned so great a gloom
as the late lamentable reverse. At present we have the most dismal
forebodings of war and its consequences on our finances; the truth is
our courage is not screwed up to the proper pitch; like everything else,
we shall be easy under our new situation in another fortnight. I am
glad, however, to turn my attention to other subjects.

I have observed in the bullion pamphlet[97] that many who say they
consider money only as a commodity, and subject to the same laws of
variation in value from demand and supply as other commodities, seldom
proceed far in their reasoning about money without showing that they
really consider money as something peculiar, varying from causes totally
different from those which affect other commodities. Do you not fall
into this error when you say, 'In the first place all depends upon the
relation between corn and other commodities, and, as labour and corn
enter into the prices of all commodities, the difference between corn
and other commodities cannot possibly increase in any proportion to the
increase in the money price of corn'? If money be a commodity does
[_sic_] not corn and labour enter into its price or value? And, if they
do, why should not money vary as compared with corn and labour by the
same law as all other commodities do? As far as this question regards
the importation of corn, you are much more interested than I am in
maintaining the uniform value of commodities, because if the rise of the
price of corn and labour will as you contend raise the price of our
commodities, this is an additional reason why we should not impose
restrictions on the importation of corn, as it will subject us to a
decided disadvantage in our competition with foreigners for the sale of
our commodities.

Not however to dwell on this very essential point, I agree with you that
a rise in the price of corn occasions a different distribution of the
produce from the old land. It does this by lowering profits. Instead of
a manufacturer having it in his power to maintain a servant or mechanic
who may contribute to his enjoyment, that power will be transferred to
the landlord, and this will arise from the lower corn value of
manufactured goods. Indeed I see no limit to the fall of the corn value
of goods but the impossibility of manufacturing them with any the least
return of profit, and this will not happen till the landlord has
appropriated to himself in the form of rent nearly the whole surplus
produce of the land. It appears to me that the progress of wealth,
whilst it increases accumulation, has a natural tendency to produce
this effect and is as certain as the principle of gravitation.

You have, I think, totally changed your proposition. You before
contended that, in consequence of increasing wealth and the cultivation
of poorer land, the whole _corn_ cost of production on the land would
bear a _less_ proportion to the whole _corn_ produce; but now you say
that the _money_ cost of production on the land will bear a less
proportion to the _money_ value of the whole produce. Between these
propositions there is a very material difference, as the latter might be
true at the very time that the former was false. To admit what you now
contend for would not affect my theory, as, though it would prove that
the landlord and tenant (together) got more money revenue, or, if you
will, a greater proportion of money revenue as compared to the money
capital employed, yet the tenant might and I think would get a less
proportion, and therefore the rate of profits would fall. Such a state
of price [_sic_] is quite compatible with a greater proportion of men,
as compared with the produce obtained, being employed on the land; but
it is wholly irreconcileable with the net corn produce bearing a larger
proportion to the gross corn produce, which was the principle before
contended for. I agree with you that the increased price of corn in the
order of things is rather a cause than a consequence of a greater than
the usual number of men being employed to obtain the same quantity of
produce from new land, because profits from such an employment of
capital may be higher than other profits; but this difference of profit
may be owing to a general fall in the rate of profits on other concerns
rather than to the actual elevation of the profits on land; and I am of
opinion that a rise in the price of corn always lowers general profits
by increasing wages. I can in no way satisfy myself that general profits
can rise with a rising price of corn and fall with falling prices,
unless they are raised or lowered by diminishing or increasing wages,
and then they can be but of short duration. In the ordinary course of
things, as a high price of corn attends a state of progression, wages of
labour will be really high, and profits cannot rise because of wages
being low.

I am decidedly of opinion that Torrens[98] has treated you unjustly in
his remarks in the preface of his book. If I recollect, you acknowledged
an alteration in your opinion respecting the corn laws, since you wrote
your essay on population, in your 'Observations on the Corn Laws.' I
think too that you have always held the opinion you now do that the
difference between the value of gold and paper was partly owing to the
rise of the value of gold. Is not his criticism very much strained as to
the use of the word depreciation? But, if he be right in all, the
instances are much too few to justify his severe observation. At the
Geological Club[99] his book was spoken of the other day with great
approbation. Mr. Blake[100] and Mr. Greenough[101] think that he has
exhausted the subject, and that his arguments cannot be controverted. I
should think that he is very generally read. 'If I would lay a tax on
foreign corn,' you ask, 'on account of a tax on our own, does not the
same principle apply to the indirect taxes that raise the price of
labour?' I think not, because a tax on corn will raise the price of corn
twice, once on account of the tax, and a second time on account of the
rise of wages; but, as this second rise is common to all things in
which labour enters, and will be corrected by a new value of money, it
will not be of long duration. The indirect taxes which only raise the
wages of labour produce, I think, the same effects as the second rise in
the price of corn, of which I have just been speaking. Whenever a tax
bore with unequal effect on the land, when it did not affect labour
bestowed in other employments, a countervailing duty on importation
should, I think, be also imposed. I fear I cannot be with you on
Saturday. If you do not hear from me by Wednesday's post, conclude that
I cannot leave home....

                                                 Ever yours,
                                                      DAVID RICARDO.

    NOTE.--Robert Torrens, the soldier economist, began his literary
    career with 'The Economist Refuted' (1808), in answer to William
    Spence, who in 1807 tried to persuade his countrymen that Napoleon's
    blockade mattered little to them, Britain being 'independent of
    commerce.' In the winter of 1810-11, Torrens was Major Commandant of
    the Royal Marines, doing garrison duty on the island of Anholt in
    the Kattegat. The frost gave him time to re-read his Adam Smith and
    write his 'Essay on Money and Paper Currency' (publ. 1812). In his
    'Essay on the External Corn Trade' (see above, page 65), Torrens
    characterizes the writings of Malthus as suggestive and candid and
    full of 'facts,' but ill-reasoned and inconsistent. Mr. Malthus,
    he says, scarcely ever embraced a principle which he did not
    subsequently abandon; his Essay on Population was a plagiarism from
    Wallace; and he refuted it himself by introducing the influence of
    Moral Restraint; in regard to Corn Bounties and in regard to the
    Currency, his later writings have contradicted his earlier. (Pref.
    pp. viii. to xii.) Torrens compared the Political Economy of Malthus
    with that of Ricardo, greatly to the advantage of the latter, in his
    'Production of Wealth' (1821). See 'Malthus and his Work,' pp.
    265-6. Compare also Note to Letter XLIV.


                                            LONDON, _4 April, 1815_.


You think that my theory of a diminishing rate of profit in consequence
of being obliged to cultivate poorer lands is affected by my admission
that there will be a greater quantity of surplus produce and a greater
money value from the old land. This would be true if any part of either
the additional quantity or additional value belonged to the owner of
stock. You, however, expressly say that this additional value or
quantity 'will remain to the farmer and landlord.['] Before my theory is
affected it must be shown that the whole will not remain with the
landlord, as, if the farmer gets no share of it, his rate of profits
cannot be raised.

I agree with you that, when the exchangeable value of corn rises, 'the
whole quantity of corn in the country will exchange for a greater number
of coats than before, and consequently that there will be both the power
and will to purchase, with the raw produce of the country, a greater
quantity of manufactured and foreign commodities.' In a progressive
country I can easily conceive this power and will to be doubled or
trebled, as well as the commodities on which they are exercised; but
this admission does not affect the question of profits. There may be a
great demand for home and foreign commodities without their price being
permanently raised, as no new difficulties may attend their production.
When America becomes populous and wealthy in the same proportion as the
most wealthy country of Europe, will not her corn exchange at a higher
value both for money and commodities, although it will have much
increased in quantity? Will not all foreign and home commodities in
America be double or treble their present amount, yet will not the
profits of stock be less there than they now are? On this question I
could not have thought that the slightest doubt could exist; all theory,
all experience is in favour of this opinion.

Whilst the labour of ten persons employed on land paying no rent can
produce one hundred quarters of wheat, it appears to me possible and
probable that one-third more labour might profitably be employed on that
land, not indeed in producing only one hundred quarters of wheat, but an
additional quantity more than the additional labourers would consume.
Whilst the labour of ten men can produce one hundred quarters of wheat,
it is difficult to suppose profits only ten per cent., and more
difficult to conceive that many more men might not be profitably
employed in increasing the produce off such land. In theory, land which
yields no rent, according to your supposition, would have more and more
capital profitably expended on it, whilst the additional quantity of
produce obtained exceeded [the] quantity paid to the additional
labourers. Capital [might] be so expended, whilst the profits of stock
gave any return, not ten per cent. but one per cent. or a half per cent.

No doubt money varies more slowly than other commodities for the reason
you mention; nevertheless its value, like every other foreign commodity,
depends on the labour and expense of bringing it to market.

I expect some friends to dine with me on Saturday, and on Monday I am
engaged out to dinner; yet, if the weather is tolerably fine, I will be
with you by the time you leave chapel on Sunday, but I must get home
next day. If this is not quite convenient, pray let me know.

                                                 Ever yours,
                                                      DAVID RICARDO.


                                           LONDON, _17 April, 1815_.


You, I think, agree with Mr. Torrens that a rise in the price of corn
will be followed by a rise in the price of home commodities; but your
theory requires that there should be no rise in the price of those
commodities on which the wages of labour are expended, for, if they rose
in the same proportion as corn, there could be no fall in the corn wages
of labour. Is it not, however, very improbable that all manufactures
should rise at home, and yet that those on which [the wages of] labour
are expended should not rise? Is not the price of soap, candles, etc.,
though foreign commodities[102], necessarily affected by the rise in the
price of those home goods which are given in exchange for them. Mr.
Torrens' theory, however, on this part of the subject appears to me
defective, as I think that the price of commodities will be very
slightly affected either by a rise or fall in the price of corn. If so,
every rise in the price of corn must affect profits on manufactures; and
it is impossible that agricultural profits can materially deviate from
them. I will, however, suppose that you and Mr. Torrens are correct, and
that commodities do rise in price with every increased price of corn.
The value of fixed capital as well as of circulating capital employed on
the land will then rise also; and, although the money value of the
produce should be increased on the old land, it will still bear the same
proportion to the money value of the capital employed; and, as this
produce will be divided in different proportions between the landlord
and the farmer, the rate of profits of the latter will fall. For the
purpose of examining the effects, let us suppose that all commodities
rise, with the rise of the price of corn, excepting those only on which
the wages of labour are expended, and that in consequence the corn wages
of labour fall. Suppose the price of corn £4, and that on the old land
the labour of eight men was necessary to raise eighty quarters of corn,
that no rent was paid, and that each labourer had eight quarters
annually for his wages, of which one half was expended on commodities.
The gain of the farmer, when the price was £4, would be £64 or sixteen
quarters, and, besides his fixed capital, horses, seed, etc., he would
require the value of sixty-four quarters, or £256, to pay the annual
wages of his labourers; consequently his profits would be in the
proportion of £25 to £100 of wages, for 256:64::100:25. Now, suppose
corn to rise to £4 10_s._, wages would vary only 10_s._ on four
quarters, and consequently would rise to £34 annually per man, or £272
on the old land; but the eighty quarters of corn would sell for £360,
leaving a produce of £88 to be divided between farmer and landlord; and
88 would be to 272 as 32 to 100.

But on the new land the labour of eight men and a half might be required
to obtain eighty quarters or £360; the labour of eight-and-a-half men
would cost, at £34 each, £289; consequently the profit would be £71,
which is to the whole expense of £360 as £19·7 to £100.

  £100 capital or expenses on the old land will yield   £32
  £100 capital or expenses on the new land   "    "     £19·7.
                                           Rent       £[1]2·3.

It appears then that the profit on new land, which regulates the profit
on all other land, would be 19·7 per cent. when the price of corn was £4
10_s._ It was 25 per cent. when the price was £4.

If indeed under the same circumstances we had supposed the price of corn
to rise to £6, then profits would be increased, and would be much more
than 25 per cent.; but some adequate cause must be shown for [such]
rise, and it cannot be arbitrarily assumed. Your theory supposes too
what is impossible, that the demand for manufactures [could] increase in
the same proportion as the demand for [corn] at the very time that more
men are employed on the land to obtain a less proportion of produce. The
whole appears to me a labyrinth of difficulties; one is no sooner got
over than another presents itself, and so on in endless succession. Let
me entreat you to give my simple doctrine fair consideration, and you
must allow that it accounts for all the phenomena in an easy natural

I yesterday met Mr. Smyth[103], your friend, and Mr. Torrens at Mr.
Phillips'. I passed a very pleasant day. Mr. Smyth was exceedingly
agreeable. I like him very much. The corn question was occasionally
introduced, and I had an opportunity of stating some of my objections to
Mr. Torrens' theory. I have no reason to think that I convinced him. I
defended the use of the word depreciation in the sense [in] which you
had used it; and I believe I had every one with me. I fancy that his
arguments in his book on currency are founded on the sense in which he
uses the word. We spoke on the other points of difference between him
and you. Mr. Smyth, Mr. Phillips, and Mr. Torrens have agreed to dine
with me on Wednesday, which has induced me to write to you a day or two
sooner than I otherwise should have done that I might express my wish
that you would join us. If you will, we will dine as late as you please.
There will be a bed at your service, and I need not say that you will
add considerably to my pleasure.

                                           Yours very truly,
                                                      DAVID RICARDO.

    NOTE.--In many of his speeches, e.g. June 12, 1822, Ricardo refers
    to the ambiguity of the word 'depreciation'. He himself always uses
    it to indicate that the currency had fallen below its own standard,
    as e.g. when coins are clipped. Others used it of a change in the
    _value_ of the currency as purchasing a larger or a smaller quantity
    of goods. A currency might be depreciated in the first sense when it
    was actually, through counteracting causes, the opposite (or
    appreciated) in the second. Malthus, in Edinburgh Review, Feb. 1811,
    had used it in the first sense. (See pp. 341, 356, 365.) Torrens, in
    his 'Essay on Money,' 1812, had used it in the second. (See pp. 98,
    99.) The word 'appreciation' occurs in Tooke's 'High and Low Prices'
    (1823), Part I. p. 76. Tooke himself distinguishes depreciation of
    the Currency (the first of the above senses) from depreciation of
    Money (the second of them); (l. c. p. 8.)


                                           LONDON, _21 April, 1815_.


I was sorry you could not join our party on Wednesday. Mr. Smyth has
left a pleasing impression on the minds of all those who met him, and I
had every reason to confirm me in the favourable opinion which I had
formed of him at our first meeting. Mr. Torrens is a very gentlemanly
man. He had sent me his book on bullion before he came, and I fear that
too much of the conversation was bestowed on the differences between his
opinion and mine on the subject of paper currency and the exchanges. The
latter he does not appear to me correctly to understand. I insisted on
the consistency of your former and present opinions on the bullion
question, and asked him from whence he had derived his knowledge of your
views on that subject. He said that Dr. Crombie[104] and you had met
purposely to discuss the question, and from him he had understood that
you ascribed the whole effects on the price of bullion to the abundance
of paper. He, as well as Monsieur Say, finds it difficult to support his
opinions and answer objections in conversation--he says all such
discussions should be carried on in writing....

On Saturday I shall meet you at the King of Clubs, to which I am invited
by Mr. Whishaw, and on Sunday I wish you and Mrs. Malthus will oblige
Mrs. Ricardo and me with your company to dinner. If you can I will ask
Mr. Whishaw and Mr. Smyth to meet you. Perhaps too you will breakfast
with me on Saturday or Sunday morning.

It appears to me that my table is applicable to all cases in which the
relative price of corn rises from more labour being required to produce
it, and under no other circumstances can there be a rise, however great
the demand may be, unless commodities fall in value from less labour
being required for their production. It is not probable that the
relative price of corn will fall so low with an abundant capital in the
country as when capital was very limited, but, if it could, the same
effects on profits and on rent would follow, as it would demonstrate
that land only of the best quality was in cultivation. You agree with me
that if a large tract of rich land were added to the Island it would
restore the state contemplated in my table. Though we agree in the
conclusion we differ materially in our opinion of the means by which it
would be brought about. You think that 'before any fall of price had
taken place capital would be removing fast from the old land, _and from
manufactures_,'--I think that capital would go from the old land to
manufactures, because a given quantity of food only being required, that
quantity could be raised on the rich land added to the Island with much
less capital than was employed on the old, and consequently all the
surplus would go to [manu]factures to procure other enjoyments for the
so[ciety[105]], and profits on the land would rise at the expense of the
rent of the landlord, whilst the cheaper price of corn would raise the
profits on all manufacturing capital. I confess it appears to me
impossible that under the circumstances you have supposed the relative
value of corn would fall, not from the facility of procuring it, but
from a rise in the value of manufactures. You suppose that corn would
remain at the same price whilst manufactures rose in price,--I on the
contrary think that the price of manufactures would continue nearly
stationary, whilst the price of corn would fall. Is not this the natural
consequence of more capital being employed on manufactures and less on
agriculture? Have you not too uniformly supported the opinion that a
fall in the price of corn will occasion a fall in the price of
commodities? If they act on each other as you think, but to which I do
not agree, how can manufactures rise in price with a stationary price of
corn? I should have thought that on your principles such an effect would
be deemed impossible.

                                           Ever truly yours,
                                                      DAVID RICARDO.


(Addressed to Claverton House, near Bath.)

                              UPPER BROOK STREET, _27th June, 1815_.


I have been for two or three days at Tunbridge Wells, and have been
agreeably surprised to-day on my arrival in London, to hear of the great
events which are taking place in France in consequence of the great
victory obtained by the Duke of Wellington and his brave army over
Bonaparte. With the deposition of Bonaparte I hope there may be no other
obstacles to peace, and that we may at length be rewarded for the blood
and treasure which we have expended with a long period of
tranquil[l]ity, which I have no doubt will also prove a long period of
prosperity. I think with Mr. Whitbread[106] that great credit is due to
ministers for the energy which they have displayed in the prosecution of
this contest. Having determined on war, their preparations have been on
such a scale as to give from the commencement the best hopes of success,
and we appear at last to have adopted the wise policy of making one
grand effort in preference to a series of puny efforts, each just
sufficient to keep the contest alive without making the least advance to
its ultimate object.

The effect on the price of Omnium has been no more than what might have
been expected. I am sorry that you have not profited by the rise. As for
myself, I have all my stock, by which I mean I have all my money[,]
invested in Stock; and this is as great an advantage as ever I expect or
wish to make by a rise. I have been a considerable gainer by the
loan[107]; in the first place by replacing the stock which I had sold
before the contract with the minister [_sic_] at a much lower price,
secondly by a moderate gain on such part of the loan as I ventured to
take over and above my stock. This portion I sold at a premium of from 3
to 5 per cent., and I have every reason to be well contented. Perhaps no
loan was ever more generally profitable to the Stock Exchange.

Now for a little of our old subject. It appears to me that there are two
causes which may cause a rise of prices, one the depreciation of money,
the other the difficulty of producing. The latter can in no case be
advantageous to a society. It is always a sign of prosperity but never
the cause of it. Depreciation of money may be beneficial, because it
generally favours that class who are disposed to accumulate, but I
should say that it augmented riches by diminishing happiness, that it
was advantageous only by occasioning a great pressure on the labouring
classes and on those who lived on fixed incomes. You and I concur in
this opinion, for you say you are convinced that there are unobserved
advantages attending the high price of corn and labour 'when not arising
solely from difficulty of production,' [by] which I think you imply that
no such advantages attend high prices if attended with difficulty of

This opinion is, however, a little at variance with that which you have
long been supporting, for you have said that the high price of corn and
labour in this country at this time was an advantage, although it is
universally allowed that that high price is mainly owing to difficulty
of production. The farmers and shopkeepers may suffer very general
distress from a sudden and general fall of prices; but I hold that this
would be no criterion by which to judge of the general or permanent
prosperity of a country.

The accounts in which I am at present engaged will I fear keep me in
London till the very latter end of July. I shall very much regret if you
quit Bath without my seeing you. I quite depended on having a visit from
you at Gatcomb this year, and I yet hope that it may be accomplished. I
shall certainly leave London the very earliest day possible.

The price of labour in America appears to me enormously high as compared
with the price of wheat; but we should not fail to remember how very low
the exchangeable value of wheat is there, and how much of it must be
given for the manufactured necessaries and comforts of life....

                                           Ever truly yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _30 July, 1815_.


I bore with great patience the fatigues of the last fortnight in London,
in the hope that on my arrival at Gatcomb I should have the pleasure of
your company for a few days previously to your return to London. It was
a great disappointment to me to learn that you would be travelling to
London the very day after I quitted it, and I see little prospect of
having a visit from you here for some time to come, as your convenience
or inclination will probably lead you to a different part of the country
next year.

I most cordially join with you in the wish that the victory of the Duke
of Wellington will be the means of giving Europe some permanent repose.
There appears every probability that it will be attended with that happy
effect, and I should hope that the late stormy times will afford
instruction both to sovereigns and people, and will secure the world
from the evils of anarchy as well as from those of tyranny and

David's ill health has induced us to take him from the Charterhouse....

Mr. Clerk, a neighbour of mine here in Gloucestershire and who is
brother to the East India Director of that name, has just sent his son
George to the East India College, and knowing my intimacy with you has
called upon me to request me to write to you on behalf of his son, that
in case he may st[and] in need of any friendly advice or assistance you
[would have] the goodness to give it to him. I hope [I] am not taking
too great a liberty in asking you to comply with his father's wishes.

The immense concerns in business which I have lately had on my mind had
nearly banished all consideration of subjects connected with political
economy from it. Those concerns are now settled, but they have given me
incessant work in arranging and balancing my accounts ever since I have
been here. I recur now, however, with pleasure to corn, labour, and
bullion. A really high price of corn is always an evil; in this opinion
I think you would concur, because it is always occasioned by difficulty
of production. I know of no other cause, and you allow difficulty of
production not to be desirable in itself. In our own case the high
bullion price of corn is not wholly owing to the barrenness of the land
to be taken into cultivation, but from whatever cause it has arisen it
cannot, I think, have enabled us to grant greater subsidies than we
should otherwise have done, for subsidies as well as all services
performed for us are paid for by the produce of the land and labour of
the people of England. It surely is a palpable contradiction to say that
our power of commanding services is increased, whilst our productions
with which those services are paid are diminished. The principle may be
true when confined to a few commodities of which we either have a
monop[o]ly or peculiar facilities in the production of them, but as a
general preposition it appears to me to be at variance with the best
established doctrines.

If a free trade in corn were allowed with America I should not expect
that the prices would differ more, here and there, than the expenses and
profits of sending it;--as it is I am surprised the price should be so
high. A high money price of wages is I think quite natural.

                                                 Ever yours,
                                                      DAVID RICARDO.


                                   GATCOMB PARK, _10th Sept., 1815_.


Nothing could be more unlucky than our missing each other as we did this
year. I should think there would be no obstacle to our leaving town a
little earlier next year, when I hope we shall at length have the
pleasure of seeing Mrs. Malthus and you at Gatcomb.

It is the general remark in our part of the country that a finer season
was never remembered. The rain, of which we have certainly had a
deficiency, has generally come at night, and the days which have
followed have been beautiful. The temptation to enjoy it has been so
great that I have been incessantly out with some one or other of my
friends who have been staying with me, either riding or walking, which
makes such inroads on my time that I find I have much less leisure here
for reading and study than I have in London. Before I came here I often
saw Mr. Grenfell[108], who is very warm on the subject of the Bank and
the advantageous bargains which it has always made with government, as
well for the management of the national debt, the composition which it
has hitherto paid for stamps, as for the compensation which government
has received in the way of loan for enormous average deposits left with
the Bank. I am quite of his opinion, and indeed I go much further; I
think the Bank an unnecessary establishment, getting rich by those
profits which fairly belong to the public. I cannot help considering the
issuing of paper money as a privilege which belongs exclusively to the
State; I regard it as a sort of seignorage, and I am convinced, if the
principles of currency were rightly understood, that commissioners might
be appointed, independent of all ministerial control, who should be the
sole issuers of paper money,--by which I think a profit of from two to
three millions might be secured to the public, at the same time that we
should be protected from the abuses of the country banks, who are the
cause of much mischief all over the kingdom. These commissioners should
also have the management of the public debt, and should act as bankers
to all the different public departments. They might invest the eleven
millions which is the average of public deposits in Exchequer Bills, a
part of which might be sold whenever occasion required. This of course
(at least all of it) could not be effected till the expiration of the
Bank Charter in 1833; but it is never too soon to give due consideration
to important principles, which might be recognized, though not yet acted
on. In looking over the papers which have from time to time been laid
before Parliament, I think it might clearly be proved that the profits
of the bank have been enormous. I should think they must have a hoard
nearly equal to their capital. By their charter they are bound to make
an annual division of their profits and to lay a statement of their
accounts before the proprietors; but they appear to set all law at
defiance. I always enjoy any attack upon the Bank, and [if I] had
sufficient courage I would be a party to it.

Though I have been thinking on this subject lately, I am not less
interested about our old subject, of the advantages or disadvantages of
high prices for raw produce. If I agreed with Mr. Torrens that such high
prices were accompanied with a rise in the prices of commodities, and,
if I thought that such rise would not preclude the usual exchanges with
foreign countries, I should of course agree with you that with such
general high prices we should command a greater quantity of foreign
commodities in exchange for a given quantity of ours; but I cannot admit
in the first place that commodities would rise because corn rose[109];
and, secondly, if they did so rise there are but very few which we could
sell in equal quantity at the advanced price to foreigners; and, if we
sold less to them, we could buy less of them, and thus would our
general commerce suffer. I can see great advantages attending low
general prices but none in high prices. On this subject we are not
likely to agree. I hope you are diligently employed and that early in
the year we shall see something new from your pen. I have some curiosity
to see a pamphlet just advertised[110], in the title page of which your
name is mentioned.

                                                 Ever yours,
                                                      DAVID RICARDO.

... Have you seen Monsieur Say's [Catec]hisme d'Economie Politique? He
has softened but not [expung]ed the objectionable definitions.

    NOTE.--Correspondence between Ricardo and J. B. Say is given in the
    'Oeuvres Diverses' of the latter, published after his death
    (Guillaumin, 1848), with notes by Ch. Comte, Daire, and Horace Say.
    J. B. Say (born 1767) was the son of a Lyons merchant, of Huguenot
    origin. When a boy, he was sent with his brother Horace to learn
    business in London, where he was struck, amongst other things, by
    the fact that his Croydon landlord built up one of the two windows
    of his lodgings to escape window tax. Having gained familiarity with
    the English language and English ways he returned to France in 1789
    and entered the employment of a Life Insurance Company, the manager
    of which (Clavière) lent him a copy of the 'Wealth of Nations,' not
    yet translated into French. The reading of it made him an economist
    for life, as it did for Ricardo ten years later. After serving in
    the revolutionary army in 1792, he left commerce for journalism. His
    chief book, Le Traité de l'Economie Politique, appeared in 1803. Too
    independent to please Napoleon, he was forced to quit his new
    profession for his old; and his commercial travelling landed him
    eventually at Geneva, where he made the acquaintance of Necker,
    Madame de Stael, and Benjamin Constant. He came back to France (to
    Auchy, Pas de Calais) to spin cotton, retiring with a moderate
    fortune in 1813. After the Peace he was sent by Government to report
    on the economical condition of England. He was cordially received
    by Ricardo, Bentham, and other economists; and on his return to
    Paris narrated with pride to his audiences at the Conservatoire des
    Arts et Metiers that the Glasgow professors had made him sit in the
    chair of Adam Smith. After an active life of teaching and writing,
    he died in Paris, 15th November, 1832.

    Ricardo writes to him from Gatcomb Park on 18th Aug., 1815, thanking
    him for the copy of the (first edition of the) 'Catechisme de
    l'Economie Politique,' which he had just sent. Though complimenting
    him highly on the work, he thinks that Say has not, even yet, with
    sufficient clearness distinguished Value from Utility. No doubt to
    have value a commodity must be _useful_, but it is the _difficulty_
    of its production that is the sole measure of its value. 'The
    wealthiest man is he who has most values, and who is able, by giving
    them in exchange, to procure himself not the things which he himself
    and everybody else regard as the most desirable, and which can be
    had at a low price, but the things that are difficult to produce and
    consequently dear. A man is rich not by the moderation of his
    desires, but by the quantity of commodities that he possesses.' Say
    has also, in Ricardo's opinion, forgotten sometimes that the growth
    of the capital of a manufacturer cannot be safely estimated in money
    if we do not allow for the change in the value of money. Ricardo
    concludes: 'The pleasure which I take in reading and studying good
    works on political economy has not diminished since I saw you. I
    should devote all my time to the discussion of points which seem to
    me to need further elucidation, if I had any talent for composition.
    However, I have ventured to publish the pamphlet[111] which I sent
    you, and I should be glad to know your opinion on the doctrine which
    I maintain in it in relation to the rent of land and the rate of
    profits, in opposition to Mr. Malthus. I learn from Mr. Mill that
    several persons in this country do not understand me because I have
    not explained my views at sufficient length; and he is trying to
    induce me to undertake an explanation of them from the beginning and
    at greater length; but I fear that the undertaking is beyond my
    powers.' (Oeuvres Diverses de Say, pp. 409-11. Ricardo wrote in
    English, but in this and the other cases the editors give only the

    Say's answer follows (pp. 411-13), 2nd Dec., 1815: 'Nous nous
    occupons heureusement vous et moi de choses de tous les temps
    plûtot que de celles du moment actuel, qui ne sont pas gaies, malgré
    les fêtes que l'on donne pour faire croire aux peuples qu'ils sont
    heureux.' Going to the subject of value, he says he did _not_ say
    Utility was the measure of Value, but 'the value that men attach to
    a thing is the measure of the utility they find in it;' moreover he
    had not maintained the Stoical doctrine, 'the fewer wants, the
    greater wealth,' but had simply said that a man is the richer if all
    the things he wants (whatever they be) are cheap instead of dear,
    and would be richest of all if he had abundance of everything
    without any cost at all. He allows that Ricardo is right in regard
    to the growth of the manufacturer's capital, and promises to
    introduce the qualification suggested by Ricardo in his next
    edition. In the controversy between Malthus and Ricardo he finds it
    difficult to take a side, for he cannot for his part exclude from
    the question of profits 'the talent and industrial capacity of the
    man who brings out the resources of a land or a capital;' the profit
    inherent merely in land or in capital seems to him unimportant in
    comparison with the profit due to the source described. But he says
    he is too timid to insist on his opinion, and will wait for
    Ricardo's full explanations in the larger work. 'How I envy your
    lot, to study political economy in your beautiful retreat of Gatcomb
    Park! I shall never forget the too short moments I passed there, nor
    the charms of your conversation.'



By facility of production I do not mean to consider the productiveness
of the soil only, but the skill, machinery, and labour joined to the
natural fertility of the earth. It does not therefore follow that
because Otaheite[112] has an abundance of fertile land profits should be
there at the highest rate, because the skill and the means of abridging
labour may in Europe more than compensate this natural advantage of
Otaheite. The question is this: If part of the skill and capital of
England were employed in Otaheite to produce 100,000 quarters of corn,
would not the persons employing that capital obtain greater profits in
Otaheite than they would if they employed the same capital for the same
purpose here, and would not rent be lower there than here? You must at
any rate allow that the quantity of corn produced with a given quantity
of capital, supposing the same skill to be employed, must be greater
there than here, or there is no meaning in fertility of soil. You must
allow too that in proportion to the fertility of Otaheite and to its
extent compared with the population will be the lowness of rent,
notwithstanding its abundant rate of produce. I can easily _conceive_
that, with the imperfect tillage the people of Otaheite now give their
land, the population may be just sufficiently numerous to require that
the whole of their lands should be in cultivation, and consequently that
they should bear a rent; but let a hundred Europeans only join them with
our improved machinery and perfectly skilled in husbandry, and the
immediate consequence would be that three quarters of their lands would
for a time become perfectly useless to them, as the quarter might
produce them more food than all the inhabitants could possibly consume.
Now I ask whether it be possible that three quarters of the land of a
country can be suffered to pass from a state of tillage to a state of
nature without occasioning a fall in rents? If land is less in demand,
must not the rent of it fall? If you say no, there is no truth in the
proposition that value depends upon the proportion between supply and
demand. Now suppose England in the state in which I have been fancying
Otaheite; and she is actually in that state, all or most of her land
being in cultivation; and suppose further that there is another country
totally unknown to us whose skill and machinery in husbandry as far
surpasses ours as ours does that of the Otaheiteans. If a hundred of
these persons were to come amongst us with their capital, skill, etc.,
would not the same consequences follow as I have just stated? Now every
improvement in machinery is precisely on a small scale what I have been
here supposing on a large scale; and I am quite astonished that you
should yet maintain that 'universally where land is limited in quantity,
the facility of production upon it will go mainly to rent, and the soil
of a country might be of such fertility as to yield sixtyfold instead of
eight or ten, and yet the profits of stock be only six per cent. and the
wages of labour both nominally and really low.' Land, like everything
else, rises or falls in proportion to the demand for it; every
improvement which shall enable you to raise the same quantity of produce
on a less quantity of land or, which is the same thing, a larger
quantity of produce on the same quantity of land cannot increase the
demand for land and therefore cannot raise rents.

I do not clearly see the distinction which you think important between
productiveness of industry and productiveness of capital. Every machine
which abridges labour adds to the productiveness of industry, but it
adds also to the productiveness of capital. England with machinery and
with a given capital will obtain a greater real net produce than
Otaheite with the same capital without machinery, whether it be in
manufactures or in the produce of the soil. It will do so because it
employs much fewer hands to obtain the same produce. Industry is more
productive; so is capital. It appears to me that one is a necessary
consequence of the other, and that the opinion which I have advanced and
which you are combat[t]ing is that in the progress of society
independently of all improvements in skill and machinery the produce of
industry constantly diminishes as far as the land is concerned, and
consequently capital becomes less productive. That this diminution of
produce is beneficial to all owners of land, but that it is so at the
expense of manufacturers, amongst which [_sic_] I include farmers, first
by rendering the commodities which they manufacture of less
exchangeable value than they before were for corn, and secondly by
raising the cost of production by raising the price of labour.

I shall put this letter in the Post Office in London, where I am going
to-morrow for a few days. I have been writing, in my unconnected and
confused style, my opinions on the profits of the Bank and on the
advantages of a paper and nothing but a paper currency. I am too little
pleased with it to think of publishing. The whole is too little for a
pamphlet. Mr. Grenfell is, I think, anxious that something should be
said about the Bank before the meeting of Parliament, and I too wish
some able hand would undertake it.

I am always glad to hear that you are preparing for the press; for,
though I do not always agree in opinion with you, I am sure that your
writings will contribute towards the progress of a science in which I
take great interest. I should be more pleased that we did not so
materially differ. If I am too theoretical (which I really believe is is
the case), you I think are too practical. There are so many combinations
and so many operating causes in Political Economy that there is great
danger in appealing to experience in favour of a particular doctrine,
unless we are sure that all the causes of variation are seen and their
effects duly estimated. Mr. Whishaw and Mr. Warburton[113] have been at
Mr. Smith's for some time. I have been absent from home unfortunately,
and have seen but little of them. I yesterday dined with Mr. Whishaw; he
talked of leaving Mr. Smith immediately....

                                                      DAVID RICARDO.

_7th Oct., 1815._


[Not dated or headed, but fastened to preceding.]

                                                      [_Oct. 1815?_]


I have an account before me of the capital actually employed on a farm
of 200 acres in Essex. It amounts to £3433 or about £17 per acre[114],
of which not more than £1100 or £1200 is of that description which is
not subject to the same variation of value as the produce of the land
itself, for £2200 consists of the value of the seeds in the ground, the
advances for labour, the horses and live stock, etc. etc. If then the
money value of the produce from the land should fall _from facility of
production_ it must ever continue to bear a greater ratio to the whole
money value of the capital employed on the land, for there will be a
great increase of average produce per acre, whilst the fall in money
value will be common to both capital and produce, and it cannot
therefore be true that rent, profits, and wages can all _really_ fall at
the same time.

The effect of high or low wages on profits has always been distinctly
recognized by me:--till the population increases to the proportion which
the increased capital can employ, wages will rise, and may absorb a
larger portion of the whole produce. But this effect will only take
place with an increase of capital, and has nothing to do with new
facilities of production. Wages do not depend upon the quantity of a
commodity which a day's labour will produce, and I cannot help thinking
you quite incorrect when you say that the natural consequence of the
facility of production being so increased that a day's labour will
produce 4 measures of corn, cloth and cotton instead of 2 measures, will
be that 4 measures of corn, cloth and cotton will be worth only the
price of a day's labour instead of 2. It appears to me that, if,
instead of 4, 10 measures could be produced by a day's labour, no rise
would take place in wages, no greater portion of corn, cloth or cotton
would be given to the labourer, unless a portion of the increased
produce were employed as capital, and then the rise in wages would be in
proportion to the new demand for labour, and not at all in proportion to
the increase in the quantity of commodities produced. This increase
would be exclusively enjoyed by the owner of stock, and, if he consumed
in his family the whole increased produce, without augmenting his
capital, wages would remain stationary, and not be in any way affected
by the increased facility of production.

I cannot agree with your proposition, namely, [']That the means of
employing capital profitably can never co-exist with an abundant capital
and produce and a stationary population, on account of the necessary
effect of such a state of things in increasing the real price of
labour,' because I consider the rise of wages as by no means a necessary
effect of an abundant capital and produce, for it may be accompanied
with new facilities in procuring corn, and then wages even if they
should rise would not lessen profits, they will only keep them lower
than they otherwise would be. In the case which we were considering the
other night, if every lady made her own shoes, a part of the capital now
employed in making shoes by the shoemakers would be otherwise employed.
The same labour would be bestowed in the production of other objects
desirable to these lady shoemakers, who would have both the power and
the will to purchase them from the savings which would accrue to them by
employing their labour productively. There is a great difference between
[the] common effects of an accumulation of capital, and the employing
the same capital more productively. The first is generally attended with
a rise of wages and a fall of profits for a time at least,--but the
second may exist for an indefinite length of time without producing any
such effects. In the case of great improvements in machinery,--capital
is liberated for other employments and at the same time the labour
necessary for those employments is also liberated,--so that no demand
for additional labour will take place unless the increased production in
consequence of the improvement should lead to further accumulation of
capital, and then the effect on wages is to be ascribed to the
accumulation of capital and not to the better employment of the same
capital. If the population were to be stopped whilst accumulation
continued the effects which you enumerate would undoubtedly follow, but
this would arise from the demand for labour not being adequately
supplied,--it would be the effect of accumulation which would operate so
powerfully that it would be but slightly checked by the facility of
production, but it would not by any means be the consequence of such

It is true that the rate of profits depends upon the scanty or abundant
supply of capital compared with the means of employing it
profitably,--and these means will as you say upon the common principles
of supply and demand be increased either by a diminution of capital or
by an extension of the market for it. Our inquiry is in fact what the
causes are of an extension of the market, and I hold that the most
powerful, and the only one which operates permanently, is a reduction in
the relative value of food. You appear to me to concede a little
respecting demand being regulated by the power of production,--but you
are yet very far from yielding all that I demand. I hope we shall meet
this month, but I cannot yet say whether I can leave London.

                                           Yours very truly,
                                                         D. RICARDO.


                                            LONDON, _17 Oct., 1815_.


Mrs. Ricardo and I are sorry that Mrs. Malthus will be prevented from
accompanying you when you pay us a visit at Gatcomb. We should have been
very happy to have shown her some of the beauties of our county. When
you come, perhaps you will bring your gun with you. Though I am no
sportsman myself, I will endeavour to procure you the best sport that my
influence can command.

I am very much obliged to you for the attention which you have given to
my MS.[115] I am fully aware of the deficiency in the style and
arrangement; those are faults which I shall never conquer. I will
however use my best endeavours to elevate it to the very low standard to
which you compare it[116]. It would be unpardonable to write worse with
more practice.

I expected that you would not quite agree with my plan of abolishing the
metals from circulation; but the grounds on which you object to it may I
think be answered, and then your objections would I hope be removed. You
fear that without a metallic circulation we could not on an emergency
supply a large sum of bullion for the exigencies of the State. The fact
is however against you, for we have supplied large sums when the metals
have been absolutely banished from circulation. This has been the case
during the whole Peninsular War. If indeed on my system the Bank could
keep a less quantity of bullion in their coffers to answer the demands
of the public, the objection would be well founded; but the only
difference would be that in one case their hoards would consist wholly
of coined gold and silver, and in the other they would consist of the
uncoined metals; but, on both systems, if the Bank paid their notes on
demand the currency must be equally reduced in quantity, if gold and
silver should become more valuable. That argument then may be used
against a currency convertible at all, into specie or bullion, but does
not apply to one more than the other. I think with you that on the whole
silver would be a better standard than gold, particularly if paper only
were used. All objections against its greater bulk would be removed.

I find I did misapprehend your illustration respecting profits from
Otaheite; but our difference is still very serious. I most distinctly
allow that any causes which tend to make capital less in demand will
lower profits; but I contend that there are no causes which will for any
length of time make capital less in demand, however abundant it may
become, but a comparatively high price of food and labour,--that profits
do not _necessarily_ fall with the increase of the quantity of capital,
because the demand for capital is infinite and [is] governed by the same
law as population itself. They are both checked by the rise in the price
of food and the consequent increase in the value of labour. If there
were no such rise, what could prevent population and capital from
increasing without limit? I acknowledge the effects of the great
principle of supply and demand in every instance; but in this it appears
to me that the demand will enlarge at the same rate as the supply if
there be no difficulty on the score of food and raw produce. Fertility
is, as you justly observe, the essence of high rents; and low rents are
the necessary result of barrenness however scarce corn may be. I agree
with you too that, in a country limited to 100,000 acres, all of the
richest conceivable quantity, yet peopled and capital'd up to the utmost
limits of its produce, the profits of stock and the wages of labour
would both be very low, although the quantity of produce yielded by a
given capital _including rent_ might be 100 per cent.; but I ask, if by
any miracle the produce of that land could at once be doubled, would
rents then continue as high as before, or could they possibly rise? We
are speaking of the immediate not the ultimate effects. The improvements
in skill and machinery may in 1000 years go to the landlord, but for 900
they will remain with the tenant.

                                           Yours very truly,
                                                      DAVID RICARDO.

I have been so busy and am yet so busy that I cannot return to Gatcomb
till Friday.


                                             LONDON, _17 Oct. 1815_.


My letter was sent to the post before I received yours of yesterday's
date. The parcel you sent me has reached me safe. I am sorry you had so
much trouble about it.

My views respecting the Bank are entirely prospective. The last return
of bank notes in circulation was, I think, larger than any that preceded
it. I have not the paper in London, but I think the circulation of bank
notes then amounted (1815) to 28,000,000 or more[117].

It is dangerous to listen to reports respecting briskness or slackness
of trade. It is I believe certain that the revenue has been uncommonly
productive the last quarter, which is no indication of diminished trade.
As you allow that the loss of the sellers is the gain of the buyers,
you appear to me to attribute effects much too great to the fall of raw
produce which has lately taken place. It does not follow that, because
prices are low, production will be discouraged. If money were to fall
very much in value whilst a country was making great advances in
prosperity, would not production be encouraged, notwithstanding a fall
of prices?

That profits may rise on the land, if population increases faster than
capital, I am not disposed to deny; but this will be a partial rise of
profits on a particular trade, for a limited time, and is very different
from a general rise of profits on trade in general. This admission does
not affect my principle.

                                           Ever truly yours,
                                                      DAVID RICARDO.

I ought to apologise for writing to you twice in one day.


                                    GATCOMB PARK, _24th Dec., 1815_.


I write to remind you that the time is come at which you once gave me
hope almost to certainty that I should have the pleasure of seeing you
here; and even when I last saw you you promised, if you could make it
convenient, to come and pass a part of your vacation with me. The
weather is beautiful, and my desire to see you as ardent as ever. Come
then and inhale the pure atmosphere of our hills, and be under no fear
that your visit will retard any object to which your attention may now
be devoted, for you shall be free to write, study, or read, as many
hours in the day as you please, unmolested by any one's intrusion.

My lost MS.[118] is recovered. Mr. Mill recommends its publication, but
advises me to write an introduction, and to divide it into sections. I
had almost resolved to throw it aside, but I have been again at work
upon it, and, though I cannot put it in any shape to please me, it is I
think rather better than when you saw it; and the probability at present
is that I shall venture to publish it.

I attended the Bank Court the other day. I had no intention whatever of
speaking; but some very bad reasoning on the other side and a total
deviation from the question called me up, and I spoke for five or ten
minutes with considerable inward agitation, but without committing any
glaring blunder. My speaking is like my writing too much compressed. I
am too apt to crowd a great deal of difficult matter into so short a
space as to be incomprehensible to the generality of readers. The
Chronicle, I see, has reported what he thought or heard I said, but he
has imputed to me what I neither felt nor uttered. Allusions were made
to the Bullion question, and it was said that it had been prophesied
that, if the Bank directors were corrupt, they might with the power they
had of issuing paper occasion the greatest public distress; no such
distress, however, had been experienced. I observed in reply that the
goodness of the system was not proved by the distress not having
occurred,--that the speaker had been only paying a compliment to the
integrity of the directors, in which no one in the court was more ready
to join than myself,--but, if the directors had been corrupt, I still
thought that they had been armed with the power of doing mischief.
Though I was ready to declare my confidence in the integrity of the
directors, there were many parts of their system of which I could not
approve, etc. etc. This is very different from the report in the
Chronicle; but I understand that the reporters were most carefully
excluded from the court.

I hope the business at the college has been settled to your
satisfaction, and that the result of the late unpleasant
disturbance[119] will give you some security against its recurrence in

I conclude that you have quite finished writing the alterations and
amendments which you projected for the new edition of your book[120].
When I last saw you I think you had made considerable progress, and
therefore it is probable that you may be already in the press. What
point will next engage your attention? For I hope, as M. Say says, that
you will 'travaillez toujours' [_sic_]....

                                                 Ever yours,
                                                      DAVID RICARDO.

[Fragment. Within this year, or earlier. See Letter XL]

[I began] by assuring you that I was not going to weary you with a
repetition of my hundred times told tale, and I am ashamed to see that I
have filled four sides with nothing else. There are some other points on
which I shall make some remarks when I have the pleasure of seeing you.
If you should come to town, will you do me the favour to call at the
Stock Exchange, unless my house should not be much out of your way. I
recommend your calling there because I am just about deserting Brook
Street for some time. Mrs. Ricardo and all the family are going to
Ramsgate to-morrow morning, and she will not consent to let me remain at
home by myself, so that when I am in London I shall be chiefly with my
brother at Bow; now and then I shall pass a night at home. My business
is so uncertain that I cannot at all foresee what portion of the next
two or three months I shall be able to spend at the sea side. It is
probable that I shall be so much in town that I shall be found by you at
the Stock Exchange....

                                           Yours most truly,
                                                      DAVID RICARDO.


                                       GATCOMB PARK, _2 Jan., 1816_.


Your two letters have both reached me, and I am very sorry to find that
I shall not have the pleasure of seeing you at Gatcomb this vacation. I
left London, as you supposed, the day after the Bank Court. I should
have considered it fortunate if whilst I was there I had met you. My
house in Brook Street is not yet in a state to receive us; nor will it
be this season, unless we consent to go in it with the walls unpapered
and unpainted, conditions to which we shall agree. It will be we are
told in a habitable state by the latter end of the month, at which time
we shall probably quit Gatcomb.

As you have not given me the pleasure of your company here, and as I
wish to speak to Murray concerning my book and to consult some
Parliamentary papers which I have not got here, I intend taking a trip
to town the beginning of next week. Do you think I shall have any chance
of meeting you there? Remember that a letter will always find me at or
follow me from the Stock Exchange[121].

It is exceedingly provoking that you should have been so much
interrupted by college affairs as not to have made more progress with
your new chapters. I shall regret your thinking it necessary to abridge
or leave out anything which you may have to say connected with the
subject, and particularly if you should so determine, because more time
will otherwise be required before you can publish. The question of
bounties and restrictions is exceedingly important, and, unless you have
already given your present opinions on that subject elsewhere, or mean
to do so, it ought to form part of the present work[122]; and a little
delay in the publication is not very important.

The edition which I have of your work is the first, and it is many years
since I read it. When you wrote to me that you were looking over the
chapters on the Agricultural and Manufacturing systems with a view to
make some alterations in them, I looked into those chapters and saw a
great deal in them which differed from the opinions I have formed on
that part of the subject. At your house I observed that in a subsequent
edition you had altered some of the passages to which I particularly
objected, and in the chapters as you are now writing them it appeared to
me that there was only a slight trace of the difference we have often
discussed. The general impression which I retain of the book is
excellent. The doctrines appeared so clear and so satisfactorily laid
down that they excited an interest in me inferior only to that produced
by Adam Smith's celebrated work[123]. I remember mentioning to you, and
I believe you told me that you had altered it in the following editions,
that I thought you argued in some places as if the poor rates had no
effect in increasing the quantity of food to be distributed,--that I
thought you were bound to admit that the poor laws would increase the
demand and consequently the supply. This admission does not weaken the
grand point to be proved.

As for the difference between us on Profits, of which you speak in your
letter, you have not, I think, stated it correctly. You say that my
opinion is 'that general profits never fall from a general fall of
prices compared with labour, but from a general rise of labour compared
with prices.' I will not acknowledge this to be my proposition. I think
that corn and labour are the variable commodities, and that other things
neither rise nor fall but from difficulty or facility of production or
from some cause particularly affecting the value of money, and that no
alteration of price proceeding from these causes affect[s] general
profits,--allowing always some effect for cheapness of the raw

                                           Yours very truly,
                                                      DAVID RICARDO.


                                          LONDON, _10th Jan., 1816_.


I arrived in town yesterday and found your letter at the Stock Exchange.
It is very uncertain whether I shall leave London to-morrow evening or
Monday evening. I am desirous of getting home on many accounts, but I
may not be able to accomplish the business for which I came so soon as
I expected, and, if I do not get it done by to-morrow it will in all
probability detain me till Monday. Thus then it is still uncertain
whether we are to meet, and I do not exactly know how to make you
acquainted with my movements. I will, however, let Mr. Murray know if I
leave town to-morrow, and, if you are in the neighbourhood of Russell
Square, by sending to No. 8, Montague Street (Mr. Basevi's), you will be
sure to know. In the City, at the Stock Exchange, any of my brothers
will inform you about me. If I should not be gone, will you do me the
favour of dining with me on Friday at Mr. Basevi's? His dinner hour is
six o'clock, and he begs me to say that he shall be much flattered by
your favouring him with your company. I was in hopes of finding you in
London and of having the benefit of your opinion of my book[124] in its
present state, before I sent it to be printed. That advantage I must now
forego, because I am desirous of getting it out before the meeting of
Parliament, and have before experienced the inconvenience of too much

I cannot think it inconsistent to suppose that the money price of
labour may rise when it is necessary to cultivate poorer land, whilst
the real price may at the same time fall. Two opposite causes are
influencing the price of labour, one the enhanced price of some of the
things on which wages are expended, the other the fewer enjoyments which
the labourer will have the power to command. You think these may balance
each other, or rather that the latter will prevail; I on the contrary
think the former the most powerful in its effects. I must write a book
to convince you.

I am glad you are not going to cut your next edition short.

                                           Very truly yours,
                                                      DAVID RICARDO.

    NOTE.--The MS. referred to in this letter was probably the pamphlet
    on 'Economical and Secure Currency,' which internal evidence would
    show to have been printed not earlier than Feb., 1816. Ricardo, as
    appears from Letter XL, had already submitted the MS. to James Mill.
    In the fragment of a letter to Mill (quoted in Bain's 'Life of
    Mill,' p. 153, and dated Jan., 1816) he writes: 'Fill eight pages in
    the Appendix, will that be too much?' Professor Bain thinks this
    must refer to the 'Principles of Political Economy and Taxation'
    (1817). But that work has no Appendix; and there seems no reason why
    it should not refer to the 'Economical and Secure Currency' (1816),
    which has one. The 'Resolutions proposed concerning the Bank of
    England by Mr. Grenfell,' and those proposed by Mr. Mellish,
    together, cover seven pages of that Appendix in the original
    edition; and Ricardo in the fragment quoted had probably been
    saying, that these Resolutions, if he printed them, would fill
    nearly eight pages, etc.


                                             LONDON, _7 Feb., 1816_.


I arrived in town yesterday, with the whole of my numerous family. We
are already as comfortably settled in Brook Street as under all
circumstances we can expect, and I hasten to inform you that we have a
bed ready for you, which I hope you will very soon occupy. I have
forgotten on which Saturday in the month you meet at the King of Clubs,
but conclude from your last meeting that it is the second. If so, you
will probably be in town to-morrow or Friday, when I shall hope that you
will lodge at our house and give us as much of your company as your
numerous friends will allow you to do.

You have probably ere this seen my book[125]. I have been reading it in
its present dress, and very much lament that I make no progress in the
very difficult art of composition. I believe that ought to be my study
before I intrude any more of my crude notions on the public.

It is said that the Bank have made some agreement with Government, but
what it is is not exactly known. They talk of the Bank advancing to
Government six millions at four per cent., besides continuing the loan
of three millions without interest. We shall not, however, be long in
suspense on this subject, as a general court of proprietors is to be
held to-morrow, when the directors will make some communication to the
proprietors to ask for their vote to sanction their agreement. They will
ask for this without giving them any information either respecting their
savings, their profits, or the amount of public deposits. Is not this a
ridiculous piece of mockery, and an insult to our common sense? I hope
there may be a few independent proprietors present who may call for
information, or who may at least demand a ballot, for which purpose nine
only are necessary[126]. You would be surprised at the abjectness of the
city men, and the great influence which the directors have in
consequence of their power of discounting bills. I am persuaded many of
the proprietors would vote very differently at a ballot, to what they
would by a show of hands.

I have not thought much on our old subject; my difficulty is in so
presenting it to the minds of others as to make them fall into the same
chain of thinking as myself. If I could overcome the obstacles in the
way of giving a clear insight into the original law of relative or
exchangeable value, I should have gained half the battle....

                                           Very truly yours,
                                                      DAVID RICARDO.


[On the back of this are jotted figures and lists of books in Malthus'

                                          LONDON, _23rd Feb., 1816_.


I beg to remind you that the first Saturday in the next month is
to-morrow se'n-night, on which day or a few days before it, I hope to
have the pleasure of seeing you in Brook Street. We have a bed always at
your service, and I wish you would make the rule invariable to take up
your lodging with us whenever you visit London.

I hope you have quite determined to extend your new edition to another
volume, and that you are now making great progress in it. I wish much to
see a regular and connected statement of your opinions on what I deem
the most difficult and perhaps the most important topic of political
economy, namely, the progress of a country in wealth, and the laws by
which the increasing produce is distributed.

Have you seen Torrens' Letter to Lord Liverpool[127]? He appears to me
to have adopted all my views respecting profits and rent; and, in some
conversation which I had with him a few days ago, he unequivocally
avowed that he was now of my opinion, that the price of labour, arising
from a difficulty in procuring food, did not affect the prices of
commodities. He confessed that his former view on that subject was
erroneous. I should be glad to see all the arguments in favour of my
view of the question clearly and ably stated. I should not wonder if
Torrens undertook it.

The sale of my last pamphlet has far exceeded its merits. Murray is
printing a second edition[128]. I had no idea that the subject was of
much interest to the public, but it seems that they are curious about
the amount of the Bank treasure. In the House of Commons the defence of
the contracts with the Bank was very little satisfactory; they
endeavoured to fix the attention of the House on what the public had got
and saved by the operations of the Bank; they seemed to think that all
the rest belonged of right to the Bank.

Will Ministers be able to carry the Income Tax[129]?

                                           Very truly yours,
                                                      DAVID RICARDO.

    NOTE.--Torrens came nearest to fulfilment of the above forecast in
    his 'Essay on the Production of Wealth' (1821), which was announced
    as 'a general treatise upon Political Economy, combining with the
    principles of Adam Smith so much of the more recent doctrines as may
    be conformable to truth and embodying the whole into one
    consentaneous system.' (Pref. p. v.) But he thinks out the subject
    vigorously for himself; and, though in all his later books he extols
    Ricardo above all his contemporaries, he finds frequent occasion to
    differ from him. Indeed he occasionally claims that Ricardo is the
    borrower, and he the lender. Ricardo, for example, is indebted to
    him (he says) for the doctrine that, when a nation has great
    advantage in one production but a much greater advantage in another,
    it will confine itself to producing the latter, and will even import
    the former (Ricardo, Works, pp. 76, 77; cf. Torrens, Preface to
    Essay on External Corn Trade, p. vii). Yet the doctrine has always
    passed as Ricardian _par excellence_ (see e.g. Cairnes, Leading
    Principles of Political Economy, Part III. ch. i. p. 371, and
    Logical Method, p. 81), and we should not guess, from Letter XLVII
    for example, that Ricardo was the convert. The Preface to the
    'Production of Wealth' ends with the prediction that in twenty
    years' time there would be unanimity amongst Economists on all
    fundamental principles.


                                            LONDON, _5 March, 1816_.


The public papers have ere this informed you of the result of
yesterday's ballot at the India House; Mr. Jackson's motion was lost by
a majority of twenty-one or twenty-two. Mr. Jackson, in his reply, said
everything of you that your most partial friends could wish; and indeed
the general tone of his speech, yesterday, was much more moderate than
that by which he introduced his motion. Mr. Bosanquet's[130] comments on
some passages in your pamphlet[131] lead me to think that he must have
misunderstood you, as I conceive that it was not your intention by
recommending the directors to appoint more young men than there were
vacant writerships, that the unsuccessful candidates should be finally
and irrecoverably dismissed from all chance of going out to India[132].
I imagine that it was your intention to let them be again competitors
for one of the prizes of the following year, and therefore that the
punishment of their neglect would rather be a delay in their appointment
than an absolute dismission. Mr. Bosanquet appeared to me to argue on
the latter supposition.

Mr. Elphinstone[133] spoke very kindly and very handsomely of the
professors; yet I thought that he was by far the most formidable
opponent of the College as at present constituted, and the one that I
should have been least able to answer. His speech was short, but from
the moderation of his language it produced, I think, a considerable
effect, and gave great courage to Mr. Jackson's party. I hope this
subject will not be again revived, or, rather, I hope that the
proficiency of the young men, and the absence of all turbulence, will
satisfy every one of the impolicy of interfering with the establishment.

I am sorry to be under the necessity of putting off my visit to you, but
I shall not be able to be with you on Saturday[134].... We are going ...
into Gloucestershire, so that I must defer my visit to you to some more
favourable opportunity. Perhaps you may be in London to the King of
Clubs. If so, pray come to us. I wanted to show you my observations[135]
on your pamphlets before they go to the printers. If I do not see you on
Friday, I shall send them by the coach in a few days. As they are the
last article in my very poor performance, the printer will probably not
want them till my return[136]. When you have read them, pray send them
with your observations to Brook Street by the coach....

                                           Very truly yours,
                                                      DAVID RICARDO.


                                         LONDON, _24th April, 1816_.


It is not too soon to remind you that Mrs. Ricardo and I expect to have
the pleasure of Mrs. Malthus' and your company at our house on your
visit to London in the next week. I hope it will be early in the week,
and that you will not be in so great a hurry to get home as you usually
are. On the Monday, after your club meeting, I shall ask a few of your
and my friends to meet you at dinner, and on Sunday or any other day
perhaps Warburton and Mill will take a family meal with us. I have just
received an invitation from Mr. Blake to dine with him on Friday the 3rd
May, and I have taken upon myself to let you know from him that he hopes
you will favour him with your company on that day. You will I trust be
also agreeable to this arrangement.

I hope you have made better use of your time than I have done of mine,
and that you are making rapid advances with the different works which
you have in hand. I have done nothing since I saw you as I have been
obliged to go very often into the city, and after leaving off for a day
or two I have the greatest disinclination to commence work again. I may
continue to amuse myself with my speculations, but I do not think I
shall ever proceed further. Obstacles almost invincible oppose
themselves to my progress, and I find the greatest difficulty to avoid
confusion in the most simple of my statements.

Have you seen Torrens' letters to the Earl of Lauderdale in the 'Sun?'
I think he has published five. They are chiefly on the subject of
currency, and are ingenious, though I think they support some very
incorrect doctrines. They are signed with his name.

Horner, I understand, will oppose the continuance of the restriction
bill; he does not deny now the fall in the value of gold and silver
since the termination of the war. There cannot be a better opportunity
than the present for the Bank to recommence payments in specie. Silver
is actually under the mint price. The change is surprising [and has
been] brought about in a very unexpected [manner]....

                                           Very truly yours,
                                                      DAVID RICARDO.


                                             LONDON, _28 May, 1816_.


From what you said when you left London it is probable that you will not
be at the Club on Saturday next. If your visit to town should be
deferred till the following Tuesday we have a bed at your service--it is
now occupied by Mr. and Mrs. Smith, our Gloucestershire friends. In case
you should come sooner I hope you will be able to pass much of your time
with us. Our breakfast hour is now at so reasonable a time that I hope
you will take that meal with us the first morning you are in London, and
then settle how often we shall see you at dinner.

I suppose you have been too busy in official occupations, since we last
met, to have made much progress in the writings which you have in hand.
I hope, however, that you will be prepared to give the public the result
of your well considered opinions in due season. We have a right to look
to you for the correction of some difficulties and contradictions with
which Political Economy is encumbered[137].

Major Torrens tells me that he shall work hard for the next few months,
so that we may expect a book on the same subject from him next year. He
continues to hold some heretical opinions on money and exchange,
notwithstanding Mr. Mill and I have exerted all our eloquence to bring
him to the right faith. We, however, have succeeded in removing some of
the obscurity which clouds his vision on the principles of exchange. He
is, I think, quite a convert to _all_ what you have called my peculiar
opinions on profits, rent, etc. etc., so that I may fairly say that I
hold no principles on Political Economy which have not the sanction
either of your or his authority, which renders it much less important
that I should persevere in the task which I commenced of giving my
opinions to the public. Those principles will be much more ably
supported either by you or by him than I could attempt to support them.
My labours have wholly ceased for two months; whether in the quiet and
calm of the country I shall again resume them is very doubtful. My
vanity has not received sufficient stimulus to remove the temptation
which is constantly offering itself to the indulgence of my idle habits.

The fine weather is come opportunely for your vacation. I suppose you
will commence your travels without much delay. I hope we shall meet at
Gatcomb before you return home.

                                     Believe me,
                                           Ever truly yours,
                                                      DAVID RICARDO.


                                     GATCOMB PARK, _9th Aug., 1816_.


I am obliged to you for the interest you have taken about my boat.... I
am glad that Mrs. Malthus and Miss Eckersall were pleased with their
excursion to Easton Grey and Gatcomb. They and you would have better
satisfied me that your visit was agreeable if you had not been in so
great a hurry to put an end to it. Our friends at Easton Grey have been
staying a few days with us, accompanied by Mr. Binda. We expected Mr.
Warburton to join them here, but he wrote to delay his journey for a
couple of days.... He appears pleased with the idea of his journey to
Italy, though Mrs. Austin, who is returned, did not fail to represent in
the strongest colours the disagreeables which she encountered. He I
daresay is a very good traveller, and my daughter I have always thought
the very worst I ever met with.

The Smiths leave Easton Grey on Monday for London. I suppose you have
heard that they are going with Mr. Whishaw to the Netherlands and
Holland. They will I am sure be very much delighted with their
excursion. They always go a journey, as indeed I think they travel
through life, with a disposition to be pleased. They view everything
through a favourable medium, and are not eager to spy out the defects of
every object they encounter.

I have no difficulty in agreeing with you 'that the rate of profits of
stock depends mainly on the demand and supply of stock compared with the
demand and supply of labour,' if by those words you mean the rise or
fall of wages. That is my identical proposition. Now, if labour rises,
no matter from what cause, profits will fall; but there are two causes
which raise the wages of labour,--one the demand for labourers being
great in proportion to the supply,--the other that the food and
necessaries of the labourer are difficult of production or require a
great deal of labour to produce them. The more I reflect on the subject
the more I am convinced that the latter cause has an incessant
operation. It is very seldom that the whole additional produce obtained
with the same quantity of labour falls to the lot of the labourers who
produce it; but, if it should, I should yet contend that the rate of
profits would fall because the price of corn would fall with such an
increased facility of production; capital would be withdrawn from the
land, rents would fall, and profits rise. The causes you mention may
operate in Poland and America; I have never denied it. The proportion
between labour and capital will undoubtedly affect profits, because it
will affect wages; but it is not the only element in the consideration
of the subject of profits; there are other causes which also affect
wages. Whether that demand can be general which increases price must, I
apprehend, depend on whether the precious metals can be furnished as
rapidly as other commodities. If the savings or acquisitions of labour
are exchanged for all commodities in the same proportion, and the demand
should increase in that proportion also, I can see no reason why any
commodity should rise; but, if the demand for cloth or gold be either
greater or less than the supply, they may rise or fall in their
exchangeable value. That is to say, their market value might rise or
fall; but their natural value would probably undergo little variation,
and therefore after a time they would exchange at their usual rates. A
new value thrown in the market always supposes a certain quantity of
sales as well as purchases; if no part of that value consists of the
precious metals, I do not see how all commodities could rise. I should
expect some to rise and some to fall, but the general tendency would
rather be to the latter.

                                           Ever truly yours,
                                                      DAVID RICARDO.



                                       GATCOMB PARK, _5 Oct., 1816_.


Notwithstanding the bad weather I have not failed to enjoy myself, for I
have been to Cheltenham, Malvern, and Worcester, and latterly to Bath.
To be sure the continued rains make it less pleasant than it otherwise
would be, but, as I am not at a loss for amusement within doors, I
contrive to take my walks while it is fine, and return to my library
with the recommencement of rain....

I hope your additional volume will soon follow your new edition of the
old work[138]. I shall be glad to see in a connected form your matured
opinions on the progress of rent, profits, and wages, and in what manner
they are affected by the increasing difficulty of procuring food, by
the increase of capital, and the improvement of machinery. I fear we
shall not agree on these subjects, and I should be very glad if we could
fairly submit our different views to the public, that we might have some
able heads engaged in considering it [_sic_][139]. Of this, however, I
have little hope, for though I feel strongly the truth of my theory I
cannot succeed in stating it clearly. I have been very much impeded by
the question of price and value, my former ideas on those points not
being correct. My present view may be equally faulty, for it leads to
conclusions at variance with all my preconceived opinions. I shall
continue to work, if only for my own satisfaction, till I have given my
theory a consistent form.

You say that you think I have sometimes conceded that if population were
miraculously stopped, while the most fertile land remained uncultivated,
profits would fall upon the supposition of an increase of capital still
going on. I concede it now. Profits I think depend on wages,--wages
depend on demand and supply of labour, and on the cost of the
necessaries on which wages are expended. These two causes may be
operating on profits at the same time, either in the same, or in an
opposite direction. In the case you put wages would have a tendency to
keep stationary as far as the supply of food was concerned, but they
would have a tendency to rise in consequence of the demand for labour
increasing, whilst the supply continued the same. Under such
circumstances profits would of course fall. You must, however, allow
that this is an extraordinary case, and out of the common course of
events, for the tendency of the population to increase is, in our state
of society, more than equal to that of the capital to increase. I shall
be in London on Thursday or Friday next.... I should be glad if some
fortunate accident were to take you to town at the same time. If so let
me know where you are to be found; a line directed to the Stock Exchange
will be certain to find me. We shall not finally leave the country till
January or February. I wish you would come and see a little more of
Gatcomb during your Xmas vacation....

                                           Ever truly yours,
                                                      DAVID RICARDO.


                                    BOW, MIDDLESEX, _11 Oct., 1816_.


I arrived in London this morning and found your kind letter, which I
ought to have answered immediately, as you could not otherwise know
whether I accepted your kind invitation, before the time that you might
expect me. The truth is I forgot the day of the week, and was not aware
till I got home that we were so near Saturday. I very much regret that I
shall not be able to avail myself of Mrs. Malthus' and your kindness, as
I have engagements here which will prevent me from leaving town till I
return to Gatcomb.

You mistake me if you suppose me to say that under no circumstances of
facility of production profits could fall. What I say is that profits
will rise when wages fall, and, as one of the main causes of the fall of
wages is cheap food and necessaries, it is _probable_ that with facility
of production, or cheap food and necessaries, profits would rise. At the
very time that the labour of a certain number of men may produce on such
land as pays no rent 1100 instead of 1000 quarters of corn, and when
corn falls in consequence from £5 to £4 10_s._ per quarter, the money as
well as the corn wages of labour _may_ rise, for capital _may_ have
increased at a very rapid rate, and labourers at a slow rate, in which
case profits would fall and not rise. Under these very peculiar
circumstances of higher money wages with a lower price of necessaries,
the wages of labour would be in an unusual state, and would shortly
revert to the old standard, when profits would feel the benefit. All I
mean to contend for is that profits depend on wages, wages under common
circumstances on the price of food and necessaries, and the price of
food and necessaries on the fertility of the last cultivated land. In
all cases it is perhaps true that rent will depend upon the demand
compared with the supply of good land, and wages on the demand compared
with the supply of labour, if it be allowed that the price of
necessaries influence[s] the demand and supply of labour.

I do not quite understand the expression that profits depend on the
demand compared with the supply of capital. What would you say of two
countries in [which] there are precisely equal capitals, where wages
[are] also equal, and where the population is precisely in the same
number. Would the demand compared with the supply of capital be the same
in both? If you say they would, I ask whether their rate of profits
would be the same under any other supposition but that of their land
being exactly of the same degree of fertility? To me it appears quite
probable that the ordinary and usual rate of profits might in one be 20
and in the other only 15 per cent., or in any other proportions....

                                         Believe me,
                                                 Ever yours,
                                                      DAVID RICARDO.


                                          LONDON, _14th Oct., 1816_.


My stay in London will not be prolonged beyond Friday next. I hope it
will be convenient to you to come up before. On Thursday I shall be
disengaged and will meet you at any place in London that may best suit
you, unless you will dine with me at my brother's at Bow. His house is
small, and I fear he has not, now we are with him, a spare bed to offer,
and you may not like to travel so far at night. If so, let us meet in
the city and get our dinner there.

The money wages of labour are, I apprehend, generally regulated by
facility of production. With an abundant production too I think that a
less proportion of the whole will be given to the landlords, and more
will remain for the other two classes, of capitalists and labourers; but
of this increased quantity a greater proportion will be given to
capitalists and a less proportion to labourers. Now, though what you
call the real wages of labour[140] (but which I think a wrong term) will
increase, the money wages will fall. But this will not be the case with
profits; what you would call real profits would increase, but so would
also money profits. Under the circumstances then that I have supposed,
the rate of profits would rise though money wages would fall. The
difference between us is this. I say that with every facility or
difficulty of production, of the quantity of necessaries, that is to be
divided between profits and wages, different proportions will be given
to each, and that money will accurately show those proportions. You
appear to me to think that profits do not depend on the division of the
produce, and that money wages may as often rise with facility of
production as fall.

You state the real question fairly; it is, 'What is the main cause which
determines the rate of profits under all the varying degrees of
productiveness?' You do not appear to me [to] solve the question when
you answer 'that it is the proportion which capital bears to labour.' In
a rich country where profits are low, and where a great portion of
produce is paid to the landlords for rent, the proportion of labour to
capital will be the greatest, and yet according to your theory it should
be the least. You will not, I think, deny that in a country where labour
is high a manufacturer would employ more capital to produce the same
commodities than what he would do in a country where wages were low, and
there also would profits be low; that is to say, profits are high where
capital bears a large proportion to labour, and low where labour bears a
large proportion to capital.

I am writing amidst the noise of the Stock Exchange, and very much fear
that I shall be more than usually incomprehensible.

                                                 Ever yours,
                                                      DAVID RICARDO.


                                     GATCOMB PARK, _3rd Jan., 1817_.


A long time has elapsed since I had the pleasure of seeing you, during
which time I have often intended writing, as I did not hear from you;
but my natural indolence prevailed, and I have procrastinated it till
now. I had some faint hopes that you might be in the neighbouring county
this vacation, in which case I should have hoped to prevail on you to
pass a short time here; but I learnt from Mr. Binda, who is on a visit
to Mr. Smith, that he had met with you at Holland House, and that it was
not probable you would go far from home. I had previously enquired about
you of our young neighbour George Clerk; he, however, could only tell me
you were well; he knew nothing about your intended movements.

By an advertisement in the public papers I perceive that you have been
occupied in writing about your College[141], which I regret, as I
believe the task was not very agreeable to you, and as it may have
prevented you from proceeding with other works in which I imagine you
are more interested. I should be glad to hear that everything you think
defective in the College was remedied, and that it was placed on such a
footing as to require only the ordinary routine of your attention.

I have been occasionally employed, since we met, in putting my thoughts
on paper, on the subjects which have often passed under our discussion.
I have encountered the usual obstacles from difficulties of composition;
but I have resolutely persevered till I have committed everything to
paper that was floating in my mind. There are a few points on which
there is a shadow of difference between my present and my past opinions;
but they are not those on which we could not agree. I hope I shall
succeed in putting my MS. in some tolerable order, as on that will
depend whether I shall again appear before the public. What I have
hitherto done is rather a statement of my own opinions than an attempt
at the refutation of the opinions of others. Lately, however, I have
been looking over Adam Smith, Say, and Buchanan, and where I have seen
passages in their works contrary to the principles I hold to be correct
I have noticed them, and shall perhaps make them the subject of some

I fear I shall not have the satisfaction of receiving your acquiescence
to my doctrines, particularly as I have reverted to my former views
respecting taxes on raw produce. Whatever may be correct on that
subject, surely Adam Smith is wrong, as there are various passages in
his book inconsistent with each other.

We shall, I hope, soon meet and renew our discussions on some of these
difficult matters. I shall be in London on Friday next, and hope to see
you in Brook Street as our inmate, as soon after that day as business or
inclination may draw you to London.

I want to hear your opinion of the measures lately adopted for the
relief of the poor[142]. I am not one of those who think that the
raising of funds for the purpose of employing the poor is a very
efficacious mode of relief, as it diverts those funds from other
employments which would be equally if not more productive to the
community. That part of the capital which employs the poor on the roads,
for example, cannot fail to employ men somewhere, and I believe every
interference is prejudicial....

                                         Believe me,
                                                 Ever yours,
                                                      DAVID RICARDO.


                        UPPER BROOK STREET, LONDON, _24 Jan., 1817_.


I have read your pamphlet[143] with great pleasure, and am very much
satisfied with your arguments in favour of a college in preference to a
school for the education of the young men destined to manage the
complicated affairs of our Indian Empire. The testimonies from India in
favour of the young men sent from the College, as compared with those
who went out to India before the establishment of the College make
powerfully for you, and do not appear to have been answered by your
opponents. I observe by the papers that the discussion on this subject
will be renewed at the India House on the 6th February, at which time I
conclude that you will be in London. If so, I hope you will make my
house your headquarters. Mr. Murray promised to send copies of your book
to the gentlemen you directed me to mention to him.

It appears to me that one great cause of our difference in opinion on
the subjects which we have so often discussed is that you have always in
your mind the immediate and temporary effects of particular changes,
whereas I put these immediate and temporary effects quite aside, and fix
my whole attention on the permanent state of things which will result
from them. Perhaps you estimate these temporary effects too highly,
whilst I am too much disposed to undervalue them. To manage the subject
quite right, they should be carefully distinguished and mentioned, and
the due effects ascribed to each.

I have been reading again your three last pamphlets on rent and corn,
and cannot help thinking there is some ambiguity in the language. The
word [_sic_], 'high price of raw produce,' is calculated to produce a
different impression on your reader from what you mean. Your first and
third causes of high price appear to me to be directly at variance with
each other. The first is the fertility of land, the third the scarcity
of fertile land. The second cause too, I think, never operates[144].
There is one passage in particular which expresses fully my opinions. I
have not the book by me, and cannot refer you to the page, but it
begins, 'I have no hesitation in stating that independently of
irregularities in the currency,' etc. It is in the essay on Rent[145].

Surely Buchanan is right and your comment[146] wrong; rent is not a
creation but a transfer of wealth. It is the necessary consequence of
rent being the effect and not the cause of high price[147].

Say and I would say that by turning revenue into capital we shall obtain
both an increased supply and an increased demand; but, if the same
capital be so created, I do not approve of its present application, and
taking it out of the hands of those who know best how to employ it, to
encourage industry of a different kind and under the superintendence of
those who know nothing of the wants and demands of mankind, and blindly
produce cloth or stockings of which we have already too much, or improve
roads which nobody wishes to travel....

                                           Very truly yours,
                                                      DAVID RICARDO.



I am not in the least acquainted with the subject on which your
papers[148] treat, but that is no reason why I should not mention what
appears to me defective. In page 8[149] you add 1/6 to the births for
probable omissions, and 1/12 for deaths; but you do not tell your reader
why these proportions are taken rather than 1/4 or 1/3, nor can I
discover on what grounds those numbers are chosen.

You sometimes take averages from the known facts of certain years; but
your averages are formed on an arithmetical ratio while your application
is to a geometrical series. I submit whether this is correct.

If, as you say in page 14[150], births are to burials as 47 to 30, and
the mortality as 1 to 47, the addition to the population would be little
more than 1/82 instead of 1/83, for out of every 1410 persons 30 would
die and 47 would be born, and consequently there would be an increase of
17; but 1410 divided by 17 is 82.94, or 83 nearly; and therefore, if
1410 gives an increase of 17, 9,287,000 will give an increase of
111,970, or 1,119,700 in ten years, which will raise the population
9,287,000 + 1,119,700 = 10,406,700 instead of 10,483,000[151].

In page 16[152] the mortality is supposed to be as before, 1 in 47, and
the births to the population as 1 to 29-1/2, and the population to be
9,287,000. This latter sum divided by 29-1/2 gives 314,813 the annual
number of births, and divided by 47 gives 197,595 the annual number of
deaths; deduct one from the other (197,595 from 314,813) gives 117,218
for the annual increase, which in ten years would be 1,172,180, which
added to the former population of 9,287,000 gives 10,459,180 instead of

I have marked in pages 35 and 36 some very trifling errors. These are
all I can discover with the facts which are before me.

                                           Ever truly yours,
                                                      DAVID RICARDO.

_8 Feb., 1817._


                                            LONDON, _21 Feb., 1817_.


I am very sorry that you were prevented from being in London yesterday.
I fully expected to see you, as I thought the subject of debate at the
India House was of too much interest not to make you desirous of hearing

Mr. Grant[153] was, I assure you, a warm advocate in the cause of the
College. He spake admirably and with great effect, improving in energy
and eloquence as he proceeded. He did justice to the various
qualifications of the professors for the responsible situations which
they filled, and I believe left nothing unsaid which might assist the
cause which he so ably defended. I thought him very severe on Randle
Jackson, who will find it difficult to answer some parts of his speech.
In the Times the report of what he said is very correct, as far as it
goes; but it is necessarily a very abbreviated statement. Mr.
Kinnaird[154] began by speaking in the most respectful manner of you,
and indeed in terms of great eulogy, but afterwards I think absurdly
dwelt on your being an interested party and an advocate for the college,
and imitated Mr. Jackson in his irony on those whom he first declared
were highly deserving of respect. In what manner could we have any
correct account of the college and its concerns but from an interested
party? Who could speak of its management, attainments, and discipline,
but those who were acquainted with it? He, however, gave up the only
strong grounds they had (if they had been true) for inquiring into the
affairs of the college, for he said that he had no idea that there was
more immorality and profligacy in the East India College than in any
other seminary; neither did he say anything of a want of proficiency in
the students; but his main argument was built on the general principle
that a supply of intellectual attainments will as surely follow an
effectual demand for it, as the supply of any material commodity will
follow effectual demand.

Mr. Grant, I should mention, supported a directly contrary principle.
Mr. Kinnaird dwelt very much on the compulsion under which parents were
of sending their children to this particular institution. He seemed to
me to adopt Mr. Mill's view of the subject, and his argument would have
been quite as applicable to all colleges if parents were compelled to
send their children to them. He passed over the compulsion under which
parents were to send their children to college, who wished to bring them
up to the church, etc. In a few minutes' conversation which I had with
him after the debate I urged this objection, and he answered that they
had a choice among a large number of colleges, whereas in your case they
were confined to this one.

He finished by assuring me that my friend had a bad cause, that it could
not be defended and must fall. Mr. Impey's speech was badly timed; he
should not have immediately followed Mr. Grant, for he could not then
say anything new, nor could he repeat anything that had been said half
as well as Mr. Grant had said it before. The debate will be renewed on
Tuesday. If you should come up, I shall expect you in Brook Street. If I
do not see you, and you are disengaged on the Saturday evening
following, I shall be glad to pass a day with you, commencing my visit
at that time....

                                           Very truly yours,
                                                      DAVID RICARDO.


                                          LONDON, _9th March, 1817_.


I leave London to-morrow morning very early for Gloucestershire, from
whence I shall return some time before your next meeting at the King of
Clubs, so that I hope you will do me the favour to come to Brook Street
when you visit town on that occasion.

... This letter will accompany that part of my MS.[155] which refers to
you. I hope I have not in any respect misapprehended you; and, however
we may differ in opinion on the subjects that we have so often
discussed, I trust you will not think that I have exceeded the bounds of
fair criticism in my remarks on the passages of your pamphlets which I
have selected for animadversion. The printing goes on briskly. We have
had a sheet a day since the commencement, and eleven sheets are now
corrected. In their printed form they appear worse, in my eyes, than
before; and I need all the encouragement of my partial correctors[156]
to keep alive a spark of hope respecting their reception. I wish it were
fairly out of my hands; and, that it may not be delayed, I have taken
every precaution that it shall proceed uninterruptedly in my absence. As
yet I have no misgivings about the doctrines themselves; all my fears
are for the language and arrangement, and above all that I may not have
succeeded in clearly showing what the opinions are which I am desirous
of submitting to fair investigation.

I hope that college affairs will no longer occupy an undue proportion of
your attention, but that you will be able to give a finishing hand to
the works which you are about to publish. Mrs. Marcet[157] will
immediately publish a second edition[158]. I have given her my opinion
on some passages of her book, and have pointed out those which I know
you would dispute with me. If she begins to listen to our controversy,
the printing of her book will be long delayed; she had better avoid it,
and keep her course on neutral ground. I believe we should sadly puzzle
Miss Caroline, and I doubt whether Mrs. B. herself could clear up the

From some conversation which I had yesterday morning with Mr. Murray, it
appears that Torrens has been offering his book to him; but Murray is
very lukewarm in the negotiation, and really very much underrates
Torrens' talents. He thinks that the sale of Torrens' best work, that on
corn[159], was very limited; he talked of it's not having exceeded 150
copies. Since writing the above I have seen Mr. Hume[160]; he tells me
that he has heard that the directors are about to institute an inquiry
into the state of the college themselves....

                                           Very truly yours,
                                                      DAVID RICARDO.


                                           LONDON, _22 March, 1817_.


I have been expecting you, both yesterday and to-day, and it is only
after a most laborious calculation that I am led to suspect that the
meeting of your Club is not till next Saturday. Next Friday then, or any
earlier day, I hope we shall see you in Brook Street; and I am desired
by Mrs. Ricardo to say that, if Mrs. Malthus will also favour us with
her company, she will be very happy to see her. If you should come on or
before Friday, the printer will not before that day want that part of
my MS. which I sent to you; but, if he uses due diligence, he will
certainly be ready for it about that time. If you have any remarks to
make on it which will require much consideration on my part, be so good
as to send it me before, for, as the time approaches that I am to appear
in print, I seem to become more dissatisfied with my work, and less
capable to give any proposition contained in it a patient investigation.

It is now 5 o'clock; and, notwithstanding my doubts have been gathering
strength since the morning, I am but just convinced, after tracing back
with Mr. Hitchings the day you were last here, that I shall not see you
this day.

In great haste, yours very truly,

                                                      DAVID RICARDO.

We returned from Gloucestershire on Tuesday last.


                                           LONDON, _26 March, 1817_.


This morning I intended that my letter to you to-day should inform you
that I would have the pleasure of passing next Saturday and Sunday with
you at Haileybury; but a circumstance has taken place which will make it
necessary for me to go to Bath on Friday next, from which place I shall
again return to London early in the next week. As you say you will not
be in town till after Easter, perhaps it will be convenient to you to
see me at Haileybury on Saturday se'nnight. If so, I shall be with you
on that day, at your dinner hour; and, if I do not hear from you before,
I shall conclude that you have no engagement which will render my visit

I mean this day to put the last of my papers in the printer's hands, and
hope he will be able to finish the printing before my visit to you; but
of this I have some doubt, as he does not proceed regularly at the same
even pace.

I agree with you that, after having so often heard your opinions, in
contradiction to mine, it would not be of much use just now, when my
book is actually in the press, to enter again on your reasons for
differing with me. I did not send you the manuscripts with any such
intention. I merely wished you to see that part which related to you
before I published, that I might not inadvertently misrepresent your
statement. I cannot have the least objection to insert the note you
mention[161], although I cannot but regret that we should differ so much
as to the just and fair import of the words _real price_. When you see
my book altogether, you will not perhaps differ from me so much as you
now think you do. You may, and I believe will, object to the correctness
of many of my terms, as they will appear to you fanciful and not always
properly applied; but, making allowance for such deviations, you will I
am sure agree with much of the matter. On some points, indeed, there is
no difference between us, and on others our chief disagreement would be
in the mode of representing them. I have written this letter at
intervals between other engagements, as I have been repeatedly
interrupted. I now hear the postman's bell, and must hasten to conclude.

                                           Very truly yours,
                                                      DAVID RICARDO.



I came up to London last night by the mail from Salisbury, and have just
seen your letter. Mr. Whishaw told me when we last met that he was
going to your house on Saturday, and I feared that my projected visit
might, on account of numbers, be inconvenient to you.... You have,
however, suggested the getting me a bed out of your house, with which I
shall be well satisfied, let it be hard or soft, narrow or roomy....
Pray make no ceremony with me, and do not receive me if there be the
least difficulty about the bed.

                                           Yours very truly,
                                                      DAVID RICARDO.

LONDON, _3 June, 1817_.


                                            LONDON, _25 July, 1817_.


I am just returned from my six weeks' excursion highly pleased with
everything I have seen. I very much regretted that you were not with me,
as I am sure you would have been gratified with the towns of Flanders
and the scenery of Namur, the Rhine and the castle of Heidelberg. I met
Mr. Hamilton[162] at Luneville; he was going through the country that I
had just quitted, and I hope he was as much pleased with it as I was. I
fear that his engagements at the college made him devote less time to it
than was required to enjoy all its beauties. We found that we were
obliged to hurry over it with more expedition than we wished. Mrs.
Ricardo has been at Gatcomb rather more than a week, and to-morrow I
shall quit town and join her there. Since Tuesday morning when I left
Paris I have been incessantly travelling in the day and have not devoted
many hours to sleep. I shall not be sorry to have a few days' rest.
Your college was liberal to France, for I not only met Mr. Hamilton
there but Mr. Le Bas[163] and the gentleman, whose name I forget, who
teaches the French language at that institution[164].

I hope you have been enjoying your excursion and that you found less
distress in Ireland than has been represented as existing there. The
prospect of a good harvest is some consolation for the sufferings which
the poor have been forced to endure; in every country of Europe they
have endured much, and in every one they are anticipating a return of

M. Say was very much gratified with your present, and requested me to
forward a letter and a small duodecimo volume which he has just
published[165]. The letter I send you, but the book as well as his work
on Political Economy, the 3rd edition of which he gave to me, has been
detained at the Custom house at Dover, that they may have sufficient
time to calculate the duty on them. As I did not wish to stay at Dover
till the next day, I requested the master of the Inn to pay the duty and
to forward them by Osman, who will be on his return from France in a few
days. The book is an interesting little work in the manner of
Rochefoucauld, and appears to me to be ably done. M. Say was very
agreeable and friendly; he dined with me one day and I with him another.
He is engaged in a commercial concern to which I believe he gives great

I fear that it will be a long time before you and I meet, though I shall
probably be in London once or twice in the next three months. I hope you
will be disposed to bend your stops westerly in your winter vacation,
and that you will not fail to pay us a visit at Gatcomb; but not such a
visit as the last,--I shall not be satisfied with a flying excursion.
Perhaps Mr. Whishaw will favour me with his company at the same time; if
so, with the assistance of my friend Smith, we should, I hope, contrive
to make the time pass agreeably to both of you. Being very tired and
very sleepy I hasten to conclude.

                                           Very truly yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _4 Sept., 1817_.


I thank you very much for your kind letter of the 17th August. I am
pleased to hear that your journey to Ireland turned out so well. The
account you give of the improvements before the check which they
received during the last two years, as well as of the situation of the
people, agrees exactly with what I should expect to find. Humbold[t] in
his account of New Spain[166] points out the very same evils as you do
in Ireland, proceeding too from the same cause. The land there yields a
great abundance of Bananas, Manioc, Potatoes, and Wheat, with very
little labour, and the people, having no taste for luxuries and having
abundance of food, have the privilege of being idle. No other advantage
would I think result from the disposable labour being employed in
manufactures than in preventing its being turned to profligate and
mischievous pursuits, dangerous to the public peace. Happiness is the
object to be desired, and we cannot be quite sure that, provided he is
equally well fed, a man may not be happier in the enjoyment of the
luxury of idleness than in the enjoyment of the luxuries of a neat
cottage and good clothes. And after all we do not know if these would
fall to his share. His labour might only increase the enjoyments of his

Mr. Smith has heard from Mr. Whishaw; he was at Paris when he wrote, on
the eve of recommencing his journey. I hope he may enjoy his tour. It is
a pity that he is without an agreeable companion; he is of so sociable a
disposition that he would have had pleasure in communicating his
feelings and comparing them with these of another intelligent person.
Mr. Smith has also heard from Mr. Warburton, who has set out on the very
same tour that I have been taking, with the addition of Holland, through
which country he means to pass. He has a very intelligent companion in
Dr. Woolaston[167].

At the very moment that we were beginning to despair of the weather it
has changed and is now beautiful. Our hopes will I trust not be
disappointed, and we shall be enabled safely to house the abundant crops
with which our lands in every country (_sic_) are loaded. I doubt
whether we have, even during the late distresses, ceased to advance as a
nation in wealth; but at present I think no one can doubt that we are
again making forward strides in prosperity. A bad harvest does not
perhaps very much check the progress of wealth; but it materially
interferes with the general happiness.

You flatter me very much by your second perusal of my book; and I am
happy to find that there are but a very few important points on which we
materially differ. I certainly allow that my theory of value does not
hold good in different countries when profits are different. If you look
to page 156 and the following pages you will see my ideas on that

It is only yesterday that I received the book from Dover which M. Say
entrusted me with for you; I send that and this letter together by Mrs.
Ricardo, who is going to London for a few days; she has undertaken to
send my parcel to the Hertford coach.

... If you go to Bath and do not come over to us I shall not know how to
forgive you.

I have heard lately from Mill; he is still hard at work in correcting
the press (_sic_) and finishing his book[169]. He tells me that Sir
Samuel and Lady Romilly are expected at Ford Abbey. I fully expect that
I shall see him here before he returns to London. I do not know when I
shall be obliged to go to town, but whenever it may happen I will let
you know, as I would not willingly forego any chance of meeting you. Mr.
Smith's house is the centre of attraction for all his able London
friends, and he is kind enough always to allow me to participate in the
pleasure which their company affords him. We have already had Mr.
Warburton and Mr. Belsham, and in a few days he expects to see Mr.
Mallet. Mr. Smith continues to reign pre-eminent in the good-will of all
his neighbours, and indeed I do not know any one who is entitled to
dispute the palm with him....

                                           Ever yours truly,
                                                      DAVID RICARDO.

This is a sad blundering letter, bad even from me, but you must excuse
it, and will I am sure when I tell you that I am just recovering from
the languor and weakness caused by the powerful medicines which I have
been obliged to take.... The night before last I was very ill; yesterday
I was better, and to-day I have no complaint left but weakness.


                                      GATCOMB PARK, _10 Oct., 1817_.


I said I would write to you when I was going to London and therefore I
now do it, but without much hope of seeing you there.... It is not my
intention, if I can get my business done, to stay in town beyond Tuesday
morning, unless I had any chance of meeting you there, which would
induce me to defer my return home one day longer.... Dr. Roget[170] has
been on a visit for a few days at Mr. Smith's; he stayed one evening
with us at Gatcomb. We all very much admire his unassuming manners, and
are well disposed to admit his claims on our esteem and affection. Sir
Samuel Romilly and Lady Romilly have been on a visit at Mr. Phelps' a
near neighbour of mine. They went from here to Bowood[171] and from
thence they were going to Ford Abbey, Mr. Bentham's residence. I have
since heard of their arrival there, and they are now probably returned
to London.

... Our harvest in this part of the country is almost entirely got in.
The crops are I believe generally good, and we are very grateful for the
fortunate change in the weather which enabled us to reap and house them
in a state of perfection. We shall now, I hope, for some years sail
before the wind. You and I have always agreed in our opinions of the
power and wealth of the country; we were not in a state of despair at
the discouraging circumstances with which we were lately surrounded. We
looked forward to the revival which has taken place....

                                           Ever truly yours,
                                                      DAVID RICARDO.

If you should write me a line, it will reach me sooner by being
directed to the Stock Exchange.


                                      GATCOMB PARK, _21 Oct., 1817_.


I hope we shall be more fortunate in meeting, when I again visit London.

You think that the low price of labour which has lately prevailed
contradicts my theory of profits depending on wages, because the rate of
interest is at the same time very low. If interest and profits
invariably moved in the same degree and in the same direction, my theory
might be plausibly opposed; but I consider this as by no means the case.
Although interest is undoubtedly ultimately regulated by profits, rising
when they are high and falling when they are low, yet there are
considerable intervals during which a low rate of interest is compatible
with a high rate of profit; and this generally occurs when capital is
moving from the employments of war to those of peace. If goods do not
vary in price and the cost of manufacturing them falls, it is
self-evident that profits must rise; and, if goods do fall in price
generally, then it is not the value of goods or of labour which falls,
but the value of the medium in which they are paid which rises, and then
my theory does not require any rise of profits; they may even fall.

You ask me if I can show you the fallacy of the following statement:
'Capital is wholly employed in the purchase of materials and machinery
and the maintenance of labour. If, from any cause whatever, materials,
machinery and the maintenance of the labourer and his wages fall
considerably in money value, is it _possible_ that the same amount of
monied capital can be employed in the country?' I answer that it is
_possible_ but by no means probable. Suppose the mines were to produce a
diminished quantity of the precious metals, at the same time that
materials and machinery were greatly increased in quantity, might not
the increased aggregate quantity of materials and machinery be of a
greater money value than before, although each particular portion should
be at a less? Might we not by importation appropriate to ourselves a
larger proportion of the mass of money distributed amongst all the
countries of the world? I cannot doubt the _possibility_ of the case.

In your argument about the stimulus of increased value and the effects
of demand and supply on future wealth, you do not really differ from my
views on this subject so much as you suppose, for I make profits and
wealth to depend on the real cheapness of labour, and so do you, for you
say that the evils of a dearth will often be more than counteracted as
regards wealth, by the great stimulus which it may give to industry. I
say the same, for I contend that the evils of a dearth fall exclusively
on the labouring classes, that they perform frequently more labour not
only without receiving the same allowance of food and necessaries, but
often without receiving the same value for wages or the same recompense
in money, whilst everything is dearer. When this happens, profits, which
always depend on the value of labour, must necessarily rise.

I thought I had written to you about the additional matter in your
excellent work[172], although I had not given it all the examination
I intended. I read it as I was travelling and noticed the pages
wherever I saw the shadow of a difference between us, that I might
look at the passages again when I got home and give them my best
consideration[A][173]. On my passing through London when I returned from
France, I looked for your book, as I expected you had sent me a copy,
which I think you kindly told me you would do; but Mrs. Ricardo had
jumbled that and many other books in a wardrobe, and it could not be got
at till I went to town. I have it now here and have been reading all the
new matter again, and am surprised at the little that I can discover,
with the utmost ingenuity, to differ from.

[A] [_Foot-note, eventually ousting the text._] In every part you are
exceedingly clear, and time only is wanted to carry conviction to every
mind. The chief difference between us is whether food or population
precedes. I could almost agree with the statement of the question in p.
47 of third vol., which I think is in strict conformity with Sir J.
Steuart's opinion. In speaking of the fall of wages you only once
mention _corn_ wages, but must always mean corn wages and not money
wages. In the note to p. 438 of the third vol. you agree to my doctrine,
but I think in pp. 446, 456 and 457 you forget the admission you had
before made, 497 [_sic_]. You agree with Smith that the monopoly of the
Colony trade raises profits. 502 is in my opinion wrong and inconsistent
with 438. I differ a little from your views in 506. You do not always
appear to me to admit that the tendency of the Poor Laws is to increase
the quantity of food to be divided, but assume in some places that the
same quantity is to be divided among a larger number. I can neither
agree with Adam Smith nor with you in 326, 328: a maximum tends to
discourage future production; an undue increase of wages, or poor laws,
tend to promote it. 360, a fall in the price of commodities and a rise
in the value of money are spoken of as the same thing. 361, a diminution
of production is another way of expressing an abatement of demand. 371,
a combination among the workmen would increase the amount of money to be
divided amongst the labouring class. These you will observe are slight
objections, and I make them that I may preserve my consistency. They
would not be understood by the mass of readers, but to you who are
acquainted with my _peculiar_ views, if you please, they need no

                                                 Ever yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _16 Dec., 1817_.


I believe I am within the time stated in your letter for your visit to
Surr[e]y, and consequently that this will reach you there. I am sorry
that you were not sufficiently loyal to give her majesty some mark of
your attention at Bath[174], during your present vacation, as in that
case I might have hoped to have seen you here. As it is we may probably
be in London nearly at the same time. We have not yet absolutely fixed
on the day for our journey, but it will not be deferred beyond the
middle of next month. I hope I may see you before your return home.

I am glad to find that we may soon expect another volume[175] from your
pen, although, if you attack me, I am prepared for nine tenths of our
readers deciding in favour of your view of the question. I want an able
pen on my side to put my opinions in a clear light, and to divest them
of that appearance of paradox which they now wear. I wish I could assist
you to a good title but no one is more able to give a work the best air
and arrangement than yourself. Have you seen the Review of M. Say and
myself in the British? In some of the remarks you would I believe agree;
yet it is some consolation to me that, after designating every part of
my performance absurd and nonsensical, they attack you on the subject of
Rent, and say that both you and I have endeavoured to make the nature
of rent, which was before so clear, obscure. Rent is nothing more than
the hire paid for land. I feel delighted that they have given me so
desirable a companion. In the Scotsman, a Scotch newspaper, I have been
ably defended--the writer[176] has evidently understood what I meant to
say, which the reviewer has not done.

I have been reading Mill's book[177] for this last week, and have got
through about half of the first volume. I am not qualified to give an
opinion of its merits, but I am very much pleased with it. It is very
interesting, and is, I think, calculated to excite a great deal of
attention, for it not only descants on the religion, manners, laws,
arts, and literature, of the Hindus, but compares them with the
religion, manners, etc. of other nations which the world has generally
considered as much inferior to the Hindus; and, if these in the Hindus
are to be deemed marks of a high state of civilization, Africa, Mexico,
Peru, Persia, and China, might also lay claim to the same character. He
also gives his own sentiments as to what constitutes good laws, a good
religion, a high state of civilization, and shews at what a very low
degree Hindostan deserves to be estimated for these acquirements[178].
The Political Economy is, I think, excellent, and the part that I have
read may be considered as the author's view of the progress of the human
mind. I hope it will bring him fame and reputation,--his perseverance as
well as his other qualities well deserve it....

Like the Patriarchs of old I am surrounded by all my descendants, sons,
daughters and grandchildren--they have assembled from all quarters to
visit us, and if I were not afraid that they would soon become too
numerous for the limits of our house I should insist on its being an
annual custom.

You have probably seen in the papers that I am gazetted as one of the
three from whom the choice of Sheriff is to be made, and as Col.
Berkeley, the first named, will in all probability be excused on account
of his intended application to the House of Lords for the Peerage which
must otherwise be given to his brother, who is nearly of age, I shall no
doubt be selected. This honour I could well have dispensed with....

                                                 Ever yours,
                                                      DAVID RICARDO.

    NOTE.--In Say's 'Oeuvres Diverses' (vol. i. p. 413) is printed a
    letter of Ricardo to Say, dated from Gatcomb, 18th Dec. 1817. He
    says amongst other things: 'Since your visit to England, I have been
    by degrees retiring from business; and, as our debt is enormous and
    the price of stock very high, I have from time to time withdrawn my
    capital, and have laid out much of it in land.... My life is made up
    of successes and cares; hence I am providing for the future as much
    as I can, that I may get rid of anxiety altogether. Our friend Mill
    is about to publish his book on India, on which he has been at work
    for several years. With powers like his, nothing can fail to become
    interesting and instructive under his pen; and I am convinced that
    this book will exceed the expectations of his closest friends. It is
    in type; and he has kindly given me an early copy. I have read more
    than half of the first volume, and I hope it will produce on
    competent judges the same impression that it has made on me. What he
    says on the government, laws, religion, and manners of the country
    is of great weight; and the comparison he draws between the former
    condition of Hindostan and its present condition seems to me to
    decide the question of the high state of civilization attributed to
    the former.... Your _Traité d'Economie Politique_ increases in
    reputation among us, in proportion as it becomes better known.
    Extracts from it (and from my own book) have recently appeared in
    the British Review, and its merit has been recognised. I have not
    fared so well; the reviewer has found in my book ample material for
    criticisms, and hardly a single passage worthy of praise.'


                                     LONDON, _30th Jan., 1818_[179].


During your visit in London next week I hope you will stay with us in
Brook Street, and I am commissioned by Mrs. Ricardo to add her
solicitations to mine to induce Mrs. Malthus to accompany you.

Lord King[180], Mr. Whishaw and you have done me a great deal of honour
in making my work[181] the subject of your discussions, but I confess it
fills me with astonishment to find that you think, and from what you say
they appear to agree with you, that the measure of value is not what I
have represented it to be; but that _natural price_, as well as _market
price_, is determined by the demand and supply,--the only difference
being that the former is governed by the average and permanent demand
and supply, the latter by the accidental and temporary. In saying this
do you mean to deny that facility of production will lower natural
price, and difficulty of production raise it? Will not these effects be
produced after a very short interval, although the absolute demand and
supply, or the proportion of one to the other, should remain permanently
the same? At any rate then demand and supply are not the sole regulators
of price. I should be glad to understand what Lord King and you mean by
supply and demand. However abundant the demand it can never permanently
raise the price of a commodity above the expense of its production,
including in that expense the profits of the producers. It seems natural
therefore to seek for the cause of the variation of permanent price in
the expenses of production. Diminish these and the commodity must
finally fall, increase them and it must as certainly rise. What has this
to do with demand? I may be so foolishly partial to my own doctrine that
I may be blind to its absurdity. I know the strong disposition of every
man to deceive himself in his eagerness to prove a favourite theory, yet
I cannot help viewing this question as a truth which admits of
demonstration and I am full of wonder that it should admit of a doubt.
If indeed this fundamental doctrine of mine were proved false I admit
that my whole theory falls with it, but I should not on that account be
satisfied with the measure of value which you would substitute in its

I am sorry that you have determined not to publish this spring.

I have not seen Torrens, and do not know what his intentions are
respecting the work which he promised to give to the public.

Sir James Mackintosh is indeed a great acquisition in more respects than
one to your College[182]. It must be particularly agre[e]able to you.

I thank you for your congratulations on the hono[u]r [which] has been
conferred on me by the appointment [to] the office of Sheriff[183], an
honour which I could well have dispensed with. Under all circumstances I
think it best not to offer an objection to it.

I wish you were of our party to-day. Mr. Whishaw, Mr. Smyth, Mr. Mallet,
Mr. Sharp and Mr. Warburton dine with me.

I am glad that you have heard Mill's book[184] favourably spoken of. I
hope it may be as well thought of by others as it is by me.

                                           Very truly yours,
                                                      DAVID RICARDO.


                                             LONDON, _25 May, 1818_.


I have again to regret that I shall not have you as an inmate of my
house on your next visit to London.... I hope, however, that you will be
our daily visitors, or as often as engagements will permit. I trust that
those on our part will be exhausted before you come, for at no period
have I led so dissipated a life as during this season. The King of Clubs
will meet on the 6th. Let me know whether Mrs. Malthus and you will
favour us with your company on the 8th, as we should be glad to ask a
few friends to meet you on that day.

The general opinion here is that Parliament will be dissolved
immediately after the prorogation[185], but as the election in that case
will interfere with the Circuit I cannot believe that ministers will
choose so inconvenient a time.

To-morrow evening there is to be a long debate in the House of Lords on
the Bank Restriction Bill[186], on which occasion Lord Grenville means
to speak. Lord King mentioned to me his idea of proposing that the Bank
should be forbid making any dividend on their stock while the price of
gold was above the mint price. I have no doubt that practically such a
measure would operate a reduction of the currency and its rise to par;
but, if the bank directors were obstinate, it might be attended with the
most serious consequences to widows, orphans, and others, who might
depend on the bank dividends only for their support.

My walks with Mill continue almost daily. I hope you will sometimes
honour us with your company when in London. We could make a very
tolerable reformer of you in six walks, if your prejudices be not too
strongly fixed. Indeed I should expect to find that our differences were
not very great, as, if you are favourable to reform at all and that I
believe you are, we should agree on all the important principles. Sir
James Mackintosh has been reading Bentham, and was just beginning to
give me his opinion of the book[187] when we were interrupted. I hope I
shall find another opportunity of hearing his sentiments, which I am
very eager to do. In a conversation which I yesterday had with Sharp he
told me what he conceived Sir James' sentiments on reform to be[188]. If
he is correct, I do not think that Sir James and I should be so much
opposed to each other as he now thinks....

                                           Very truly yours,
                                                      DAVID RICARDO.


[Addressed to Albury, Guildford.]

                                          LONDON, _24th June, 1818_.


Your letter arrived here whilst I was in Gloucestershire. I came to town
last night, having on Monday presided at the County meeting, and made a
return of our two members.

I thank you for your inquiries after the infant[189] that you left so
ill.... It died ... on the day you left London. Dr. Holland was
surprised at the rapidity with which the disease advanced....

I believe it is now finally settled that I am not to be in Parliament,
and truly glad I am that the question is at any rate settled, for the
certainty of a seat could hardly compensate me for the disagreeables
attending the negociation for it. Mr. Clutterbuck's[190] answer
announced to me that the seat he had in view for me was disposed of; and
thus end my dreams of ambition.

Having once consented to yield to the opinion of my friends, I let no
opportunity slip of getting into the Honourable House; but I am fully
persuaded that, if I consult my own happiness only, I shall do wisely in
stopping where I am. It is easier to animadvert on the actions of others
than to act with wisdom ourselves; and I strongly fear that I want both
the judgment and discretion which are requisite to make a tolerable
senator. I am surprised at the kindness and consideration with which my
friends now treat me, and it would be a great want of prudence to afford
them more easy means of sifting my claims.

I am equally pleased with you that Sir Samuel Romilly's election is
going on so well in Westminster, and more pleased than you will be at
Sir Francis Burdett's recent success on the poll[191]. Sir Francis is, I
think, a consistent man. I believe Bentham's book has satisfied him that
there would be no danger in universal suffrage; but his main object, I
am sure, is to get a real representative government; and he would think
that object might be [secur]ed by stopping very far short of universal
suffrage. [With] such opinions it is a mere question of prin[ciple][192]
(as to the obtaining of his object) whether he shall ask for the more or
the less extended suffrage. I agree with you that it would be more
prudent to ask for the less, and I agree also with you in thinking that
with our present experience we should not venture on universal suffrage
if it could be had. I am glad, however, to find, that you think the
election in Westminster will afford us a fair sample of the sense of the

I will take care that all demands against you shall be faithfully

I have not left myself room to enter at any length into the question of
the comparative advantage of employing capital in agriculture or on
manufactures[193]. If by wealth you mean as I do all those things which
are desirable to man, wealth I think would be most effectually increased
by allowing corn to be grown or imported as best suits those concerned
in the trade. You say that in the one case the corn obtained would only
be sufficient to support the workmen employed _and pay fully the profits
of stock_; and in the other case it would pay in addition the increased
amount of rent, and support an additional population proportioned to it.
Now, _if the profits of stock to be paid fully_ in one case would be
much greater both in value as defined by you, and in value as defined by
me, than in the other, it is evident that the difference might not only
equal the additional amount of rent but exceed it. I contend that the
profits of stock would be higher than this whole amount if we consented
to import corn, and therefore, although I will admit that in the case
supposed our wealth has increased by the increase of rent from 1790 to
1818, yet I would contend that, if the trade had been free, and corn had
been imported in preference to growing it, under the new and improved
circumstances of agriculture, our wealth would have increased in a still
greater ratio than it now has done....

                                                Truly yours,
                                                      DAVID RICARDO.

    NOTE.--In the new Parliament of 1818 Portarlington was represented,
    as in the last Parliament, by Richard Sharp, who seems to have
    retired in the course of six or seven months, for we find Ricardo's
    name in a division list as early as March 2, 1819. (Hansard, _sub
    dato_, p. 846.) It was a pocket borough, and there is nothing to
    show that Ricardo ever visited his constituents; but this did not
    prevent him from strongly denouncing the system of election. The
    biographer of J. B. Say asserts (apparently on pure conjecture) that
    Ricardo had bought an estate at Portarlington, and with it the seat
    in Parliament as one of its appurtenances (Say, Oeuvres Diverses,
    p. 406): 'Possesseur de vastes domaines, il s'en trouvait qui, par
    un abus déploré par lui-même, lui donnaient entrée au parlement.' In
    his Biography of James Mill, p. 172, Professor Bain speaks as if
    Ricardo had entered Parliament at the General Election in 1818.


[On outside of letter with the frank MINCHING HAMPTON (_sic_), _Aug. 20,


I am very much obliged to you for the kind manner in which you express
yourself respecting the praise that has been so lavishly bestowed on me
by the reviewer of my book, in the Edinburgh Review[195]. Immediately on
reading it, I guessed that the writer of the article was Mr.
M'Culloch[196], for from the publication of my book he appears sincerely
to have embraced the views which I wished to impress on all my readers.
I cannot but feel highly gratified at his praise, which I should not
have been in anything like an equal degree if it had come from Mr. Mill,
because, though I should not have doubted his sincerity, I should have
imputed much to his friendship and good opinion. The praise indeed is
far beyond my merits, and would perhaps have really told more if the
writer had mixed with it an objection here and there.

I do not remember what the question was which I answered consistently
with my general principles in my last letter, and not having your letter
here I cannot refer to it. I admit that by improvements in agriculture
an enormous quantity of wealth may be created, and that in the natural
progress of society much of that wealth may ultimately go to landlords
in the shape of rent, but that does not alter the fact of rent being
always a transfer, and never a creation of wealth--for before it is paid
to the landlords as rent it must have constituted the profits of stock,
and a portion is made over to the landlord only because lands of a
poorer quality are taken into cultivation....

... You must have found your excursion to the Isle of Wight very

You will have seen by the newspapers that I have been through all the
parade and expense, which my office of sheriff imposes on me, when the
judges attend the Assizes, without any advantage. The judge came into
the town after midnight, by which his commission became void, and, after
sending to London, Jury, Witnesses, Counsel, and Sheriff were all
dismissed to their respective homes. It is expected that we shall have a
new commission in two or three weeks....

I am sorry that you have not made any great progress in the work that
you are about. After the reflection you have given to the subject I am
not surprised that my reviewer has not shaken your confidence in your
opinions. It would have been little flattering to me if he had, for I
have had many opportunities, and have taken a great deal of pains to
bring you round to my way of thinking without success. Why should he be
so fortunate on the first trial? The truth I begin to suspect is that we
do not differ so much as we have hitherto thought. I differed very
little from the opinions expressed in that part of your MS. which you
read to me, but I wish to h[ave an] opportunity of judging of your
system as a whole, and therefore shall be glad when it comes forth in
its printed form.

I am glad to hear that Sir J. Mackintosh and Mr. Whishaw are well, pray
remember me kindly to them. If either, or both of them, should go to
Bowood[197] this season, I shall take it very kind of them if they will
come for a few days to me. The Marquis of Lansdown has promised me a
visit, and it would be particularly agreeable if they would all come at
the same time. Should Mr. Whishaw be as near to me as Bowood he is
already under an engagement to come. I met the Marquis and Marchioness
of Lansdown at Gloucester; they entered the town on their way home from
a tour, just as I was about leaving it; and owing to the breaking up of
the courts were detained some time for want of horses. I suppose that
you will be confined at Hertford till the Xmas vacation. I very much
wish that Mrs. Malthus and you would pass a part of that vacation with
us.... Mr. Mill arrived here yesterday evening to pay me his long
promised visit. He brings me no news, excepting that he dined at Mr.
Bentham's with Mr. Brougham, Mr. Rush[198] the American Ambassador, and
Sir Samuel Romilly. The old gentleman is becoming gay. A party of four
must to him be a formidably large one[199]....

                                           Ever truly yours,
                                                         D. RICARDO.

    NOTE.--Between this letter and the next come probably the two quoted
    by McCulloch (Ricardo, Works, p. XXVI), to whom (if not to Mill)
    they were no doubt addressed: 7th April, 1819, 'You will have seen
    that I have taken my seat in the House of Commons. I fear that I
    shall be of little use there. I have twice attempted to speak; but I
    proceeded in the most embarrassed manner; and I have no hope of
    conquering the alarm with which I am assailed the moment I hear the
    sound of my own voice.' 22nd June, 1819, 'I thank you for your
    endeavours to inspire me with confidence on the occasion of my
    addressing the House. Their indulgent reception of me has, in some
    degree, made the task of speaking more easy to me; but there are yet
    so many formidable obstacles to my success, and some, I fear, of a
    nature nearly insurmountable, that I apprehend it will be wisdom and
    sound discretion in me to content myself with giving silent votes.'
    Happily he did not keep this resolution. It was at this time that
    George Grote was introduced to Ricardo, breakfasting with him at
    Brook Street (March 23 and 28, 1819), and walking with him and Mill
    in St. James's Park and Kensington Gardens afterwards. Grote used to
    submit his papers to Ricardo's judgment, and vied with Mill in
    admiration of him (Personal Life of George Grote, p. 36). A letter
    from Ricardo to Grote, dated March 1823, is given in Grote's Life
    (p. 42); Ricardo thanks Grote for having expressed approbation of
    his political conduct. One of Ricardo's last public appearances,
    outside Parliament, was at a Reform dinner, where he proposed the
    chief resolution of the evening in a speech which Grote helped him
    to prepare (Bain's Life of J. Mill, p. 208).


                                     GATCOMB PARK, _21 Sept., 1819_.


I must not longer delay answering your kind letter. I have had you often
in my mind, and was on the point of writing to you a short time ago,
when I received a letter from Mill enclosing one from Mr. Napier, the
editor or manager of the Encyclopedia Britannica, requesting him to
apply to me to write an article on the Sinking Fund[201] for his
publication. The task appeared too formidable to me to think of
undertaking; and I immediately wrote to Mill to that effect; but that
only brought me another letter from him which hardly left me a choice,
and at last I have consented to try what I can do, but with no hope of
succeeding. I am very hard at work, because I wish to give Mr.
Napier[202] the opportunity of applying to some other person, without
delaying his publication, as soon as I have convinced Mill and him that
I am not sufficiently conversant with matters of this kind. This
business has lately engrossed all my time, and will probably continue to
do so for at least a week to come.

So you moved from Henley to Maidenhead! You were determined not to lose
sight of the Thames. I shall expect to see your name entered as a
candidate for the annual wherry.

I am glad that you are proceeding merrily with your work. I now have
hopes it will be finished. You have been very indolent, and are not half
so industrious nor so anxious as I am when I have anything on hand.

I have not been able to give a proper degree of attention to the subject
of your letter. The supposition you make of half an ounce of silver
being picked up on the sea shore by a day's labour is, you will confess,
an extravagant one. Under such circumstances silver could not, as you
say, rise or fall, neither could labour, but corn could or rather might.
Profits I think would still depend on the proportions of produce
allotted to the capitalist and the labourer. The whole produce would be
less, which would cause its price to rise, but of the quantity produced
the labourer would get a larger proportion than before. This larger
proportion would nevertheless be a less quantity than before, and would
be of the same money value. In the case you suppose the rise of money
wages does not appear to be necessary in the progress of cultivation to
its extreme limits; but the reason is that you have excluded the use of
capital entirely in the production of your medium of value. You know I
agree with you that money is a more variable commodity than is generally
imagined, and therefore I think that many of the variations in the price
of commodities may be fairly attributed to an alteration in the value of
money. It is difficult to conceive that in a great and civilized country
any commodity of importance could be produced with equal advantage
without the employment of capital. By what you tell me in your
letter[203] you have respected my authority much too highly, and I do
not consent that you should attribute to that respect the little
activity you have displayed in getting your work finished. I wish that
Mrs. Malthus and you would come to us here at Christmas. I shall then be
quite in the humo[u]r to discuss all the difficult questions on which we
appear to differ. My family is now in a settled state, and I think I can
promise you more comfortable entertainment than I have yet been able to
give you here. You must no longer plume yourself on being the principal
object of Cobbett's[204] abuse. I have come in for my share of it, and
just in the way that I anticipated. Even when he agrees with you he can
find shades of difference which calls [_sic_] forth his virulence.

I had the pleasure of passing a few days lately in Mr. Whishaw's company
at Mr. Smith's at Easton Grey. He was in very good spirits and very
agreeable. We had some political discussion, particularly on Reform, and
he was more liberal in his concessions than I have usually found him. I
had Miss Hobhouse heartily on my side; and Mrs. Chandler, an enthusiast
for the Whigs, declared that mine were the true Whig principles. Mr.
Belsham was of the party, but he did not take a decided part. Mr.
Macdonnel, who came with Mr. Whishaw was, I thought, all but an ally.
Are you not weary?...

                               Believe me, Ever yours truly,
                                                      DAVID RICARDO.

    NOTE 1.--The Sinking Fund was a frequent topic of Ricardo's
    speeches in the House of Commons. It was a delusion to the people,
    who fancied it was paying off their National Debt, and a snare to
    the Government, who were constantly tempted to divert it from its
    proper purpose. So he declared in his first session (e.g. May 13,
    June 9, and June 18, 1819), and so he persisted, in his last. The
    following apologue on the subject from his speech of 28th Feb.
    1823, is in the manner of Cobden, and shows how economists will
    rather read a difficult truth 'writ small' than 'writ large:'--'I
    have (he says) an income of £1000 a year, and I find it necessary
    to borrow £10,000, for which I agree to give up to my creditor £500
    per annum. My steward says to me: "If you will live on £400 a year
    and give up another £100 out of your income of £500, that will
    enable you in a certain number of years to get completely rid of
    your debt." I listen to this good advice, live on £400 a year, and
    give up annually £600 to my steward in order to pay my creditor.
    The fist year my steward pays the creditor £100; then the debt
    would be £9,900, and therefore the income [or interest] due to the
    creditor would be only £495. But I continue to pay to my steward
    £600 per annum; and in the next year the steward pays over £105,
    and so from year to year the debt is diminished, £600 being still
    received by the steward. At the end of a certain number of years
    the result is this--that out of a yearly reserve of £600, half the
    debt is paid off; only £250 is due to the creditor, and £350
    remains in the hands of the steward, his master continuing to live
    on £400 per annum. At this period some object occurring to the
    steward which he thinks might be of benefit to me or to himself, he
    borrows £7000, and devotes the whole £350 in his hands to pay the
    interest on that sum. What then becomes of my sinking fund?
    Originally I was in debt only £10,000; now I find myself indebted
    altogether £12,000; so that instead of possessing a sinking fund,
    as I had hoped, I am positively so much more in debt.' Ricardo's
    moral was that we should honestly give up pretending to have a
    sinking fund. One of his own friends remarking that this was to
    believe, with the French lady, that the best way to overcome
    temptation was to yield to it, Ricardo retorts (speech of 6th
    March, 1823): 'If I knew I was going to be robbed of my purse, I
    should spend its contents myself first.'

    NOTE 2.--It is worth while to quote some parts of the passages of
    Cobbett, to which this letter refers. They were too violent to be
    taken seriously. If Dr. Johnson really loved a good hater, he lost
    much enjoyment by ending his days before Cobbett wrote. In the
    letter which appears in the Political Register for 4th Sept. 1819,
    Cobbett delivers himself as follows: 'I see that they [the
    borough-mongers] have adopted a scheme of one Ricardo (I wonder
    what countryman he is), who is I believe a converted Jew. At any
    rate he has been a 'Change Alley-man for the last fifteen or twenty
    years. If the Old Lord Chatham were now alive, he would speak with
    respect of the muckworm, as he called the 'Change Alley people.
    Faith, they are now become _everything_. Baring assists at the
    Congress of Sovereigns, and Ricardo regulates things at home. The
    muckworm is no longer a creeping thing; it rears its head aloft,
    and makes the haughty borough-lords sneak about in holes and
    corners.'... He goes on to say that the doctrines preached in the
    'Courier' and elsewhere about the inutility of ready money and the
    convenience of paper show that cash payments are not really thought
    practicable by these people. 'This Ricardo says that the country is
    happy in the discovery of a paper money, that it is an improvement
    in political science. Now if this were true it would be better to
    have a paper money in _all_ countries. And what standard of _value_
    would there then be? It is manifest that there could be none, and
    that commerce could not be carried on. Besides, what would be the
    peril in case of war?' Even as it is, the French expect us to be in
    their power in a very few years from this very cause, &c. In
    another letter to Hunt in the following number of the Register he
    goes on (p. 112): 'I wonder that Ricardo, hot from the 'Change, who
    talks of the _lower orders_ in such goodly terms, and was shocked
    at the idea of their increasing, ... had not thought of the fine
    and copious _drain_ that is continually going on from England to
    America. This was a little thing of sunshine amidst the gloom.'
    There are other references to Ricardo in the Register not much more

    Ricardo and Malthus, however, wear their rue with a difference.
    Cobbett reaches his spring-tide level of vituperation in the letter
    written from Long Island on 6th Feb., and printed in the Political
    Register for May 8, 1819 (vol. 34, no. 33): 'To Parson Malthus, on
    the Rights of the Poor and on the cruelty recommended by him to be
    exercised towards the Poor.'

    'Parson, I have during my life detested many men, but never any one
    so much as you. Your book ... could have sprung from no mind not
    capable of dictating acts of greater cruelty than any recorded in
    the history of the massacre of St. Bartholomew. Priests have in all
    ages been remarkable for cool and deliberate and unrelenting
    cruelty; but it seems to have been reserved for the Church of
    England to produce one who has a just claim to the atrocious
    preeminence. No assemblage of words can give an appropriate
    designation of you; and therefore, as being the single word which
    best suits the character of such a man, I call you Parson, which
    amongst other meanings includes that of Borough-monger Tool' (pp.
    1019, 1020). He goes on to say he has drawn up a list of 743
    obnoxious parsons, who have dared to exclude his Register and
    'Paper against Gold' from their parish reading-rooms. 'I must hate
    these execrable Parsons; but the whole mass put together is not to
    me an object of such perfect execration as you, a man (if we give
    you the name) not to be expostulated with but to be punished'

    The best commentary on this scurrility may be found in a speech of
    Ricardo himself (July 1, 1823, on the 'Petition of Christian
    Ministers for free discussion'), where he says that ribald language
    should always be allowed full publicity, for it 'offends the
    common-sense of mankind' and can hope to make no serious converts.


                                       GATCOMB PARK, _9 Nov., 1819_.


... I shall go to London alone, on the 22nd, and of course I shall
continue there until Parliament adjourns for the holidays:--perhaps you
may have occasion to visit town during that time, if so, I shall have a
bed at your service, and such fare as can be furnished by my factotum
in Brook Street.

I am glad that Mr. Whishaw has expressed satisfaction with his very
short visit here. I was very much pleased with his company--no one could
be more agreeable, nor more disposed to be satisfied with everything
about him. We had many conversations on the subject of Parliamentary
Reform, and I was glad to find that our sentiments accorded much more
than I had previously imagined. I should be quite contented with such a
reform as Mr. Whishaw was willing to grant us. I am certainly not more
inclined than I was before to Radicalism[205], after witnessing the
proceedings of Hunt, Watson, and Co., if by Radicalism is meant
Universal Suffrage. I fear, however, that I should not think the
moderate reform, which you are willing to accede to, a sufficient
security for good government. Your scheme of reform, if I recollect
right, is as much too moderate as the universal suffrage plan is too
violent: something between these would give me satisfaction. Do you
think that any great number of the people can really be deluded with the
idea that any change in the representation would completely relieve them
from their distresses? There may be a few wicked persons who would be
glad of a revolution, with no other view but to appropriate to
themselves the property of others, but this object must be confined to a
very limited number, and I cannot think so meanly of the understandings
of those who are well disposed, as to suppose that they sincerely
believe a reform in Parliament would give them work, or relieve the
country from the payment of the load of taxes with which we are now
burthened; neither do I observe in the speeches which are addressed to
the mob any such extravagant expectations held out to them. If there
were I am sure they know better than to believe the speakers who make
such delusive promises. I expect that we shall have a very stormy
session of Parliament.

With respect to my calculations, I have only this to say in defence of
them, that I never brought them forward for any practical use, but
merely to elucidate a principle. It is no answer to my theory to say
that 'it is scarcely possible that all my calculations should not be
necessarily and fundamentally erroneous,' for that I do not deny; but
still it is true that the proportion of produce in agriculture or
manufactures, retained by the capitalist who sets the labourers to work,
will depend on the quantity of labour necessary to provide for the
maintenance and support of the labourers.

You ask me 'whether, when land is thrown out of cultivation from the
importation of foreign corn, I consider the new rate of profits as
determined by the state of the land, or the stationary prices of
manufactured and mercantile products compared with the fall of wages.'
You have correctly anticipated my answer. 'Capital will,' I think, 'be
withdrawn from the land till the last capital yields the profit obtained
(by the fall of wages) in manufactures, on the supposition of the price
of such manufactures remaining stationary.[']

I am glad to hear that your book will be so soon in the press, but I
regret that the most important part of the conclusions from the
principles which you endeavour to elucidate, will not be included in it,
I mean taxation. In a letter which I have lately received from
Turner[206], he is full of regret that the important subject of taxation
receives so little attention from Political Economists;--at this time he
thinks it peculiarly important, and I cannot but agree with him. As soon
as you have launched your present work, I hope you will immediately
prepare to give us your thoughts on a subject in which [we] are all
practically interested.

I have received a letter also very lately from M'Culloch, he has been
writing an article on Exchanges for the Ency. Brit., which is very well
done, I think; although I cannot agree with one or two of his

I finished in my hasty way the article I had undertaken to do on the
Sinking Fund, and then became so disgusted with it, that I was glad to
get rid of it. I have given so many injunctions not to regard my
supposed feelings in deciding whether it shall or shall not be
published, that I much doubt whether it will ever see the light....

                                                 Ever yours,
                                                         D. RICARDO.

    NOTE.--The gap between the above letter (of 9th Nov. 1819) and the
    following (of 4th May, 1820) may be filled up by a letter of
    Ricardo to J. B. Say, dated from London, 11th January, 1820
    (Oeuvres Diverses, p. 414). After thanking him for a present
    (which appears from Say's reply to have been a French translation
    of his 'Pol. Econ. and Taxation') and a letter, he goes on to say:
    'I remember hearing you tell me when I saw you in Paris that in
    each successive edition of our respective works our opinions would
    approximate to each other more and more, and I am convinced that
    the truth of the remark will be demonstrated.' Our differences (he
    goes on) are becoming rather verbal than substantial. Your chapter
    on Value has in my opinion gained considerably. You misrepresent
    me, however, on that subject when you say I consider the _value_ of
    labour to determine the value of commodities; I hold, on the
    contrary, that it is not the value, but 'the _comparative quantity
    of labour_ necessary to production which regulates the relative
    value of the commodities produced.' Also in regard to Rent,
    Profits, and Taxation, you do not observe that my reasoning
    proceeds on the assumption that there is in every country 'a land
    which yields no rent, _or_ there is a capital employed on the land
    with a view to profit merely, and paying no rent for it.' [See
    'Pol. Ec. and Tax.' (McC.'s ed.), ch. xii. p. 107.] The latter you
    pass over without answer. I forward you the 2nd edition of my
    book, which 'has nothing new in it, as I have not had the courage
    to recast it.' He concludes by saying: 'Political Economy is
    gaining ground. Sounder principles are now brought forward. Your
    treatise is rightly in the first rank of authorities. The debates
    in parliament last session were satisfactory to the friends of the
    science. The true principles of currency are at last recognised. I
    think that on that point we shall not again go astray. Jeremy
    Bentham and Mill are well; I saw them a short time ago.'

    Say answers (2nd March, 1820) that their controversy would
    certainly end in agreement, if it were not cut short by death, as a
    recent fit of apoplexy had made him think probable. He then briefly
    defends himself against Ricardo's criticisms. How can you (he says)
    determine the quantity and quality of the labour except by the
    price paid to obtain it? As to the two parts of your proposition on
    Rent, I see no reason for disagreeing with the second when I differ
    from the first, and I think (with you) that taxation in the second
    case will be shifted to the consumers.


                                              LONDON, _4 May, 1820_.


... I have read your book[208] with great attention. I need not say that
there are many parts of it in which I quite agree with you. I am
particularly pleased with your observations on the state of the poor; it
cannot be too often stated to them that the most effectual remedy for
the inadequacy of their wages is in their own hands. I wish you could
succeed in ridding us of all the obstacles to the better system, which
might be established.

After the frequent debates between us you will not be surprised at my
saying that I am not convinced by your arguments on those subjects on
which we have long differed. Our differences may in some respects, I
think, be ascribed to your considering my book as more practical than I
intended it to be. My object was to elucidate principles, and to do this
I imagined strong cases that I might show the operation of those
principles[209]. I never thought, for example, that practically any
improvements took place on the land which would at once double its
produce; but, to show what the effect of improvements would be,
undisturbed by any other operating cause, I supposed an improvement to
that extent to be adopted; and I think I have reasoned correctly from
such premises. I am sure I do not undervalue the importance of
improvements in agriculture to landlords, though it is possible that I
may not have stated it so strongly as I ought to have done. You appear
to me to overvalue them; the landlords would get no more rent while the
same capital was employed as before on the land, and no new land was
taken into cultivation; but, as with a lower price of corn new land
could be cultivated and additional capital employed on the old land, the
advantage to landlords would be manifest. Because the landlord's corn
rent would increase without these conditions, you appear to think he
would be benefited; but his additional quantity of corn would exchange
for no more money nor for any additional quantity of other goods. If
labour were cheaper, he would be benefited in as far as he would save on
the employment of his gardeners and perhaps some other menial servants,
but this advantage would be common to all who had the same money
revenue, from whatever source it might be derived. The compliment you
pay me in one of your notes[210] is most flattering. I am pleased at
knowing that you entertain a favourable opinion of me; but I fear that
the world will think, as I think, that your kind partiality has blinded
you in this instance.

I differ as much as I ever have done with you in your chapter on the
effects of the accumulation of capital[211]. Till a country has arrived
to [_sic_] the end of its resources from the diminished powers of the
land to afford a further increase, [I hold] it to be impossible that
there should [be at the] same time a redundancy of capital and of
[commodities (?)]. [I] agree that profits may be for a time very l[ow]
because capital is abundant compared with [labour][212], they cannot
both, I think, be abundant at one [and the same time].

Admitting that you are correct on this [point, I doubt] whether the
inference you draw is the correct one, and it [does not seem to me] wise
to encourage unproductive consumption. If individuals would not do their
duty in this respect, government might be justified in raising taxes for
the mere purpose of expenditure.

McCulloch[213] has a short review of your book in the last Scotsman; it
is chiefly on the subject of value; he differs from you but does so with
the greatest civility and good humour. Torrens has an interest in (I
believe he is editor of) the Traveller[214], and as his arguments are on
my side, I of course think his criticism just....

                               Believe me, ever truly yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _Sept. 4, 1820_.


I was very desirous of hearing from you, and was on the point of telling
you so when your letter reached me from Brighton. Mr. Hump[hre]y Austin,
a neighbour of mine, told me he saw you at Paris and I had heard of your
safe arrival in England. I am quite pleased to hear that your journey
has been agreeable to you; it could not fail to be so when it gave you
the opportunity of seeing and conversing with the principal literary men
of France and of hearing their opinions on the present state of that
important country. I hope in that quarter there will be no interruption
of the present order of things for some time to come; but, if they do
make a movement, I trust it will be for the purpose of securing more
effectually the liberty of the people by perfecting as far as human
means can perfect the representative system. There is nothing on which
the happiness of the great body of the people so much depends. I did not
expect that I had so many readers in France as the number of copies of
the French translation which you tell me have been sold would seem to
imply. I am not surprised that you found few who understood my theory
correctly and still fewer who were disposed to agree with me. I have not
yet succeeded in making many converts in my own country; but I do not
despair of seeing the number increase; the few I have are of the proper
description, and do not want zeal for the propagation of the true faith.

I have seen Say's letters to you[216]; it appears to me that he has
said a great deal for the right cause but not all that could be said. In
one point I think he falls into the same error as Torrens in his article
in the Edinburgh Review[217]. They both appear to think that stagnation
in commerce arises from a counter set of commodities not being produced
without which the commodities on sale are to be purchased, and they seem
to infer that the evil will not be removed till such other commodities
are in the market. But surely the true remedy is in regulating future
production; if there is a glut of one commodity, produce less of that
and more of another, but do not let the glut continue till the purchaser
chooses[218] to produce the commodity which is more wanted. I am not
convinced by anything Say says of me; he does not understand me and is
frequently at variance with himself, when value is the subject he treats
of. In his 4th edition[219], vol. ii, page 36, he says everything falls
in value, as the quantity is increased, by the facility of production.
Now suppose that you have to pay for what he calls 'services productifs'
in these commodities which have so fallen in value, will you give the
same value if you give for them the same quantity of commodities as
before? Certainly not, according to his own admission; and yet he
maintains, page 33, that productive services have not varied if they
receive the same quantity of a commodity, notwithstanding the cost of
production of that commodity may have fallen from 40 to 30 francs per
ell. He has two opposite notions about value, and I am sure to be wrong
if I differ with either of them[220].

I am sorry that the government of France is prejudiced against
Political Economy. Whatever differences of opinion may exist amongst
writers on that science, they are nevertheless agreed upon many
important principles, which are proved to demonstration. By an adherence
to these, governments cannot fail to promote the welfare of the people
who are submitted to their sway. What more clear than the advantages
which follow from freedom of trade, or than the evils resulting from
holding out any peculiar encouragement to population?

I have been reading your book a second time with great attention, but my
difference with you remains as firmly rooted as ever. Some of the
objections you make to me are merely verbal; no principle is involved in
them; the great and leading point in which I think you fundamentally
wrong is that which Say has attacked in his letters. On this I feel no
sort of doubt. With respect to the word value, you have defined it one
way, I another. We do not appear to mean the same thing, and we should
first agree what a standard ought to be and then examine which
approaches nearest to an invariable standard, the one you propose, or
that which I propose.

I have not heard of anything further having been written against you
either by McCulloch or Torrens, nor do I know that they have anything in
contemplation. McCulloch has written me two letters since I saw you
last; he does not say anything about value, and it will probably be a
year or two before he can publish anything on that subject in the
Supplement to the Encyclopedia. In the next Review there will be an
article of his on Tithes, which I have seen; his principles are right,
but I do not like his remedy for the existing evil[221].

Mill has been with me here for a fortnight and will stay some time
longer. He has it in contemplation to write a popular work on Political
Economy[222], in which he will explain the principles which he thinks
correct in the most familiar way for the use of learners. It is not his
intention to notice any person's opinions or to enter into a controversy
on the disputed points.

I have been looking over my first chapter with a view to make a few
alterations in it before the work goes to another edition. I find my
task very difficult, but I hope I shall make my opinions more clear and
intelligible. I did intend to defend myself against some of your
attacks, but on reflection I think that, to do myself justice, I must
say so much that I should very inconveniently enlarge the size of my
book, besides which I should be constantly drawing my readers' attention
from the [proper?] subject. If I defend myself at all, I must do it in
[a] separate publication[223].

Respecting the trial of the Queen I am more than ever convinced of the
impolicy and inexpediency of the proceedings which have led to it, and
am quite sure that the plea set up that it is a State question is a
false one: it is entered into merely to gratify the resentment and
hostility of one individual who has himself behaved so ill that whatever
he may have to complain of he so fully merits that no one is bound to
enter into his quarrels or wish for punishment to follow offences to
which his own conduct has been so instrumental.... Gatcomb is very
delightful. I wish you and Mrs. Malthus could give us your company here
before we go to London. Mr. Mill desires to be kindly remembered.

                                                 Ever yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _10 Oct., 1820_.


The Queen's defence appears to be going on well; a few more such
evidence [_sic_] as Sir Wm. Gell and I think the Lords cannot pass the
bill; in that case I shall not be called to town, and if you are in this
part of the world at Christmas perhaps we shall see you at Gatcomb.

Warburton is staying at Easton Grey and has paid us a visit of two or
three days with the Smiths; he was very agreeable. He does not speak
quite positively, but I think he is one of my disciples and agrees with
me on some of those points which you most strongly dispute.

I quite agree with you in thinking that M. Say's letters to you are not
very well done. He does not even defend his own doctrine with peculiar
ability, and on some other of the intricate questions, on which he
touches, he appears to me to be very unsatisfactory. He certainly has
not a correct notion of what is meant by value when he contends that a
commodity is valuable in proportion to its utility. This would be true
if buyers only regulated the value of commodities; then indeed we might
expect that all men would be willing to give a price for things in
proportion to the estimation in which they held them; but the fact
appears to me to be that the buyers have the least in the world to do in
regulating price; it is all done by the competition of the sellers, and,
however the buyers might be really willing to give more for iron than
for gold, they could not, because the supply would be regulated by the
cost of production, and therefore gold would inevitably be in the
proportion which it now is to iron, although it probably is by all
mankind considered as the less useful metal.

I think more may be said in defence of his doctrine of services; they
are, I think, the regulators of value, and, if he would give up rent, he
and I should not differ very materially on that subject. In what he says
of services he is quite inconsistent with his other doctrine about
utility. He appears to me to talk very ignorantly of the taxation of
England. In the note, page 101, he concedes too much. The difficulty of
finding employment for capital in the countries you mention proceeds
from the prejudices and obstinacy with which men persevere in their old
employments; they expect daily a change for the better, and therefore
continue to produce commodities for which there is no adequate demand.
With abundance of capital and a low price of labour there cannot fail to
be some employments which would yield good profits; and, if a superior
genius had the arrangement of the capital of the country under his
control[225], he might, in a very little time, make trade as active as
ever. Men err in their production; there is no deficiency of demand. If
I wanted cloth and you cotton goods, it would be great folly in us both,
with a view to an exchange between us, for one of us to produce velvets
and the other wine; we are guilty of some such folly now, and I can
scarcely account for the length of time that this delusion continues.
After all, the mischief may not be so great as it appears. You have
fairly represented the point at issue between us;--I cannot conceive it
possible, without the grossest miscalculation, that there should be a
redundancy of capital and of labour at the same time.

When I say mine is the true faith, I mean to express only my strong
conviction that I am right; I hope you do not attach anything like
arrogance to the expression. I am in the habit of asserting my opinion
strongly to you, and I am sure you would not wish me to do otherwise. I
am satisfied that you should do the same by yours, and I dare say you
will agree with me that you are not more inclined to yield to mere
authority without being convinced than I am[226]. I affirm with you that
'if the farmer has no adequate market for his produce, he will soon
cease to distribute more necessaries to his labourers,' with a view to
the production of more necessaries; but will he therefore leave that
part of his capital inactive, will not he or somebody else employ it in
producing something which will meet an adequate market? You speak of the
relative _utility_ of our two definitions of value. I confess that your
definition[227] does not convey to my mind anything approximating to the
idea I have ever formed of value. To say that real value as applied to
wages implies the quantity of necessaries given to the labourer, at the
same time that you agree that those necessaries are as variable as
anything else, appears to me a contradiction. Political Economy you
think is an enquiry into the nature and causes of wealth; I think it
should rather be called an enquiry into the laws which determine the
division of the produce of industry amongst the classes who concur in
its formation. No law can be laid down respecting quantity, but a
tolerably correct one can be laid down respecting proportions. Every day
I am more satisfied that the former enquiry is vain and delusive, and
the latter only the true object of the science. You say that my
proposition, 'that with few exceptions the quantity of labour employed
on commodities determines the rate at which they will exchange for each
other, is not well founded.' I acknowledge that it is not rigidly true,
but I say that it is the nearest approximation to truth, as a rule for
measuring relative value, of any I have ever heard. You say demand and
supply regulates value [_sic_]; this I think is saying nothing, and for
the reason I have given in the beginning of this letter: it is supply
which regulates value[228], and supply is itself controlled by
comparative cost of production. Cost of production, in money, means the
value of labour as well as profits. Now, if my commodity be of equal
value with yours, its cost of production must be the same. But cost of
production is, with some deviations, in proportion to labour employed.
My commodity and your commodity are both worth £1000; they will
therefore probably have the same quantity of labour realized in each.
But the doctrine is less liable to objections when employed not to
measure the whole absolute value of the commodities compared, but the
variations which from time to time take place in relative value. To what
causes, I mean permanent causes, can these variations be attributed? To
two and to two only, one insignificant in its effects, a rise or fall of
wages, or what I think the same thing a fall or rise of profits, the
other of immense importance, the greater or less quantity of labour that
may be required to produce the commodities. From the first cause no
great effects may follow because profits themselves constitute but a
small portion of price, and no great addition or deduction can be made
on their account. To the other cause no very confined limit can be
assigned, for the quantity of labour required to produce commodities may
vary to double or treble.

The subject is difficult, and I am but a poor master of language, and
therefore I shall fail to express what I mean. My first chapter[229]
will not be materially altered; in principle I think it will not be
altered at all....

                                           Ever truly yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _24 Nov., 1820_.


I have been living in a state of great uncertainty whether I should be
obliged to go to London or not. It seems to be settled that Parliament
will be prorogued, and therefore I do not think it necessary to take a
journey to town for the sole purpose of hearing the usher of the black
rods give his three taps at the door of the House of Commons with his
rod of office, and which [_sic_] we are assured by Hobhouse would be
laid about his back, if he presumed so to disturb a reformed House of
Commons. The political horizon does not appear to be clearing up. It is
always unwise for a Government to set itself against the declared
opinion of a very large class of the people, and it is more particularly
so when the point in dispute is one trifling in itself, and of no real
importance to the state. Should the public be kept in this agitated
state on a question whether the Queen should be allowed a palace, or
whether her name should be inserted in the Liturgy? Nothing can be more
unjustifiable than to risk the public safety on such questions as these,
for after raising the discussion there is no safety either in yielding
or resisting.

You say in your last letter 'that you are fortified with new arguments
to prove demonstratively that a neat revenue is absolutely impossible
under the determination to employ the whole produce in the production of
necessaries, and consequently that if there is not an adequate taste for
luxuries and conveniences or unproductive labour, there must necessarily
be a general glut.' I shall not trouble you to bring forward these
arguments, for with a very slight alteration I should entirely concur in
your proposition. If I recollect right, it is the very exception which I
made[231] and which you mention in your book. You must collect your
stock of arguments to defend more difficult points than this.

I am quite sure that you are the last man who would misstate an
adversary, knowingly, yet I find in your book some allusions to opinions
which you represent as mine and which I do not really hold. In one or
two cases you, I think, furnish the proof that you have misapprehended
me, for you represent my doctrines one way in one place, and another way
in another. After all the difference between us does not depend on these
points; they are very secondary considerations.

I have made notes on every passage in your book which I dispute, and
have supposed myself about publishing a new edition of your work, and at
liberty to mark the passage with a reference to a note at the bottom of
the page. I have in fact quoted three or four words of a sentence,
noting the page, and then added my comment. The part of your book to
which I most object is the last. I can see no soundness in the reasons
you give for the usefulness of demand on the part of unproductive
consumers. How their consuming, without reproducing, can be beneficial
to a country, in any possible state of it, I confess I cannot discover.
I have also written some notes on M. Say's letters to you, with which I
am by no means pleased. He is very unjust to me, and evidently does not
understand my doctrine; and for the opinions which we hold in common he
does not give such satisfactory reasons as might, I think, be advanced.
In fact he yields points to you, which may almost be considered as
giving up the question, and affording you a triumph. In Say's works
generally, there is a great mixture of profound thinking, and of
egregious blundering. What can induce him to persevere in representing
utility and value as the same thing? Can he really believe that our
taxation operates as he describes[232], and can he think that we should
be relieved, in the way he represents, by the payment of our national

I shall not dispute another proposition in your letter. 'No wealth,' you
say, 'can exist unless the demand or the estimation in which the
commodity is held exceeds the cost of production.' I have never disputed
this. I do not dispute either the influence of demand on the price of
corn or on the price of all other things; but supply follows close at
its heels and soon takes the power of regulating price in his [_sic_]
own hands, and in regulating it he is determined by cost of production.
I acknowledge the intervals on which you so exclusively dwell, but still
they are only intervals. 'Fifty oak trees valued at £20 each do not
contain as much labour as a stone wall in Gloucestershire which costs
£1000['][234]. I have answered your question; let me ask you one. Did
you ever believe that I thought fifty oak trees would cost as much
labour as the stone wall? I really do not want such propositions to be
granted in order to support my system....

                                     I am, Ever truly yours,
                                                      DAVID RICARDO.


                                  [MINCHINHAMPTON, _29 Nov., 1820_.]


... I am very glad to hear of your intention of paying me a visit here.
I hope it will be for a longer time than you mention. I am desired by
Mrs. Ricardo to say that it would give her great pleasure to see Mrs.
Malthus and your three children.... There is a coach which leaves London
three times a week at five o'clock in the evening, on Monday, Wednesday,
and Friday. This coach goes to Minchinhampton, one mile from our house;
it carries four inside, travels at a very good pace, and sets off from
the Angel Inn, St. Martin's-le-Grand. There is also a morning coach
which goes from Gerard's Hall, Basing Lane, Cheapside, three times a
week in the morning at a quarter before six. I believe this coach goes
on Tuesday, Thursday, and Saturday; it is a Stroud coach and does not
come nearer to our house than within four miles on the Cirencester Road.
If you prefer this coach, we will send for you to the place where the
roads diverge. This is of course in case Mrs. Malthus does not accompany

It is true the case[236] in my book is stated to be temporary, and in my
opinion it can only be temporary because it cannot exist when the
population has increased with the demand for people. When we meet we
must agree upon the meaning to be attached to 'a neat surplus from the
land'; it may mean the whole material produce after deducting from it
what is absolutely necessary to feed the men who obtained it, or it may
mean the value of the produce which falls to the share of the
capitalist, or to the share of the capitalist and landlord together. If
the first be neat surplus it is equally so whether given to labourers,
capitalists, or landlords. If the second it may fall short of giving as
great a value to the capitalist as he expended in obtaining it, and
therefore for him there would be no neat produce. This term neat produce
is used ambiguously in your book, and is made the ground of an
observation on something [which I s]aid about neat and gross produce.
The observation is [just] or not just, according to the meaning attached
to the term neat produce; but more of this when we meet.

Knowing as I do how much we are influenced by taking a particular view
of a subject, and how difficult it is to destroy a train of ideas which
have long followed each other in the mind, I will not say I am right
about the effects of unproductive demand, and therefore it is possible
that five years hence I may think as you do on the subject, but at
present I do not see the least probability of such a change, for every
renewed consideration of the question confirms me in the opinion which I
have long held.

                                           Ever truly yours,
                                                      DAVID RICARDO.

    NOTE.--On the 8th May, 1821, Ricardo writes to J. B. Say from
    London (Say, Oeuvres Diverses, p. 416), acknowledging receipt of
    Say's 'Letters to Malthus,' and sending him an early copy of the
    3rd edition of his 'Pol. Econ. and Tax.' He finds fault again with
    Say's use of the word Value. He adopts Say's doctrine of
    'productive services'; but 'rent being the effect and not the cause
    of the rise of prices, I submit afresh to you the question whether
    it is not well to leave rent out of account when we are estimating
    the comparative value of the productions of the soil. Suppose that
    I have before me two loaves, the one from the best land in the
    country, a land yielding three or four pounds sterling per acre,
    the other from a land rented at about three or four shillings. The
    two are precisely of the same quality and the same price. You would
    say that the price of the one is largely a payment for the service
    of the soil, while it gives little profit for the capital and the
    labour that have made that land produce. This is incontestable; but
    what consequence can you draw from it for our practical guidance?
    What we want to know is the general law which regulates the value
    of bread relatively to the value of all other things; and I believe
    that we shall find that one of those loaves, the one that comes
    from the land that pays little or no rent, determines the value of
    the whole of the bread; consequently its value, compared with that
    of all other things, depends on the quantity of labour employed in
    its production, comparatively with the quantity of labour employed
    in every other production. Your book (the Traité) would have gained
    much if you had considered the laws of rent and profits more
    deeply: 'Adam Smith was certainly wrong in supposing that the rate
    of profits depends on the amount of accumulated capitals without
    regard to the population, and the means of providing for it.' In
    other points I agree with your book and with the greater part of
    your 'Letters to Malthus.' 'Mr. Malthus and I see each other
    frequently, without convincing one another. I am glad to be able to
    inform you that economical science is more and more studied by the
    youth of this country. We have recently formed a club of political
    economists, in which we are proud to include Messrs. Torrens,
    Malthus, and Mill. Many others besides are actively maintaining the
    principles of free trade, though their names are not so well known
    to the public.'

    In his reply (Paris, 19th July, 1821) Say points out that Ricardo
    neglects the distinction between 'natural wealth' and 'social
    wealth,' or he would agree more than he does with Say in his view
    of value. 'Value in use,' if it means anything, means utility pure
    and simple, and we may leave out the 'value.' But utility may be
    gratuitously presented to us by nature, or added by our labour and
    outlay. We measure the new utility thus added, not as you say by
    the _quantity of labour_ it costs us, but by the different
    _quantities of another product_ which are given for it (for the new
    utility not for the nature-given utility) by others. For instance,
    a pound of iron is perhaps 2000 times less valuable than a pound of
    gold, though the utility of the iron may be equal, if not
    superior, to that of the gold; and the reason is that nearly all
    the utility of the iron is a gratuitous gift of nature to us. I
    neglect, therefore, the distinction of value in use and value in
    exchange deliberately, for I think Political Economy has to do only
    with the latter. As to the two loaves, the phenomenon you speak of
    is due, first, to the appropriation of land, apart from which such
    produce of the soil as was got without labour would cost nothing to
    anybody,--second, taking things as they are, to the fact that
    progress in production essentially consists in the substitution of
    nature's gratuitous services for our own costly ones--our ideal
    being the complete displacement of the latter by the former, which
    would make us all 'richer than David Ricardo.' Again, I consider
    that the determining causes of value include the causes that
    influence demand as well as supply, the cost to the demander of the
    productive services he offers in exchange, and not only the cost in
    labour of the article supplied. I am glad to hear of your Club.
    'What I desire above all is that such economical principles as are
    not abstract, but are only the frank exposition of facts and their
    consequences, should be diffused among all classes of citizens. We
    have need not of controversialists expert in syllogistic weapons,
    but of practical economists; and all that is wanted, for that, is
    notions accessible to plain common sense, which I fear we repel by
    our too abstract reasonings.' If you admit strangers, I should be
    glad to be a member. He adds in a postscript that his eulogies (in
    the letters to Malthus) of the Essay on Population have been taken
    by some English writers as ironical; and he would like Ricardo to
    tell Malthus this is not so; he considers the position of the Essay
    impregnable, and has a genuine esteem for the author (Oeuvres
    Diverses, pp. 418-22). Say was of opinion that the time had not yet
    come for setting up a dogmatic orthodoxy in economical doctrines;
    and he begins the above letter by saying to Ricardo:--'I see in
    your book a new proof that the subjects of political economy are
    prodigiously complicated, for, though you and I are both seeking
    the truth in good faith, yet after devoting whole years to sounding
    the depths of its fundamental questions we find several points on
    which we do not agree. It is well we are agreed on the essential
    point, the possibility of the progress of man in wealth and
    happiness, as well as on the means needful to that end. We reach
    the same conclusions, though sometimes in different ways' (p. 418).


[Addressed to St. Catherine's, Bath.]

                       GATCOMB PARK, MINCHINHAMPTON, _9 July, 1821_.


I am sorry that you will not spare me a few days before you return to
London. Pray reconsider your determination, and, if you can alter it,
do. On Saturday I expect Mr. Tooke; it is a long time since he fixed on
that day to come to me, and I am sure the pleasure of his visit will be
much increased, both to him and to me, if you also formed one of our

McCulloch has specifically and strongly objected to my chapter on
Machinery[238]; he thinks I have ruined my book by admitting it, and
have done a serious injury to the science, both by the opinions which I
avow, and by the manner I have avowed them[239]. Two or three letters
have passed between us on this subject; in his last, he appears to me to
acknowledge that the effect of the use of machinery may be to diminish
the annual quantity and value of gross produce. In yielding this, he
gives up the question, for it is impossible to contend that with a
diminished quantity of gross produce there would be the same means of
employing labour. The truth of my propositions on this subject appear to
me absolutely demonstrable. McCulloch is lamenting over the departure
from my plan of currency, and means to make it the subject of an article
in the Edinburgh Review, as he has already done in the Scotsman. I very
much regret that in the great change we have made from an unregulated
currency to one regulated by a fixed standard we had not more able men
to manage it than the present Bank directors. If their object had been
to make the revulsion as oppressive as possible, they could not have
pursued measures more calculated to make it so than those which they
have actually pursued. Almost the whole of the pressure has arisen from
the increased value which their operations have given to the standard
itself. They are indeed a very ignorant set.

You are right in supposing that I have understood you in your book not
to profess to enquire into the motives for producing, but into the
effects which would result from abundant production. You say in your
letter--'We see in almost every part of the world vast powers of
production which are not put into action, and I explain this phenomenon
by saying that from the want of the proper distribution of the actual
produce adequate motives are not furnished to continued production.' If
this had been what I conceived you to have said, I should not have a
word to say against you; but I have rather understood you to say that
vast powers of production are put into action and the result is
unfavourable to the interests of mankind; and you have suggested as a
remedy either that less should be produced or more should be
unproductively consumed. If you had said 'After arriving at a certain
limit, there will in the actual circumstances be no use to try to
produce more; the end cannot be accomplished, and, if it could, instead
of more, less would belong to the class which provided the capital,' I
should have agreed with you; yet in that case I should say the real
cause of this faulty distribution would be to be found in the inadequate
quantity of labour in the market, and would be effectually cured by an
additional supply of it. But I say with you there could be no adequate
motive to push production to this length, and therefore it would never
go so far. I do not know whether I am correct in my observation that 'I
say so with you,' for you often appear to me to contend not only that
production can go on so far without an adequate motive, but that it
actually has done so lately, and that we are now suffering the
consequences of it in stagnation of trade, in a want of employment for
our labourers, etc., etc.; and the remedy you propose is an increase of
consumption. It is against this latter doctrine that I protest, and give
my decided opposition. I acknowledge there may not be adequate motives
for production, and therefore things will not be produced; but I cannot
allow first that with these inadequate motives commodities will be
produced, and secondly that, if their production is attended with loss
to the producer, it is for any other reason than because too great a
proportion is given to the labourers employed. Increase their number and
the evil is remedied. Let the employer consume more himself and there
will be no diminution of demand for labour; but the pay of the labourer,
which was before extravagantly high, will be reduced. You say in your
letter, 'If an increased power of production be not accompanied by an
increase of unproductive expenditure, it will inevitably lower profits
and throw labourers out of employment.' In this proposition I do not
wholly agree. First I say it must be accompanied with an increase either
of productive or of unproductive expenditure. If the labourer receives a
large proportion of the produce as wages, all that he receives more than
is sufficient to prompt him to the necessary exertions of his powers, is
as much unproductive consumption as if it were consumed by his master,
or by the State; there is no difference whatever. A master manufacturer
might be so extravagant in his expenditure, or might pay so much in
taxes, that his capital might be deteriorated for many years together;
his situation would be the same if, from his own will or from the
inadequacy of the population, he paid so much to his labourers as to
leave himself without adequate profits or without any profits whatever.
From taxation he might not be able to escape, but from this last most
unnecessary _unproductive_ expenditure he could and would escape, for he
could have the same quantity of labour with less pay, if he only saved
less; his saving would be without an end, and would therefore be absurd.
You perceive then I fully admit more than you ask for; I say that, under
these circumstances, without an increase of unproductive expenditure on
the part of the masters profits will fall; but I say this further that
even with an increased unproductive consumption and expenditure by the
labouring classes profits will fall. Diminish this latter unproductive
expenditure and profits will again rise; this may be done two ways,
either by an increase of hands which will lower wages, and therefore the
unproductive expenditure of the labouring class, or by an increase of
the unproductive expenditure of the employing class, which will also
lower wages by reducing the demand for labour.

I fear I have been guilty of needless repetition, but I have really a
great wish to show you what the points are on which our difference
really exists. I am glad to hear that you are in a pleasant country....

                                                 Ever yours,
                                                      DAVID RICARDO.


[To St. Catherine's, Bath.]

                                      GATCOMB PARK, _21 July, 1821_.


I think that the concession which I have made will not bear the
construction you have put upon it. 'An increased power of production
must be accompanied with an increase of productive or unproductive
expenditure.' This is the sentence on which you have remarked, and you
say could not be true if the gross produce were diminished. Certainly
not, but I have never said that with an increased power of production
the gross produce would be diminished; I have never said that machinery
enables you to get a greater quantity of gross produce; my sole
complaint against it is that it sometimes actually diminishes the gross

With respect to the particular subject of discussion between us, you
seem to be surprised that I should understand you to say in your book
'that vast powers of production are put into action, and the result is
unfavourable to the interests of mankind.' Have you not said so? Is it
not your objection to machinery that it often produces a quantity of
commodities for which there is no demand, and that it is the glut which
is the consequence of quantity which is unfavourable to the interests of
mankind? Even as you state your proposition in your present letter, I
have a right to conclude that you see great evils in great powers of
production from the quantity of commodities which will be the result,
and the low price to which they will fall. Saving, you would say, would
first lead to great production, then to low prices, which would
necessarily be followed by low profits. With very low profits the
motives for saving would cease, and therefore the motives for increased
production would also cease. Do you not then say that increased
production is often attended with evil consequences to mankind because
it destroys the motives to industry, and to the keeping up of the
increased production? Now in much of this I cannot agree with you. I
indeed allow that the case is possible, to conceive of saving being so
universal that no profit will arise from the employment of capital; but
then I contend that the specific reason is because all that fund, which
should, and in ordinary cases does, constitute profit, goes to wages and
immoderately swells that fund which is destined to the support of
labour. The labourers are immoderately paid for their labour, and they
necessarily become the unproductive consumers of the country. I agree
too that the capitalists being in such a case without a sufficient
motive for saving from revenue to add to capital, will cease doing so,
will, if you please, even expend a part of their capital; but I ask what
evil will result from this? None to the capitalist, you will allow, for
his enjoyments and his profits will be thereby increased, or he would
continue to save; none to the labourers, for which we should repine,
because their situation was so exceedingly favourable that they could
bear a deduction from their wages and yet be in a most prosperous
condition. Here it is where we most differ. You think that the
capitalist could not cease saving on account of the lowness of his
profits, without a cessation in some degree of employment to the people.
I, on the contrary, think that with all the abatements from the fund
destined to the payment of labour, which I acknowledge would be the
consequence of the new course of the capitalists, enough would remain to
employ all the labour that could be obtained and to pay it liberally, so
that in fact there would be little diminution in the quantity of
commodities produced; the distribution only would be different; more
would go to the capitalists and less to the labourers.

I do not think that stagnation is a proper term to apply to a state of
things, in which for a time there is no motive to a further increase of
production. When in the course of things profits shall be so low from a
great accumulation of capital and a want of means of providing food for
an increasing population, all motive for further savings will cease; but
there will be no stagnation; all that is produced will be at its fair
relative price, and will be freely exchanged. Surely the word stagnation
is improperly applied to such a state of things, for there will not be
a general glut, nor will any particular commodity be necessarily
produced in greater abundance than the demand shall warrant.

You say, 'We know from repeated experience that the money price of
labour never falls till many workmen have been for some time out of
work.' I know no such thing; and, if wages were previously high, I can
see no reason whatever why they should not fall before many labourers
are thrown out of work. All general reasoning, I apprehend, is in favour
of my view of this question, for why should some agree to go without any
wages while others were most liberally rewarded? Once more I must say
that a sudden and diminished demand for labour in this case must mean a
diminished reward to the labourer, and not a diminished employment of
him; he will work at least as much as before, but will have a less
proportion of the produce of his work, and this will be so in order that
his employer may have an adequate motive for employing him at all, which
he certainly would not have if his share of the produce were reduced so
low as to make increased production an evil rather than a benefit to
him. 'It is' (never) 'said that an increase of unproductive consumption
among landlords and capitalists may not sometimes be the proper remedy
for a state of things in which the motives for production fail.' I know
of no one who has recommended a perseverance in parsimony even after the
profits of capital have vanished. I have never done so, and I should be
amongst the first to reprobate the folly of the capitalist in not
indulging himself in unproductive consumption. I have indeed said that
nothing can be produced for which there will not be a demand, unless
from miscalculation, while the employment of stock affords even moderate
profits; but I have not said that production may not in theory be pushed
so far as to destroy the motive on the part of the capitalist to
continue producing to the same extent. I believe it might possibly be
pushed so far, but we have never witnessed it in our days, and I feel
quite confident that, however injurious such a state of things may be to
the capitalist, it is so only because it is attended with
disproportionate and unusual benefits to the labourers. The remedy,
therefore, and the sole remedy, is a more just distribution of the
produce; and this can be brought about only, as I said in my last
letter, by an increase of workmen or by a more liberal unproductive
expenditure on the part of the capitalists. I should not make a protest
against an increase of consumption as a remedy to the stagnation of
trade, if I thought as you do, that we were now suffering from too great
savings; as I have already said, I do not see how stagnation of trade
can arise from such a cause.

We appear then not to differ _very_ widely in our general principles,
but more so respecting the applications of them. Such and such evils may
exist; but the question is do they exist now? I think not; none of the
symptoms indicate that they do, and in my opinion increased savings
would alleviate rather than aggravate the sufferings of which we have
lately had to complain. Stagnation is a derangement of the system, and
not too much general production, arising from too great an accumulation
of capital.

Mr. Tooke has been here since Saturday last. I am going with him
to-morrow to Bromesberrow[241], from whence he will go to Ross and down
the Wye to Chepstow. We have had plenty of talk on subjects of political
economy, and have found out points on which there is partial difference
of opinion between us. He brought with him two pamphlets, in which you
are often mentioned as well as myself; perhaps you have seen them: their
titles are An Inquiry into those principles advocated by Mr. Malthus
relative to the Nature of Demand and the necessity of Consumption[242],
the other Observations on certain Verbal Disputes in political
economy[243]. Mrs. Ricardo unites with me in kind regards to Mrs.
Malthus and yourself. Mr. Tooke also desires to be kindly remembered.

                                           Ever truly yours,
                                                      DAVID RICARDO.


                                     GATCOMB PARK, _18 Sept., 1821_.


Without imputing the least blame to you, I fear that I do not quite
understand your 'knotty point.' You appear to me to compare things
together, which cannot, under any supposable circumstances, be made the
subject of comparison. You compare a commodity, in the production of
which the advances in labour remain the same while the profits of stock
diminish, to another commodity 'obtained by a given quantity of labour,
a given quantity of capital, and a given rate of profits.' Is not this
supposing two rates of profit at the same time? Perhaps this was not
meant, and your question was asked on the supposition of profits varying
equally in all trades. If so, I have no hesitation in answering that,
if, from an increased quantity of labour on the land, corn should appear
to have doubled in money price, and not from any increased facility in
the production of money, we ought to say, as we always do say, that corn
had risen a hundred per cent., and not that money had fallen fifty. In
differing on this point we in reality come to our old dispute, whether
the quantity of labour in a commodity should be the regulator of its
value, or whether the value of all things should, under all
circumstances, be estimated by the quantity of corn for which they would
exchange. You say 'we cannot surely assume that the cost of producing
the necessaries of the labourer is low absolutely when the land is
productive, if what is gained by the small quantity of labour employed
is counterbalanced by the very high rate of profits.' I, of course,
should say the cost of these necessaries was low if they were produced
with little labour, but would not you, who adopt another measure and
_sometimes_ think value is to be estimated by the quantity of things
generally which the commodity could command, would you not say, that the
cost of these necessaries was small in value, agreeing, as you would,
that they would not command an abundance of other things? I do not know
what you mean by the low cost of necessaries being counterbalanced by
the very high rate of profits. If a hundred quarters of corn be to be
divided between my labourers and me, its cost being made up of wages and
profits, its cost will be the same, whether profits be high or low, and
this division will in no degree affect the price of the corn; but, if at
a subsequent time eighty quarters only can be obtained with the same
labour and capital, and in consequence a greater proportion of the
eighty be given to the labourers than was before given of the hundred,
corn will rise absolutely both in my measure and in yours. It is I who
am willing to take some one or more of the external commodities[245] in
the production of which, while the advances in labour increase in money
value, the profits of stock diminish, as a steady measure, but which you
so often reject, and insist that, whether the produce of a given
quantity of labour be a hundred or eighty quarters, in either case, corn
has remained a steady measure of value. In the case you have supposed,
you say that the commodity, in which the same advances for labour were
made, while profits diminished, 'would not only fall one half
relatively to corn, but it would appear to do so estimated in any common
external commodity which had all along been produced by the same
quantity of labour, _and at the same rate of profits_.' I wish you had
named this commodity. In the first place I deny that it would be
produced at the same rate of profits, for there cannot be two rates of
profit at the same time in the same country, and secondly I contend that
this commodity would also fall to one half relatively to corn, and
therefore would appear invariable when compared with the other

Perhaps by external commodity, you mean a foreign commodity to be
imported from abroad. If so, why should not that commodity vary in
reference to corn in the same degree as any home made commodity? If a
hogshead of claret were worth a certain quantity of cloth, of hats, of
hardware, etc., etc., would its relative value to these things alter
because it was more difficult to raise corn in England, and its price
rose because we refused to import it from other countries? To me it
appears most clear that claret would not vary as compared with the
things which I before enumerated, and that it would vary as compared
with corn. Pray think of this and tell me whether I am not right. In the
postscript to your letter you ask 'In the two extreme cases of the
highest profits, and the lowest profits on the land, may not corn and
labour remain of the same value estimated in some external commodity,
although in the interval considerable variations may have taken place
from supply and demand?' I answer, no, it could not remain of the same
value estimated in home commodities, and as it is by means of these home
commodities that we should purchase the external commodities, I cannot
see the slightest reason for supposing that these commodities so
exchanged could alter in relative value. I hope I have made myself
understood. I am glad you approach a little towards my views, I wish you
had told me to what extent. Torrens told me he should send me his
book[246]; he has not done so, and I have not seen it.

                                                 Ever yours,
                                                      DAVID RICARDO.


                                                 [_28 Sept., 1821._]


The case you put to me appears to me to be an impossible one. How can
all countries produce their commodities with the same quantity of
labour, all, except one, produce their _corn_ with the same quantity of
labour also, and yet all, the one not excepted, have their profits on
capital at the same rate? The one which you suppose to raise its corn
with only half the quantity of labour required in the others would in
all probability obtain its labour at a much cheaper price, and
consequently profits would be higher in that country. If indeed a free
trade should be established between all these countries, then their
profits might be all nearly at the same rate, because the price of corn
and necessaries estimated in quantity of labour would be nearly the same
in all. In carrying on this supposed case we must be informed whether
the country in which corn is obtained with comparatively little labour
can continue to obtain it on the same terms, after she is called upon to
supply the markets of other countries; if she can, then the comparative
prices of corn and commodities will be altered in all countries; in the
country producing the cheap corn, money will be rather at a higher level
than before, and therefore corn rather dearer; but commodities generally
will be at no higher price;--they will be indeed rather cheaper, because
they will be imported from abroad and from countries where the level of
currency will be somewhat reduced; and therefore the cost price of
commodities in those countries will be lower, and consequently they can
be sold cheaper to the country importing them. Bulky commodities and the
price of labour will only be raised in this particular country, because
the level of currency will be somewhat raised; labour will in the real
measure of value be rather lowered, that is to say, the portion of
produce paid to the labourer, manufactured and raw produce, together,
will probably be rather increased, but in consequence of free trade and
a better distribution of capital, the proportion of the whole produce of
a given capital which the labourer will receive, will be diminished; his
proportion will really be obtained with less labour.

The benefit to other countries cannot be doubted; corn and labour will
fall very greatly in those countries, and consequently profits will
rise, and, as part of their exports in return for corn must in the first
instance be money, the general level of currency will be reduced and
commodities generally will fall, not because they can be produced
cheaper but because they are measured by a more valuable money. This is
on the supposition that corn can continue to be produced with little
labour in the excepted country; but suppose the increased demand for
corn should oblige this country to cultivate poorer land, then the price
of corn would rise from another cause besides the higher level of
currency; and, if this difficulty should be nearly as great as in other
countries, corn would be nearly as high; but, while it could afford on
any terms to export corn for commodities, there would be previously to
the importation of commodities an influx of the precious metals and a
higher level of currency. Without such higher level of currency
commodities could never be imported from countries where they were
before at the same price, and where they required the same quantity of
labour to produce them. Your case is an impossible one, first because
you suppose the profits in two countries to be the same although the
cost of producing necessaries in one of them be only one half of what it
is in the other, secondly you assume as a matter of course that with a
free trade the price of corn in the exporting country would rise to the
price of corn in the importing country whereas it would fall in the
importing country to the price in the exporting country if its cost of
production was not increased in that country, and if it rose it would
rise only in proportion to the increased cost of production. When there
is a free trade between countries it is impossible that profits can
differ very much, the only cause of difference in such case will be the
different modes of living of the labourers; in one country they may be
contented with potatoes and a mud hovel; in another they may require a
decent house and wheaten bread. You say: 'Proceeding from this point it
is obvious that in the course of a hundred years (if accumulation were
supposed) labour and corn might continue at nearly the same price, while
domestic commodities from the fall of profits to the level of other
countries would fall to half their price estimated in the money of the
commercial world.' Domestic commodities are to fall, because profits
fall. If profits fall, _I_ do not see why domestic commodities should
fall; but why should profits fall if corn and labour continued at nearly
the same price? I know of no cause of the fall of profits but the
fall[248] of labour. You say: 'A striking approximation to this case
actually exists in America.' 'The only difference,' you continue, 'is
that circumstances in America have made labour high'; but this is the
only important feature in the case. I am however decidedly of opinion
that, if in America labour was very low and profits consequently much
higher than they are, there would be very little fall in the domestic
commodities of America.

I agree indeed with you that in the progress of the cultivation of
America her corn must rise with the increased difficulty of producing
it; this circumstance must have a tendency to reduce the relative
quantity, or rather lower the level of American currency, which will not
fail by increasing the value of money to lower the value of those
commodities in America which are too bulky to be exported[249]. The
commodities which America exports will not be similarly affected.
Nothing is to me so little important as the fall and rise of commodities
in money; the great enquiries on which to fix our attention are the rise
or fall of corn, labour, and commodities, in real value, that is to say
the increase or diminution of the quantity of labour necessary to raise
corn and to manufacture commodities. It may be curious to develop the
effect of an alteration of real value on money price; but mankind are
only really interested in making labour productive, in the enjoyment of
abundance, and in a good distribution of the produce obtained by capital
and industry. I cannot help thinking that in your speculations you
suppose these much too closely connected with money price.

I have read a very good critique on Godwin in the Edinburgh Review[250];
and I am quite sure that I know the writer. It is very well done and
most satisfactorily exposes Godwin's ignorance as well as his

                                                 Ever yours,
                                                      DAVID RICARDO.

[Postscript.] I cannot agree with you that in the progress of the
cultivation of America a mean between her corn and labour will remain
nearly at the same price as it now is, estimated in money or in
hogsheads of claret; it will in my opinion rise. Let me take your own
supposition. A country produces her corn with half the labour of another
country; consequently she employs only half the capital in producing a
given quantity[251]. In this country corn will be at only half the price
at which it is in another; 100 quarters will sell for £200, while in
another it sells for £400. Suppose profits in both countries to be 20
per cent.; in one a capital of £166 will be employed in the raising of
100 quarters of corn, in the other £333 will be so employed, and 20 per
cent. on each of these capitals will be on one £33, and on the other
£66. To get £33 the one must have 16-1/2 quarters for his share of the
100 quarters, the other must have precisely the same quantity, and
consequently 83-1/2 quarters are paid in both cases for wages and other
charges. But the farmer in the fertile country employs only half the
labour that the other employs, and consequently with the same money
wages each labourer will have the command of double the quantity of
corn, he will have what you call double real wages.

Now suppose that in the progress of the fertile country it [will] at
last arrive at the state in which it is necessary to [emplo]y £333
instead of £166 to raise 100 quarters of corn; it is indeed possible,
under the extravagant supposition with which we have commenced, that
labour might continue at the same money price; but it is quite
impossible that corn should not be doubled in money price, for twice the
quantity of labourers at these uniform money wages would be required to
produce it. If corn doubles in price and wages remain stationary, the
mean between the two must necessarily rise, and consequently, estimated
in claret or in money, a mean between her corn and labour cannot as you
say remain nearly the same. If (as I had a right to suppose) labour in
such a country was at a low money price, when corn could be produced
with so much facility, the conclusion, when corn rose, would be much
more in my favour.

I cannot allow that hats would fall in a progressive country because of
a fall of profits. How can it be said that the cost of producing hats is
reduced by a fall of profits, if a fall of profits must be accompanied
by a rise of wages? Show me that a fall of profits may take place
without a rise of wages in any fixed measure of value, and then I will
yield this point. But _you_ have no right to talk of a fall of profits;
your case is that of a progressive country with low profits and enormous
wages. If of every 100 quarters of corn, where it can be produced with
little labour, eighty-three be given to the labourers, while no more is
given in countries where double the quantity of labourers are employed
to produce 100 quarters of corn, _you_ are bound to say that wages are
enormously high. In my measure of value they would not be enormously
high: but the commodity on which wages were expended would be
extravagantly low; at any rate we should both agree that profits in such
a state of things would be very moderate.

It is hardly fair to tax you with so long a letter and so soon too!


                                      GATCOMB PARK, _11 Oct., 1821_.


It is certainly probable that the fault is with me in not understanding
the proposition you submit to me; and it may arise as you say from my
being too much prepossessed in favour of my own views; but I do not
plead guilty to the charge of not giving the requisite degree of
attention to the propositions themselves. You now say 'where have I made
the supposition you impute to me? Surely not in my last letter. My first
supposition was that profits would be 100 per cent. in the country where
corn was obtained with double the facility, while it was 10 per cent. in
all others.' If you had done so, then indeed I should be justly
chargeable with inattention; but these were your words in the letter
which I was answering, 'I will try an illustration. Suppose that corn,
money and commodities were obtained in the great mass of nations,
connected with each other by commerce, at a rate of 10 per cent., but
that in one country half the quantity of labour only was necessary to
produce corn, while other commodities were produced with as much labour
as in the rest of the world;' not one word is said of profits being at a
different rate in this country; and, as you had said that in the great
mass of nations profits were at 10 per cent., I concluded that in this
country also profits were supposed to be at 10 per cent. In this
instance then you must acknowledge the fault was yours and not mine. You
do indeed afterwards suppose that this single country exports its corn
and obtains the high price of other countries for it, and by such means
raises its profits to 100 per cent.; but this evidently would depend on
the fact whether she would get the price of other countries or whether
domestic competition would lower the price of corn, in the countries to
which it was exported, to the growing price of the exporting country.
This I now understand to be your case. If the country which raised its
corn, with such great facility, were completely insulated from all other
countries, you would probably allow that corn, in that country, would be
cheap in proportion to the facility of producing it. You would allow
this also if all other countries were determined to protect their own
agriculture and absolutely refused to import foreign corn. But in the
case of a free trade, then you think the price would rise in the
exporting country to the level of the price of other countries, and
consequently profits would be enormously high. If I could admit the fact
of a high price, which I cannot do, I should adopt your conclusion. I
should say that general profits would be higher than they had been
before the rise in the price of corn. Rents would undoubtedly be higher,
for the landlord would have at least the same portion of corn as before,
and that portion would be greatly enhanced in value. Labour would be
higher, because the labourer would require higher money wages when corn
was doubled in price. And profits would be higher because the capitalist
would have more corn than before at the same time that it bore a higher
price. All these classes would be benefited by the high relative value
of corn to manufactured commodities, and the capitalist more
particularly so, because amongst those manufactured commodities are to
be found some of the necessaries of the labourer, and therefore by the
payment of a less portion of corn to the labourer he would still have
the command of a increased quantity of food and necessaries for himself
and his family. The question then between us is--would the price of corn
rise permanently or would it not, in the country which continued to
possess the great facility of producing it?

There is only one case in which I think such a rise possible, and that
is on the supposition that the whole capital of the country was employed
in producing corn, and yet could not produce it in sufficient quantity
to satisfy the demand of other countries. In that case corn would be at
a monopoly price, in the same manner as those rare wines which can only
be produced in particular districts are at a monopoly price, because
competition could not have its full effect. In the article of corn it
would be limited by the scarcity of capital, which gave to the growers
of corn large profits, in the same way as the East India Company or any
other Company might make large profits. In the article of wine the price
would be augmented by the scarcity of the land on which the grapes were
grown, and would chiefly go to the landlord in [the] form of rent. But,
supposing no monopoly, supposing capital to be so abundant that all the
corn demanded could be supplied, then I hold it to be demonstrable that
the price would sink to the growing price of it in the exporting

There is however another point on which we differ; you say a striking
approximation to this actually exists in the case of America; the only
difference is that the demand for labour has awarded a larger quantity
of corn to the labourer, the effect of which has been to keep the rate
of profit comparatively low. But you surely do not mean that the
exchangeable value of the commodities exported by America are (_sic_) in
the least degree affected by the quantity of corn awarded to the
labourer. I do not think you are justified in your expectation that in
consequence of the accumulation of capital in America any commodity
should fall there until it ceased to possess the character of a
monopolized commodity. Corn and the bulky commodities of America (which
latter are always regulated by the price of corn) could not fall until
corn was sold at a price depending on the quantity of labour actually
expended on its production, and not on the demand of our countries. When
that time came, it would cease to be a monopolized commodity, and would
fall as well as profits to the fair competition rates. I deny that
America comes at all within your supposed case; and the proof is that,
if you were to isolate America from all other countries, you would not
lower her rate of profits, otherwise than by preventing her from
receiving a supply of labour from other countries; but do the same thing
to a country circumstanced as you have supposed, and profits would
immediately fall from 100 to perhaps 20 per cent. Your case in fact is
that of a country possessed of a particular commodity in very general
demand, and on which competition operates most feebly. We have often
discussed this peculiar case, and have always agreed in our opinions on
it. I confess, however, I am astonished to hear you say that this is the
case of America; you might with as much reason contend that it was also
the case of Russia, of Poland, of the Cape of Good Hope, of Botany Bay.
If indeed America could send her produce from the interior to Europe
without expense, and if the ports of all countries were open freely to
receive the corn with which America could, under the circumstances I
have supposed, supply [them], then I should say the cases were similar;
but, with the enormous expenses of sending corn from the interior of the
country, America can really produce a very inconsiderable supply to
Europe at an expense much less than Europe can grow it. You ask what can
entitle me to suppose that corn will be at half the price in America
that it is in other countries, and then argue on that supposition so
contrary to the fact. I answer I did not apply my argument to America
but to your case, which supposed a country to produce corn with half the
labour which was required to produce it in other countries. If America
can do this, then I apply it to America. You complain that I do not
reason fairly with you, that my theory requires labour to be low in
America; but you dispute my theory and refer to the actual state of
things in America, where labour is high, and yet I contend that I have a
right to suppose labour low. I was dealing with your case and not with
America. With respect to America I am not in possession of the facts of
her case, and I cannot admit that my theory requires the price of labour
to be low in that country. It requires rent to be low, for without that
there cannot be a great surplus produce to divide between the two other
classes, after satisfying the landlord. You will always make me say that
profits depend on the low price of corn. I never do say so; I contend
that they depend on wages, and, although in my opinion wages will be
mainly regulated by the facility of obtaining necessaries, they do not
entirely depend on such facility. You wish to confine me to that theory,
but I reject it; it is none of mine, and I have often told you so. I
think I _do_ show that your fact does not invalidate my theory, which
you say I am bound to do, and I do not assume a different fact than the
one you refer to in order to refute you. Surely it is fair to say 'for
such and such reasons your conclusion is not correct, but my argument
would have been still stronger against you, if, as I have a right to
suppose, labour in such a country were cheap, because the necessaries of
the labourer are there obtained with facility.' In a country situated as
you suppose America to be I do not see what is to make her corn rise; it
is already according to your arguments at a monopoly price and cannot
rise above that price unless there should be a greater demand and a
higher price in Europe, which you say regulates the price in America, or
unless America should become so populous that the price of her corn
should be regulated by the expense of growing it, as in other countries,
and that expense should exceed the present expense in Europe. If your
theory be correct, this may not happen in 150 years, notwithstanding the
greatest accumulation of capital; but will not labour fall during all
that time? If it does fall, then the mean between corn and labour will
fall. But suppose the other case. Suppose the _cost_ price of corn in
America should rise above the present cost price in Europe; is it
conceivable that labour should fall under such circumstances? To me it
appears impossible unless we suppose money to alter in value. In this
case then also the mean between corn and labour would vary in value. If
hats were produced under the same circumstances as money they would not
fall in price in consequence of a fall of profits. If hats were
produced by the employment of capital, and money were produced, as you
suppose, without any capital, then I allow and have said so in my
book[253], hats would fall in price with a fall of profits. But I say
again that too much importance is attached to money; facility of
production is the great and interesting point. How does that operate on
the interests of mankind? You ask what is to become of the money before
produced in a country which should grow its own corn with 10 per cent.
profit, if it had its facility of producing corn doubled, and profit,
were to rise to 100 per cent.; you ask further whether she would not
continue to produce money as well as other commodities as the profits of
producing it would be also 100 per cent. If the facility of producing
corn were doubled, a great deal of labour would be employed on other
things, and therefore the corn and commodities of the country would
altogether be of as great a money value as before, and would require the
same quantity of money to circulate them. With respect to the production
of more money that would depend on the demand for it and the prices of
other things. I think the production of money would continue as before,
but it is quite possible that there might be less encouragement to
produce money than other things, and therefore capital might afford 100
per cent. profit in all employments except that one. I wonder you should
refuse to assent to this obvious conclusion. You say it is your opinion
that, if labour were to fall in consequence of improvements in
agriculture before an increase of population had taken place, it could
only be from glut and want of demand. Is this opinion consistent with
another, which I think you hold, and in which I agree, that one of the
regulators of the price of labour is the price of the necessaries of the

I have mentioned my suspicions respecting the writer of the article on
population in the _Edinburgh Review_ to several persons. I will not
utter them from this time. I hear nothing about Murray and Place. I hope
your visit at Holland House was an agreeable one. Mrs. Ricardo unites
with me in kind regards to Mrs. Malthus; we are all well and are leading
gay lives, one week at Worcester Music meeting and Bromesberrow, another
at Bath, etc.

                                           Ever truly yours,
                                                      DAVID RICARDO.

    NOTE.--Francis Place, the radical tailor, is well known to every
    reader of Prof. Bain's Life of Mill (see e.g. p. 77). His book on
    Population, perhaps the best of the long series that followed the
    'Essay' of Malthus, was published by Longman early in 1822. He
    differed from Malthus mainly on the nature of the preventive checks.
    The collection of Scrap Books known by his name in the British
    Museum library contains the following autograph letter of Malthus
    (whom he seems to have first known through Ricardo):--'Mr. Malthus
    sends to Mr. Place, at the request of Mr. Ricardo, the edition of
    the Essay on Population which was first published in reply to the
    speculations of Mr. Godwin and other writers. The copy sent is the
    only one which Mr. Malthus has left. He will be much obliged to Mr.
    Place, therefore, as soon as he has done with it, to send it to Mr.
    Ricardo's house in Upper Brook St., to be kept till Mr. M. is in
    town, which will be in a fortnight. Mr. Godwin, in his last work,
    has proceeded to the discussion of the principles of population with
    a degree of ignorance of his subject which is really quite
    inconceivable.' E. I. Coll. Feb. 19, 1821.


                                      GATCOMB PARK, _27 Nov., 1821_.


Your excuse for not going on with the discussion which you commenced is
ingenious, and I ought to be satisfied with it, as it is accompanied
with a pretty compliment to me--indeed as pretty an one as could well be
paid to a person who is so uniformly your adversary. I however agree
with you;--we know each other's sentiments so well that we are not
likely to do each other much good by private discussion. If I could
manage my pen as well as you do yours, I think we might do some good to
the public by a public discussion.

I am sorry that I shall be obliged to miss two of the Political Economy
meetings[255], as I shall not be in London till towards the latter end
of the month of January.

On the 7th of December I am to dine at Hereford, by invitation, with
Hume, at a public dinner, which is to be given to him for the purpose of
presenting him a silver tankard and a hogshead of cider, in token of the
respect and gratitude of the inhabitants of Hereford for his public
services. Hume comes from town on the occasion, and is to be met at Ross
at 11 o'clock in the forenoon, and escorted with due honour into
Hereford. I hope everything will be conducted in an orderly and
peaceable manner. I have a great aversion to a row.

I have not yet seen Torrens' book[256], nor shall I see it in all
probability till I get to London. Torrens has some concern in the
Champion, in which there is a paper weekly on Political Economy[257]. I
think these essays are well done, but you probably would not agree with
me in that opinion.

                                                 Ever yours,
                                                         D. RICARDO.

    NOTE.--This wide gap of more than a year between the eighty-first
    and the eighty-second letter of this collection may be filled up by
    a letter to Say (Oeuvres Diverses, p. 423), dated from London, 5th
    March, 1822, and being a somewhat tardy answer to Say's letter of
    July, 1821, quoted above, p. 182. He says in effect: We are nearer
    agreement than I thought, and your distinction of natural and costly
    utility illustrated by the iron and the gold is objectionable only
    in point of expression. But it follows that commodities have a value
    equal to the quantity of labour spent on them, and that therefore if
    a pound of gold for example could be produced with less labour it
    would fall in value. You for your part therefore are bound to
    maintain it would be a less portion of our [social] wealth. Whereas
    for my part I do not estimate wealth by value, but by utility from
    whatever source derived. Your 'Catéchisme' (of which Francis Place
    has just given me the 2nd edition) says that a man's wealth is in
    proportion to the value and not to the quantity of the things he
    possesses, but, as you add that that same value is estimated by the
    quantity of other things these same things will buy, wealth turns
    out to be in proportion to quantity of goods after all. If wealth is
    value, then to lessen all costs, so as to produce all things with
    less labour, would be to make the wealth of the world no greater.
    After some remarks on the 'two loaves,' he concludes by saying that
    the Political Economy Club had made Say an honorary member. 'We hope
    in time to raise ourselves from a Club to the dignity of an Academy,
    and become a learned body with ever-increasing numbers.'

    Say replies (1st May, 1822) that he gratefully accepts the honorary
    membership. As to the points discussed, some of their differences
    are merely verbal. His most important contention is that in
    production we exchange productive services for products, and the
    more products we obtain for them the more _value_ they have, and the
    richer we are. 'Moreover, I do not think that we should aim at
    giving abstract definitions especially of wealth,--definitions, that
    is to say, in which we should abstract from the possessor and the
    thing possessed. This was the method of medieval disputants, and
    this was the very reason they could never come to an understanding.
    Too general a definition, which enters into none of the
    peculiarities of each several object, teaches us nothing.'

    He concludes his letter by lamenting that his countrymen paid so
    little attention to economical questions. A full half of his
    audience in the Conservatoire des Arts et Métiers consisted of
    foreigners--English, Russians, Poles, Germans, Spaniards,
    Portuguese, and Greeks. The Crown Prince of Denmark got private
    lessons from him.


                       BROMESBERROW PLACE, LEDBURY, _Dec. 16, 1822_.


A long time has elapsed since there has been any connection between us,
and I take an early opportunity after my arrival in England to address a
few lines to you principally with a view of having some account of
yourself and family, from your own pen. I have been actively employed
since we last met, for not only have I wandered about Switzerland but I
have been as far as Florence. In my way to Florence I deviated from the
direct road to see Venice, and on my return from it I did the same thing
in order to visit Genoa. Our journey has been an uncommonly prosperous
one, for we have all enjoyed perfect health and have met with few or no
difficulties. My companions as well as myself have very much enjoyed
this tour. When I was at Geneva I saw a good deal of our friend Dumont,
who accompanied us to Chamouny and returned with us to Geneva. At
Coppet[258] I met M. Sismondi. He, the Duke of Broglie, and I had a
long conversation on the points of difference between us: the Duke took
my side, but after a long battle we each of us I believe remained in the
same opinion that we commenced the discussion in. M. Sismondi has left a
pleasing impression on my mind. Madame de Broglie had a great deal of
patience and forbearance. She is, I think, a very agreeable lady. I
stayed in Paris three weeks just previous to my return to England. M. de
Broglie and the Baron de Stael arrived there after me. I had the
pleasure of seeing them two or three times. I was very much pleased with
M. Gallois[259], who made me acquainted with M. Destutt [de] Tracy[260],
a very agreeable old gentleman, whose works I had read with pleasure. I
do not entirely agree with him in his political economy; he is one of
Say's school; there are, nevertheless, some points of difference between
them. I saw Say several times, but our conversation did not turn much on
subjects connected with political economy; he never led to those
subjects, and I always fancied he did not much like to talk upon them.
His brother, Louis Say[261], has published a thick volume of remarks
upon Adam Smith's, his brother's, your, and my opinions. He is not
satisfied with any of us. His principal object is to show that wealth
consists in the abundance of enjoyable commodities; he accuses us all of
wishing to keep up what we call valuable commodities, without any regard
to quantity, about which only the political economist should be anxious.
I do not believe that any of us will plead guilty to this charge. I
feel fully assured that I do not merit it should be made against me.

M. Gamier[262] is dead; but previous to his death he had prepared an
additional volume of notes for a new edition of his translation of the
'Wealth of Nations,' and which [_sic_] has lately been published. I had
an opportunity of looking it over, and naturally turned to those places
where he criticises me. He has bestowed a good deal of space on his
remarks upon my work, but they do appear to me quite irrelevant. Neither
he nor M. Say have (_sic_) succeeded in at all understanding what my
opinions are. Your name often occurs in this last volume. I believe he
differed from you also, but I had not time to read the whole of his

I hope you have been very industrious in my absence, and that we shall
soon see the new edition of your last work[263]. I am anxious to know
how you deal with the difficult question of value. I shall read you with
great interest and attention.

I am sorry to find the agricultural distress continue. I was in hopes
that it would have subsided before this time. I suppose we shall hear
much on this subject next session of Parliament, and that I shall be a
mark for all the country gentlemen. There is not an opinion I have given
on the subject which I desire to recall. I only regret that my
adversaries do not do me justice, and that they put sentiments in my
mouth which I never uttered. Dr. Copplestone in his article in the
Quarterly Review[264] charges me with maintaining the absurd doctrine
that the price of gold bullion is a sure test of the value of bullion
and currency. A Mr. Paget has addressed a (printed) letter[265] to me,
in which I am accused of holding the same opinion, and everybody knows
how pertinaciously Cobbet[t] persists in saying that I have always done
so. I must fight my cause as well as I can; I know it is an honest one
(in spite of Mr. Western's[266] insinuations), and, if it be also
founded in truth and on correct views, justice will be finally done to

I arrived in London the beginning of last week; I saw Tooke for a few
minutes, and was glad to hear from him that he had been writing and was
nearly ready for the press. I have a very good opinion of his judgment
and of the soundness of his views; he will, I think, from his practical
knowledge, throw much light on the question of the influence of an
over-supply or of an increased demand, without a corresponding supply,
on price[267].

I am now on a visit to my son. On the 27th I shall go to Gatcomb for a
week. From the 3rd to the 17th January I shall be with Mrs. Austin at
Bradley, Wottonunderedge, and from the 17th to the 2nd February with
Mrs. Clutterbuck, Widcomb, Bath. Where shall you pass your holidays? Is
there any probability of my seeing you at Bath? I should be glad to meet
you there.

I read in the papers with much concern of the renewal of disturbances
amongst the young men at the college. I know how distressing to you such
insubordination is, and greatly regretted that you should have been
again exposed to it. I hope that order was quickly restored.

I saw Mr. Whishaw in London for a few minutes. I am not without hopes
of seeing him at Mrs. Smith's at Easton Grey, where I mean to pass two
nights on my way to Bradley....

                                   Believe me,
                                           Ever truly yours,
                                                      DAVID RICARDO.


                                           LONDON, _29 April, 1823_.


After the most attentive consideration which I can give to your
book[268], I cannot agree with you in considering labour, in the sense
in which you use it, as a good measure of value. Neither can I discover
exactly what connexion the constant labour necessary to produce the
wages and profits on a commodity has with its value. If it be a good
measure for one commodity, it must be for all commodities; and, as well
as valuing wheat by the constant quantity of labour necessary to produce
the particular quantity given to the workman, together with the profit
of the farmer on that particular quantity, I might value cloth or any
other thing by the same rule.

I know, indeed, that I might make out a table[269] precisely such as
yours, in which the only alteration would be the word cloth instead of
the word wheat, and you would probably then ask me whether your
principle were not of universal application. I should answer that it
contains in it that radical objection which you make against the
proposed measure of your opponents. You may, if you please, arbitrarily
select labour as a measure of value, and explain all the science of
political economy by it, in the same way as any other man might select
gold or any other commodity; but you can no more connect it with a
principle or show its invariability than he could. Let me suppose that
cloth could not be made in less than two years; the first line of my
table must be altered, and the figures would stand in the following

  150, 100, 25 per cent. 7-1/2, 2-1/2, 10, 10, 15.

They would do so because ten pieces of cloth would, with the
accumulation of profit for two years, be of the same value as a
commodity, the result of the same quantity of labour, which could be
produced in two years. I do not know how you will treat this objection,
but in my opinion it is fatal to your whole theory.

I have the same objection to your measure, which I have always
professed; you choose[270] a variable measure for an invariable
standard. Who can say that a plague which should take off half our
people would not alter the value of labour? We might, indeed, agree to
transfer the variation to the commodities, and to say that they had
fallen and not that labour had risen, but I can see no advantage in the

We might again discover modes by which the necessaries of the labourer
might be produced with uncommon facility; and, in consequence of the
stimulus which the good situation of the labourers might give to
population, the reward of the labour in necessaries might be no higher
than before; would it be right in this case, in which nothing had really
altered but necessaries and labour, to say that they only had remained
steadily at the same value, and, because a given quantity of corn or of
labour will exchange only for (perhaps) 3/4 of the former quantity of
linen, cloth, or money, to declare that it was the linen, cloth, or
money which had risen in value, not labour and corn which had fallen?

Two countries are equally skilful and industrious; but in one the people
live on the cheap food of potatoes, in the other on the dear food,
wheat. You will allow that profits will be higher in the one country
than the other. You will allow, too, that money may be nearly of the
same value in both, if we choose anything else as a measure of value but
labour. You will further agree that there might be an extensive trade
between such countries. If a man sent a pipe of wine from the
potato[271] country, which cost £100 and which might be sold at £110 in
the wheat country, you would say that the wine was at a higher value in
the country from which it was exported, merely because, in that country,
it could command more labour. You would say this although the wine would
not only exchange for more money but for more of every other commodity
in the wheat country. I contend that this is a novelty which cannot be
considered an improvement; it would confound all our usual notions, and
would impose upon us the necessity of learning a new language. All
mankind would say that wine was dearer in the wheat than in the potato
country, and that labour was of less value in the latter. In page 31
there is a long passage on the reason for choosing labour as a standard,
with which I am not satisfied. A piece of cloth is 120 yards in length
and is to be divided between _A_ and _B_; it is obvious that in
proportion as much is given to _A_ less will be given to _B_ and vice
versa. This will be true, although the value of the whole 120 yards be
£100, £50, or £5. Is it not then a begging of the question to assume the
constant value because the quantity is constant, and because it is
always to be divided between two persons?

Allowing you your premises, I see very few instances in which I can
quarrel with your conclusions. I agree with all you say concerning the
glut of commodities; allow to you your measure, and it is impossible to
differ in the result.

I hope soon to see you. I have hardly been able to find time to write
this letter, I am so busily engaged. I am serving on a committee.

                                                 Ever yours,
                                                      DAVID RICARDO.

    NOTE.--The table referred to in this letter is the following:--

    _Table illustrating the invariable Value of Labour and its Results._

      Table Key
        1: Quarters of corn produced by 10 men or varying fertility of
              the soil.
        2: Yearly corn wages to each labourer, determined by the demand
              and supply.
        3: Advances in corn wages, or variable produce commanding the
              labour of 10 men.
        4: Rate of profits under the foregoing circumstances.
        5: Quantity of labour required to produce the wages of 10 men
              under the foregoing circumstances.
        6: Quantity of profits on the advances of labour.
        7: Invariable value of the wages of a given number of men.
        8: Value of 100 qrs. of corn under the circumstances supposed.
        9: Value of the product of the labour of 10 men under the
              circumstances supposed.

  |   1    |   2   |    3   |   4   |   5  |  6  |  7 |   8   |   9   |
  |        |       |        |       |      |     |    |       |       |
  |150 qrs.|12 qrs.|120 qrs.|25 p.c.|8     |2    | 10 |  8·33 | 12·5  |
  |150     |13     |130     |15·38  |8·66  |1·34 | 10 |  7·7  | 11·53 |
  |150     |10     |100     |50     |6·6   |3·4  | 10 | 10    | 15    |
  |140     |12     |120     |16·66  |8·6   |1·4  | 10 |  7·14 | 11·6  |
  |140     |11     |110     |27·2   |7·85  |2·15 | 10 |  9·09 | 12·7  |
  |130     |12     |120     | 8·3   |9·23  |0·77 | 10 |  8·33 | 10·8  |
  |130     |10     |100     |30     |7·7   |2·3  | 10 | 10    | 13    |
  |120     |11     |110     | 9     |9·17  |0·83 | 10 |  9·09 | 10·9  |
  |120     |10     |100     |20     |8·33  |1·67 | 10 | 10    | 12    |
  |110     |10     |100     |10     |9·09  | ·91 | 10 | 10    | 11    |
  |110     | 9     | 90     |22·2   |8·18  |1·82 | 10 | 11·1  | 12·2  |
  |100     | 9     | 90     |11·1   |9     |1    | 10 | 11·1  | 11·1  |
  |100     | 8     | 80     |25     |8     |2    | 10 | 12·5  | 12·5  |
  | 90     | 8     | 80     |12·5   |8·88  |1·12 | 10 | 12·5  | 11·25 |

                                        ('Measure of Value,' p. 38.)

    Columns 5 to 9 contain the debateable matter.


                                             LONDON, _28 May, 1823_.


I will, to the best of my power, state my objections to your arguments
respecting the measure of value. You have yourself stated, as an
objection to my view on this subject, that a commodity produced with
labour and capital united, cannot be a measure of value for any other
commodities than such as are produced precisely under the same
circumstances, and in this I have agreed that you are substantially
correct. If all commodities were produced in one day and by labour only
without the assistance of capital, they would vary in proportion as the
quantity of labour employed on their production increased or diminished.
If the same quantity of labour was constantly employed on the production
of money, money would be an accurate measure of absolute value, and, if
shrimps or nuts or any other thing rose or fell in such money, it would
only be because more or less labour was employed in procuring them.
Under such circumstances every commodity which was the produce of a
day's labour would naturally command a day's labour, and therefore the
value of a commodity would be in proportion to the quantity of labour
which it would command. But, though such a money would measure
accurately the value of every commodity produced under circumstances
exactly similar, it would not be an accurate measure of the value of
other commodities produced with a large quantity of capital, employed
for a length of time. In the case just supposed a quantity of shrimps
would be as accurate a measure of value as a quantity of money produced
by the same quantity of labour; but, when capital is employed and cloth
is the product of labour and capital, you justly say that cloth is not
a correct measure of the value of shrimps and of silver, picked up by
labour alone, on the sea shore; and yet with singular inconsistency, as
I cannot help thinking, you contend that the shrimps and the silver,
picked up by labour alone on the sea shore, are accurate measures of the
value of cloth. If you are right, then must cloth be also an accurate
measure of value, because the thing measured must be as good a measure
as the thing with which you measure. When I say that £4 and a quarter of
wheat are of the same value, I can measure other values by the quarter
of wheat as well as by the £4. You say: 'It is conceded that, when
labour alone is concerned in the production of commodities, and there is
no question of time, both the absolute and exchangeable values of such
commodities may be accurately measured by the quantity of labour
employed upon them.' Nothing can, I think, be more correct, and it is
perfectly accordant with what I have been saying. Your mistake appears
to me to be this: you show us that under certain conditions a certain
commodity would be a measure of absolute value, and then you apply it to
cases where the conditions are not complied with, and suppose it to be a
measure of absolute value in those cases also. You appear to me, too, to
deceive yourself when you think you prove your proposition, because your
proof only amounts to this, that your measure is a good measure of
exchangeable value but not of absolute value. You say: 'If the
accumulated and immediate labour worked up in a commodity be of any
assumed value, £100 for instance, and the profits of the value of £20,
including the compound profits upon the labour worked up in the
materials, the whole will be of the value of £120. Of this value 1/6
only belongs to profits, the rest or 5/6 may be considered as the
product of pure labour.' This is quite true, whether we value the
commodity by the quantity of labour actually employed upon it, by the
quantity which it will command when brought to market, or by the
quantity of money, or any other commodity, for which it is exchanged;
5/6, in all cases, will belong to the workmen and 1/6 to the master.
'Consequently the value of 5/6 of the produce is determined by the
quantity of labour employed on the whole; and the value of the whole
produce by the quantity of labour employed upon it with the addition of
1/6 of that quantity.' This is really saying no more than that, when
profits are one sixth of the value of the whole commodity (in which no
rent enters), the other 5/6 go to reward the labourers, and that the
portion so going to the labourers may itself be resolved into labour and
profits in the same proportion of 5 and 1. Five men produce six pieces
of cloth, of which 5 are paid to them, the men; if profits fall one
half, the men will receive 5-1/2 pieces, and then you say the cloth is
of less value; but in what medium? In labour, you answer. You appear to
me to advance a proposition that cloth is of less value when it will
exchange for less labour, and to prove it by showing the fact, merely,
that it actually does exchange for less labour.

You say: 'But, when labour is concerned, it follows from what has been
conceded that the value of the produce is determined by the quantity of
labour employed upon it.' By value here you mean absolute value; and
then you immediately apply this measure of absolute value, which is only
conceded in a particular case, to a general proposition, and say
'consequently;' consequently on what? On this particular case;
'consequently the value of 5/6 of the produce is determined by the
quantity of labour employed on the whole,' that is to say 'consequently
the quantity of labour which 5/6 of the produce will command is
determined by the quantity of labour employed on the whole;' the same is
true, in the same sense, of 5/6, 5/7, 5/8, 5/9 or of any other
proportions in which the whole may be divided. My only object has been
to show, and, if I am not mistaken, I have succeeded in showing, that a
measure of value, which is only allowed to be accurate in a particular
case where no capital is employed, is arbitrarily applied by you to
cases where capital and time necessarily enter into the consideration.

I fear I have been guilty of many repetitions. I shall not regret it,
however, if I have made myself understood.

[The last sheet is wanting. The fragment on page 105 does not match this

    NOTE.--On 12th June, 1822, in one of Ricardo's most important
    speeches on Resumption (afterwards published as a pamphlet), he
    speaks of those who propose to make Corn, on a ten years' average,
    the standard of value instead of money. To prove gold more variable
    than corn, they and their authorities, Locke and Adam Smith are (he
    says) obliged to begin by supposing gold invariable. 'Unless the
    medium in which the price of corn is estimated could be asserted
    to be invariable in its value, how could corn be said not to have
    varied in relative value? If they must admit the medium to be
    variable--and who could deny it?--then what became of the argument?'
    Nothing is more difficult than to ascertain the variations in the
    value of money: 'To do so with any accuracy we should have an
    invariable measure of value; but such a measure we never had nor
    ever can have.' (Cf. Pol. Econ. and Tax. ch. i. § 7, Works, p. 28.)
    But we can speak with accuracy of depreciation; we can see to it
    that the standard is always the same standard, and that our currency
    conforms to it, even if the standard itself may vary in value. (See
    Note to Letter XXXI.)


                                            LONDON, _13 July, 1823_.


McCulloch and I did not settle the question of value before we
parted,--it is too difficult a one to settle in a conversation; I heard
everything he had to urge in favour of his view, and promised, during my
holiday, to bestow a good deal of consideration on it. He means exactly
what you say;--he does not contend that commodities exchange for each
other according to the quantity of labour actually worked up in them,
but he constitutes a commodity the general measure, by which he
estimates the value of all others. A pipe of wine kept for three years
has no more labour worked up in it than a pipe of wine kept for a day,
but he says the additional value on account of time must be estimated by
the accumulations which a like amount of capital actively employed in
the support of labour would make in the same time. An oak-tree which has
been growing for 200 years has very little labour actually worked up in
it, but its value is to be estimated by the accumulated capital which
the original labour employed would give in the same time. He and you in
fact differ as to your original measure. I think he could not give any
other good reason for choosing a medium which requires labour and
capital to produce it, rather than one which requires labour only,
excepting that commodities in general require the combination of the
two, and that a measure, to have any claim to be even an approximation
to an accurate one, should itself be produced under circumstances
somewhat similar to the commodities which it is to measure. If all
things required precisely the same quantities of capital and labour, and
for the same length of time, to produce them, any one of them would be
an accurate measure of the rest; but this is not the case; the
conditions admit of infinite variety, and therefore whichever we choose
it can only be an approximation to truth, and we are bound to give good
reasons for preferring it.

I should, indeed, be wanting in candour if I refused to admit that my
money measure would not measure the quantity of labour worked up in
commodities. I have admitted it over and over again. I am also ready to
admit that your money measure will measure exactly the quantity of
labour and profits together of which commodities are composed, but so
will my money measure. Neither of them will measure the quantity of
labour alone worked up in commodities, but they will both measure the
quantity of labour and profits together of which commodities are
composed. Suppose gold always to require the same quantity of labour,
for one year, before it can be brought to market, will you say that all
variations in wages and profits may not be estimated in this medium? You
would indeed say that many of those variations would be ascribable to
the variations in the value of the medium, and not to any alteration in
the value of the thing measured, because you do not think that it is any
proof of invariability in a commodity that it requires always the same
quantity of labour, and the same duration of time to produce it. If I
allow the justice of your objection, I am at liberty to apply the same
to your medium. The same quantity of labour applied for a day will
always produce the same given quantity of gold; gold is therefore an
invariable measure, you say. I find this gold vary in relation to
another commodity which always requires the same quantity of labour and
capital to produce it; you say it is never the gold but it is always the
commodity which varies, and, when you are asked why, you answer because
labour never varies. Double the quantity of labour in a country or
diminish it one half, always leaving the funds which are to employ it at
precisely the same amount, and you tell us, notwithstanding the
condition of the labourer is in the one case a very distressed one, in
the other a very prosperous one, that the value of his labour has not
varied. I cannot subscribe to the justness of this language. The
question is whether you are right, not whether I am wrong. Suppose that
a man in India could pick up in a day precisely the same quantity of
gold as in England, and that all trade in provisions were forbid between
the two countries. The small quantity of rice and clothing in India
which are necessary for the support of a labourer would be of precisely
the same value as the quantity of wheat and clothing necessary for a
labourer in England. But this would not long continue. All manufactured
commodities would be of a high comparative money value in India, and
consequently we should export manufactured commodities and import gold;
the reward of a labourer in England would come to be a much larger
quantity of gold than he could actually pick up here. No gold would be
then obtained in England but by means of importation. Under these
circumstances you would say that money was of a low value in England,
and you would be correct if all men agreed to constitute labour the
measure of value; but in this they do not agree, and, as we should find
that at the very moment that gold was low, relatively to labour, in
England, it was high relatively to manufactured commodities of every
description, with which in fact gold would be purchased from India, if
we took these commodities for the measure, we should be bound to say
that gold was cheap in England and dear in India. You must remember that
the point in dispute is whether labour be the correct measure of value;
you must not then take the fact for granted, and then offer it as a
proof of your correct conclusion.

We leave London for Gatcomb early to-morrow morning.... We shall have
one bed disengaged if you and Mrs. Malthus will come over to us. I am
sorry I cannot ask all your party.

                                           Ever truly yours,
                                                      DAVID RICARDO.


                                   [MINCHINHAMPTON, _Aug. 3, 1823_.]


The value of almost all commodities is made up of labour and profits,
but in choosing a measure of value it is not necessary that it should
possess the property of determining what proportion of the value of the
commodity measured belongs to wages, and what proportion belongs to
profits. You make it a reproach on my proposed measure that it will not
do this, and prefer your own because it will. Now, as I do not think
this quality essential to a measure of value, I shall not defend mine
for not possessing this quality. This consideration appears to me wholly
foreign to the question under discussion.

We agree, I believe, that nothing can be a measure of value which does
not itself possess value. We agree too, I believe, that a measure of
value to be a good one should itself be invariable, and further that in
selecting one thing as a measure of value rather than another we are
bound to show some good reason for such selection, for, if a good reason
be not given, the choice is altogether arbitrary. Now the measure
proposed by you has value, and therefore [is] not to be objected against
on account of any deficiency of that quality; but I do not think it is
invariable, and by the concession which you make in your last letter you
appear to give up your measure, for you say that 'you expressed yourself
without sufficient care, when you intimated that, if any number of
labourers were imported or exported, the value of labour would remain
the same.' This is a large concession indeed, and I think entirely
subverts your measure, because, if it be true of labourers exported or
imported, it must be true also of labourers born or dying in the
country. If by poor laws imprudent marriages are encouraged and
population becomes excessive, the effect on the value of labour will be
precisely the same as if labourers had been imported; and, if an
epidemic disorder break out and many labourers die, it will be the same
as if they were exported. Nay more, if the people be well educated and
be taught caution and foresight with regard to the increase of their
numbers, who shall say that the effect on the value of labour will not
be the same as an exportation of labourers? You have, I think, been
imprudent, which is much at variance with your usual practice, in
conceding this point, and you allow us to enter into your fortress and
spike all your guns. You add indeed: 'This will only be true after the
supply comes to be affected by the increased or diminished number of
labourers.' When will the supply not be affected by the increased or
diminished number? What follows will not assist you, for you say: 'If
the corn obtained by twenty men be divided among ten, then the value of
the wages of ten men will be less than the quantity of labour employed
to produce them with the addition of profits, and vice versa.' What
profits? They might have been 50 per cent., and may from the
circumstance mentioned be reduced to 5 per cent. You speak of profits in
this place as if they were a fixed amount, and forget that they fall
when wages rise. Besides, I will not admit the extravagant supposition
that the corn obtained by the labour of twenty men is bestowed as wages
on ten men; but I will suppose that the corn obtained by twenty men had
been sufficient to command the labour of thirty men, but that owing to a
diminished supply of labour this same quantity of corn obtained by the
same number of men is bestowed as wages on twenty-two men. In this case
I ask you whether corn has fallen in value in the proportion of thirty
to twenty-two? If you say Yes, then you do not admit that labour may
rise in value in consequence of exporting labourers; and, if you say No,
there is an end of your measure, because you then acknowledge that
commodities do not vary according to the quantity of labour they can
command. I do not see how you are to extricate yourself from this
dilemma. I cannot discover what the value of the precious metals in
different countries can have to do with this question. A piece of cloth
or a piece of muslin can command more labour in India than in England;
on this we are agreed, but we are not agreed in our explanation of this
fact. You say the piece of cloth or muslin is more valuable in India
than in England, and your proof is that it can command more labour in
India. You would say so, although both cloth and muslin were exported
from India to England, from the country where they are dear to the
country where they are cheap. I, on the contrary, say that it is not the
cloth and muslin which are dear in India and cheap in England, but it is
labour which is cheap in India and dear in England, and that cloth and
muslin would come to England from India although there were no such
commodities as gold and silver on the face of the earth. I say further
that you are bound to admit this by the concession which you have made,
for you must admit that labour might be rendered cheap as effectually in
England by prevailing on English labourers to be satisfied with the
modest remuneration of food paid in India, as by the importation of
labourers; and, if you do not admit it, I beg to ask why you refuse to
do so. I beg you to point out the distinction between a supply of
labourers from abroad, with a consequently reduced remuneration of food,
and a supply of labourers from the principle of population, and a
consequent reduction in the remuneration paid in food. Can you be said
to have given a good reason for the selection which you have made of a
measure of value when it will not bear close examination? You have
repeatedly said that a commodity, on which a quantity of labour has been
bestowed, will always exchange for a like quantity, together with an
additional quantity which will constitute the profits on the advances.
Now this I consider to be your main proposition, and on its truth must
depend according to your own view the correctness of your measure. Is it
true then that every commodity exchanges for two quantities of labour,
one equal to the quantity actually worked up in it, another equal to the
quantity which the profits will command? I say it is not. This year corn
is cheap, and I must give a certain quantity of it to procure the labour
of ten men to be worked up in the commodity which I manufacture; but
next year, when I take my commodity to market, corn is dear and wages
high, and therefore to procure a certain quantity of labour I must give
more of my finished commodity than I should have given if corn had been
plenty [_sic_] and wages low. If corn had been cheap and wages low, my
profits would have been high; as it is, they are low. I want to know in
these two cases whether the commodity does really exchange for the two
specific quantities of labour mentioned above. You answer my question by
saying that you always make a reserve of the first quantity, and all
above it you call profits. But I contend that labour of one value has
been expended on the commodity, and, when it comes to market, it is
exchanged for labour of another value, and that is the sole reason why
the balance, over and above the labour expended on it, is small. Why is
it small but because the value of labour is high? No such thing, you
say; labour never varies; and yet you cannot but confess that, if corn
had been abundant and if wages had remained the same, the manufactured
commodity would have exchanged for a great deal more labour. You say:
'How comes it about that labour should remain of the same value in the
progress of society, when it is known that it must require more labour
to produce it?' You must mean 'to produce the remuneration paid for it;'
and you add: 'The answer to this question is that, as profits depend
upon the _proportion_ of the whole produce which goes to labour, it must
necessarily happen that the increase of value occasioned by the
additional quantity of labour will be exactly counterbalanced by the
diminution in the amount of profits, leaving the value of labour the
same.' I confess I cannot understand this answer. We are inquiring about
the meaning which should be attached to the words 'increase of value,'
'diminution of value.' You tell me that increase of value means an
increased power of commanding labour. I deny that this definition is a
correct one, because I deny the invariability of the standard measure
you have chosen; and to prove its invariability you speak of the
proportion in which the whole produce is divided, and that, if wages
have more, profits have less;--all which is true, but what connection do
you prove between this proposition and the invariability in your measure
of value? In your answer you use the words 'increase of value;' that is
to explain the meaning of the words required to be understood by the use
of the words themselves. You mistake McCulloch's and my objection to
your doctrine if you suppose it to be on account of its making the same
quantity of labour of the same value, while the condition of the
labourer is very different; we do not object to it on that account,
because, as you justly observe, our own doctrines require the same
admission; but we object to your saying that, from whatever cause it may
arise that the labourer's condition is deteriorated, he is always
receiving the same value as wages. When _our_ labourers are badly off,
although (we say) they have wages of the same value, profits must
necessarily be very low; according to you wages would be of the same
value whether profits were 2 per cent. or 50 per cent.

I think I have shown you that your long letter was acceptable by doing
that which is really a difficult task to me, writing a longer one
myself. I am, however, only labouring in my vocation and trying to
understand the most difficult question in political economy. All I have
hitherto done is to convince myself more and more of the extreme
difficulty of finding an unobjectionable measure of value. As far as I
have yet been [able] to reflect upon McCulloch's and Mill's suggestion,
I am not satisfied with it. They make the best defence for my
measure[273], but they do not really get rid of all the objections. I
believe however that, though not without fault, it is the best.

I am sorry you could not spare a few days for a visit to us; if you will
come to Gatcomb before we go to town, I shall be very glad to see you.

I have been writing a few pages in favour of my project of a National
Bank[274], with a view to prove that the nation would lose nothing in
profits by abolishing the Bank of England, and that the sole effect of
the change would be to transfer a part of the profits of the bank to the
national treasury....

                                                 Yours ever,
                                                      DAVID RICARDO.

    NOTE.--Arguments very similar to those of this letter have been used
    against Malthus by Julius Pierstorff, in his book on 'Die Lehre vom
    Unternehmergewinn' (Berlin, 1875), where the views of Malthus and
    Ricardo are compared with one another. There is, however, shrewder
    criticism of Ricardo's whole doctrine in Böhm Bawerk's 'Geschichte
    und Kritik der Kapital-Zins-Theorien,' Innsbrück, 1884. A neat
    _reductio ad absurdum_ of the view, held more or less explicitly by
    MacCulloch and others, that cost is enough to explain value, is
    given by Böhm Bawerk in his 'Grundzüge der Theorie des
    wirthschaftlichen Güterwerths' (Jena, 1886, p. 72), in a passage of
    which this is the conclusion: 'To explain the value of a commodity
    by its cost is to explain it by the value of the means of its
    production. But how have the latter their value? Logically we must
    answer from _their_ cost, in other words from the means of
    production a degree farther back, and so on backwards. Now, clearly,
    if we pursue this regress, we either arrive at commodities which are
    not themselves 'produced,' e.g. land and labour, and our explanation
    of all value by cost has failed us; or else we explain even these
    sophistically as being in a sense 'products,' and owing their value
    to their cost, e.g. the labour as owing its value to the cost of the
    labourer's subsistence, and in this case we are bound to go farther
    back and explain the value of the means of subsistence by _their_
    cost, i.e. the labour that produced them; and we reason endlessly in
    a circle.'


                    GATCOMB PARK, MINCHINHAMPTON, _15th Aug., 1823_.


It is a prudent step in you to withdraw your concession, for I am sure
that your theory could not stand with it. You find fault with my measure
of value, you say, because it varies with the varying profits of other
commodities. This is, I acknowledge, an imperfection in it when used to
measure other commodities in which there enters more or less of profits
than enters into my measure; but you do not appear to see that against
your measure the same objection holds good, for your measure contains no
profits at all, and therefore never can be an accurate measure of value
for commodities which do contain profits. If I had no other arguments to
offer against your measure, this which I am going to mention _when used
to you_ would be fatal to it. You say that my measure cannot measure
commodities produced by labour alone. Granted; but, if it be true, how
can your measure measure commodities produced with labour and profits
united? You might just as well say that three times two are six and that
twice three are not six, or that a foot measure was a good measure for
a yard but a yard was not a good measure for a foot. If your measure
will measure my commodity accurately, mine must do the same by yours.
These are identical propositions, and I confess I see no answer that can
be made to me. The fact really is that no accurate measure of absolute
value can be found. No one doubts the desirableness of having one; but
all we can ever hope to get is one tolerably well calculated to measure
the greatest number of commodities, and therefore I should have no
hesitation in admitting your measure to be the best, under all
circumstances, if you could show that the greatest number of commodities
were produced by labour alone without the intervention of capital. On
the other hand, if a greater number of commodities are produced under
the circumstances which I suppose to attend the production of the
commodity which I choose for my measure, then mine would be the best
measure. You will understand that in either case I suppose a degree of
arbitrariness in the selection, and I only contend that it would be best
employed in selecting mine.

When you say that my great mistake is in considering commodities made up
of labour alone and not of labour and profits, I think the error is
yours, not mine, for that is precisely what you do; you measure
commodities by labour alone, which have both labour and profits in them.
You surely will not say that my money, produced by labour and capital,
and by which I propose to measure other things, omits profits. Yours
does; what profits are there in shrimps or in gold picked up by daily
labour, on account of the labourer, on the sea-shore? How much more
justly then might this accusation be brought against you!

You object to me that I am inconsistent in wishing to leave the
consideration of the value of money here and in India out of the
question, when speaking of the value of labour and of commodities in
this country and in India. I, you say, to leave out the consideration
of the value of the precious metals, who have proposed a measure formed
of them! There is nothing inconsistent in this. In examining your
proposition which rejects my measure and adopts another, I must try it
by your doctrines and not by mine which you reject. A conclusion founded
on my premises might be a just one, but, if you dispute my premises and
substitute others, the conclusion may no longer be the same; and in
examining your doctrines I must attend only to the conclusions to which
your premises would lead me. You ask: 'Would you really say that cloth
and muslin were not dear in India where they cost four or five times as
much labour as in England?' You know I would not, because I estimate
value by the quantity of labour worked up in a commodity; but by the
cost in labour of cloth and muslin in India you do not mean the quantity
of labour actually employed on their production, but the quantity which
the finished commodity can command in exchange. The difference between
us is this; you say a commodity is dear because it will command a great
quantity of labour, I say it is only dear when a great quantity has been
bestowed on its production. In India a commodity may be produced with
twenty days' labour, and may command thirty days' labour. In England it
may be produced by twenty-five days' labour and command only
twenty-nine. According to you this commodity is dearer in India,
according to me it is dearer in England.

Now here is my objection against your measure as a general measure of
value, that, notwithstanding more labour may be bestowed on a commodity,
it may fall in value estimated in your measure; it may exchange for a
less quantity of labour. This is impossible when you apply your measure
legitimately to those objects only which it is calculated to measure.
Would it be possible, for example, to apply more labour to the
production of shrimps or to pick up grains of gold on the sea-shore,
and yet to sell those commodities for less labour than before? Certainly
not; but it would be quite possible to bestow more labour on the making
of a piece of cloth, and yet for cloth to exchange for a less quantity
of labour than before. This is another argument in my mind conclusive
against the expediency of adopting your measure.

I repeat once more that the same trade precisely would go on between
India and Europe, as far as regards commodities, if no such thing as
money made of gold and silver existed in the world. All commodities
would in that case as well as now command a much larger quantity of
labour in India than in England; and, if we wanted to know how much
more, either of those commodities, as well as money, would enable us to
ascertain. The same thing which makes money of a low value in England
makes many other commodities of a low value there; and the political
economist in accounting for the low value of one accounts at the same
time for the low value of the others. I do not object to accounting for
the low value of gold in particular countries; but I say it is not
material to an enquiry into a general measure of value, particularly if
it be itself objected to as forming any element in that measure.

Suppose a farmer to have a certain quantity of cattle and implements and
a hundred quarters of wheat,--that he expends this wheat in supporting a
certain quantity of labour, and that the result is 110 quarters of wheat
and an increase of one-tenth also in his cattle and implements; would
not his profits be 10 per cent. whatever might be the price of labour
the following year? If the 110 quarters could command no more labour
than the 100 quarters could command before, he would, according to you,
have made no profits; and you are right if we admit that yours is a
correct measure of value; he would have a profit in kind but no profit
in value. If wheat was the measure of value, he would have a profit in
kind, and the same profit in value. If money was the correct measure of
value and he commenced with £100, he would have 10 per cent. profit if
the value of his produce was £110. All these results leave the question
of a measure of value undecided, and prove nothing but the convenience,
in your estimation, of adopting one in preference to another. The
labourer, however, who lived by his labour would find it difficult to be
persuaded that his labour was of the same value at two periods, in one
of which he had abundance of food and clothing, and in another he was
absolutely starving for want. What he might think would certainly not
affect the philosophy of the question; but it would be at least as good
a reason against the measure you propose as that of the farmer in favour
of it, when he found that he had no profits because he had no greater
command of labour, although he might have more corn or more money. You
call every increase of value nominal which is not an increase in the
measure you propose. I do not object to your doing so; but those who do
not agree with you in the propriety of adopting this measure may argue
very consistently in saying they are possessed of more value when they
have £110 than when they had £100, although the larger sum may not when
it is realized command so much labour as the smaller sum did before,
because they not only admit but contend that labour may rise and fall in
value, and therefore in respect to labour he may be poorer, although he
possesses a greater value.

I have said that the value of most commodities is made up of labour and
profits. If this be so, you observe, 'it is as clear as the sun that the
variable wages which command the same quantity of labour must be of the
same value, _because_ they will always cost in their production the same
quantity of labour with the addition of the profits upon that labour.' I
confess that I cannot see the connection of this conclusion with the
premises. Whether you divide a commodity in eight, seven, or six
divisions, it will always be divided into two portions, variable
portions, but always two. If the division be in eight, the portions may
be six and two, five and three, four and four, seven and one. If seven,
they may be six and one, five and two, four and three, and so on. Now
this is my admission. What we want to know is what the number of those
divisions are, or what the value of the commodity is, whether eight,
seven, or six? And have I come a bit nearer to this knowledge by
admitting that whatever the value may be it will be divided between two
persons? Whatever you give to the labourer is made up of labour and
profits, and therefore the value of labour is constant! This is your
proposition. To me it wants every quality of clearness. I find that at
one time I give a man ten bushels of wheat for the same quantity of his
labour for which at another time I give him eight bushels. Wheat,
according to you, falls in the proportion of ten to eight. I ask why?
And your answer is, because 'as the positive value of the labour worked
up in the wages increases, the positive value of the profits (the other
component part of their whole value) diminishes exactly in the same
degree.' Now does this positive value refer to the same quantity of
wheat? Certainly not, but to two different quantities, to ten bushels at
one time, to eight at another. You add: 'If these two propositions[']
(namely the one I have just mentioned and the invariability of labour as
a measure of value) 'can properly be considered as having no connection
with each other, I must have quite lost myself on these subjects, and
can hardly hope to show the connection by anything which I can say
further[']. I hope you do not suspect me of shutting my eyes against
conviction; but, if this proposition is so very clear as it is to you, I
cannot account for my want of power to understand it. I still think that
the invariability of your measure is the _definition_ with which you
set out, and not the _conclusion_ to which you arrive by any legitimate
argument. My complaint against you is that you claim to have given us an
accurate measure of value, and I object to your claim, not that I have
succeeded and you have failed, but that we have both failed, that there
is not and cannot be an accurate measure of value, and that the [most
th]at any man can do is to find out a measure of value applicable in a
great many cases, and not very far deviating from accuracy in many
others. This is all I have pretended to do, or now pretend to have done;
and, if you advanced no higher claims, I would be more humble; but I
cannot allow that you have succeeded in the great object you aimed at.
In answering you I am really using those weapons by which alone you say
you can be defeated, and which are I confess equally applicable to your
measure and to mine, I mean the argument of the non-existence of any
measure of absolute value. There is no such thing; your measure as well
as mine will measure variations arising from more or less labour being
required to produce commodities, but the difficulty is respecting the
varying proportions which go to labour and profits. The alteration in
these proportions alters the relative value of things in the degree that
more or less of labour or profit enters into them; and for these
variations there has never been, and I think never will be, any perfect
measure of value.

I have lost no time in answering your letter, for I am just now warm in
the subject, and cannot do better than disburthen myself on paper.

                              Ever, my dear Malthus,
                                                Truly yours,
                                                      DAVID RICARDO.


                                      GATCOMB PARK, _31 Aug., 1823_.


I have only a few words more to say on the subject of value, and I have
done. You cannot avail yourself of the argument that a foot may measure
the variable height of a man, although the variable height of a man
cannot truly measure the foot, because you have agreed that under
certain circumstances the man's height is not variable, and it is to
those circumstances that I always refer. You say of my measure, and say
truly, that if all commodities were produced under the same
circumstances of time, etc., as itself, it would be a perfect measure,
and you say further that it is now a perfect measure for all commodities
produced under such circumstances. If then under certain circumstances
mine is a perfect measure, and yours is always a perfect one, under
those circumstances certain commodities ought to vary in these two
measures just in the same degree. Do they so? Certainly not, then one of
the measures must be imperfect. If they are both perfect mine ought to
measure yours as well as yours mine.

There is no impropriety in your saying with Adam Smith[277] that 'labour
will measure not only that part of the whole value of the commodity
which resolves itself into labour, but also that which resolves itself
into profit,' because it is the fact. But is not this true also of any
variable measure you could fix on? Is it not true of iron, copper, lead,
cloth, corn, etc., etc.? The question is about an invariable measure of
value, and your proof of invariability is that it will measure profits
as well as labour, which every variable measure will also do.

I have acknowledged that my measure is inaccurate, you say, I have so;
but not because it would not do everything which you assert your's will
do, but because I am not secure of its invariability. Shrimps are worth
£10 in my money;--it becomes necessary, we will suppose, in order to
improve the shrimps to keep them one year when profits are 10 per cent.;
shrimps at the end of that time will be worth £11. They have gained a
value of £1. Now where is the difference whether you value them in
labour and say that at the first period they are worth ten days' labour
and subsequently eleven, or say that at the first period they are worth
£10, subsequently £11?

I am not sure that your language is accurate when you say that 'labour
is the real advance in kind, and profits may be correctly estimated upon
the advances whatever they may be.' A farmer's capital consists of raw
produce, and his real advances in kind are raw produce. His advances are
worth and can command a certain quantity of labour undoubtedly, and his
profits are nothing unless the produce he obtains will command more if
he estimates both advances and profits in labour, but so it is in any
other commodity in which he may value his advances and returns. Does it
signify whether it be labour or any other thing, provided there be no
reason to suspect that it has altered in value? I know that you will say
that provided his produce is sure to command a certain quantity of
labour he is sure of being able to reproduce, not so if he estimates in
any other thing, because that thing and labour may have undergone a
great relative alteration. But may not the real alteration be in the
value of labour, and, if he act on the presumption of its remaining at
its then rate, may he not be wofully mistaken, and be a loser instead of
a gainer? Your argument always supposes labour to be of an uniform
value, and if we yielded that point to you there would be no question
between us. A manufacturer who uniformly used no other measure of value
than that which you recommend would be as infallibly liable to great
disappointments as he is now exposed to in the vulgar variable medium in
which he is accustomed to estimate value.

And now, my dear Malthus, I have done. Like other disputants, after much
discussion we each retain our own opinions. These discussions, however,
never influence our friendship; I should not like you more than I do if
you agreed in opinion with me.

Pray give Mrs. Ricardo's and my kind regards to Mrs. Malthus.

                                                Yours truly,
                                                      DAVID RICARDO.

    NOTE.--Ricardo died at Gatcomb on 11th Sept., 1823, of an abscess in
    the head, which caused great suffering. He was buried in the vault
    of a church at Huish, near Chippenham, Wilts; and his friend Joseph
    Hume was among the mourners. As he was only fifty-one years of age,
    his death was a great shock to his friends and caused something like
    dismay among his disciples. 'I never loved anybody out of my own
    family so much. Our interchange of opinions was so unreserved, and
    the object after which we were both enquiring was so entirely the
    truth and nothing else, that I cannot but think we sooner or later
    must have agreed.' So said Malthus, in Empson's hearing[278].

    James Mill[279], albeit unused to the melting mood, was overwhelmed
    with grief, and in a letter to MacCulloch, 19th Sept., 1823, writes
    of the closing scenes with much tenderness of feeling.


1809. Ricardo's letters in 'Morning Chronicle' ('High Price of
Bullion'). Quarterly Review founded. Corunna (Jan.), Talavera, Wagram,
Walcheren. Continuance of Orders in Council and Berlin Decrees.
Perceval, Premier. King's Jubilee. O. P. riots. Bad harvest. Rise in
wheat. Fall in other articles.

1810. Letters I (25th Feb.) to V (Aug.).--Lines of Torres Vedras,
Busaco. Bullion Committee (report, 8th June). Burdett and Parliamentary
privilege. Fair harvest. Commercial and Agricultural Depression. Many
failures. South American market overstocked. Trade with United States

1811. Letters VI to X (Dec.).--Ricardo's 'Reply to Bosanquet,' Malthus'
article on 'Depreciation.' 'Curse of Kehama.' Fuentes Onoro, Albuera.
Napoleon's estrangement from Russia. Virtual close of George III's
reign. Questions of Regency. Castlereagh and Sidmouth in the Government.
Poor harvest and high prices of wheat. Lord King's letter to his
tenants. Currency debates in Parliament. Government loan to Merchants.
Slight revival of trade. Stoppage of trade with United States.

1812. Letters XI and XII (Dec.).--'Childe Harold,' I and II. Ciudad
Rodrigo, Badajoz, Salamanca. Moscow Campaign. Repeal of Orders in
Council (June). War with United States. Catholic Association. Murder of
Perceval (May). Liverpool, Premier. Williams' murders in Ratcliff
Highway. Depression of trade. Luddite outbreaks. Cold and wet summer.
High price of corn.

1813. Letter XIII (Dec.).--Malthus' 'Letter to Lord Grenville.' Southey,
Laureate. Vittoria, S. Sebastian. Lützen, Katzbach, Dresden, Leipzig.
Affairs of Princess Charlotte. Joanna Southcote. Prosecutions for
seditious libel. Removal of Company's monopoly of East India trade. Good
harvest. Rise in Colonial produce.

1814. Letters XIV to XXI (Dec.).--Malthus' 'Observations on the Corn
Laws.' 'Waverley.' 'The Excursion.' Treaty of Chaumont. Abdication of
Napoleon (April). First Treaty of Paris. Congress at Vienna. Capture of
Washington. Peace of Ghent (Dec.). Trial of Cochrane. Burning of Custom
House (Feb.). Introduction of Corn Bill. Repeal of Corn Bounty. Relapse
in prices of Colonial produce. Indifferent harvest. Medium prices of

1815. Letters XXII to XL (Dec.).--Ricardo's 'Influence of Low Price of
Corn.' Malthus' 'Grounds for an Opinion,' and 'Rent.' Napoleon in France
(March). Treaty of Vienna. Waterloo. Second Treaty of Paris (Nov.). Bad
Season. New Corn Law. Luddite outbreaks. Low Corn prices. Low general

1816. Letters XLI to LI (Oct.).--Ricardo's 'Economical and Secure
Currency.' Bombardment of Algiers. War taxation kept up. Adoption of
Gold standard by Act of Parliament. Income-tax rejected. Agitation about
Civil List. Cobbett's cheap 'Political Register.' Spa Fields. Luddite
outbreaks. Petition of London Corporation. Continued fall of general
prices. Bad harvest. Rise in Corn.

1817. Letters LII to LXIV (Dec.).--Ricardo's 'Political Economy and
Taxation.' Malthus' 'Statements respecting the East-India College.'
Malthus' visit to Ireland. Ricardo's to Flanders, Germany, and France.
Death of Horner (8th Feb.). 'Biographia Literaria,' 'Revolt of Islam,'
'Lalla Rookh.' Committee on Sinecures. Suspension of Habeas Corpus.
Derby Insurrection. Blanketeers. Attack on Regent. Death of Princess
Charlotte. Hone's Trials. Fair Harvest. Rise in general prices.

1818. Letters LXV to LXVIII (Aug.).--Mackintosh at Haileybury. Ricardo
Sheriff of Gloucestershire. Death of Romilly. 'Childe Harold,' III, IV.
Congress of Aix-la-Chapelle. Secret Committees on disaffection. Act of
Indemnity. Poor Law Bill. Scotch Borough Reform. Debates on Resumption
of Cash payments. Royal Marriages. Renewal of Alien Act. General
Election (June, July). Manchester strike. Fair harvest. Increased
general imports and fall of general prices.

1819. Letters LXIX and LXX (Nov.).--Malthus F.R.S. Ricardo M.P. for
Portarlington. Act for Resumption of Cash payments. The 'Radicals.'
Factory Act. Poor Law Amendment. Penal Law Amendment. Peterloo massacre.
The Six Acts. Fall in Cotton. Trade healthier. Fair harvest.

1820. Letters LXXI to LXXV (Nov.).--Malthus' 'Political Economy.'
Malthus' visit to France. Ricardo's 'Funding System.' 'The Cenci.' Death
of George III. Insurrection in Spain. Congress of Troppau. General
Election. Queen Caroline. Cato Street Conspiracy. Political trials.
Reform movement. Popular Education. Penal law amendment. Good harvest.
Low prices of corn. Agricultural distress.

1821. Letters LXXVI to LXXXI (Nov.).--Foundation of Political Economy
Club. Death of Keats. King's Coronation, and Visit to Ireland. _De
facto_ Resumption of cash payments. Interference with the Press. 'Bridge
Street Gang.' Coalition of Liverpool ministry with the Grenvilles.
Retirement of Sidmouth. Insurrection in Greece. Death of Napoleon. Large
harvest, poor in quality. Fall in wheat. Low general prices.

1822. Letter LXXXII (Dec.).--Ricardo's 'Protection to Agriculture.'
Ricardo's visit to Italy and Switzerland. Death of Shelley. New Marriage
Act. New Corn Law. Wellesley in Ireland. Suicide of Castlereagh. Canning
at the Foreign Office. Wellington at Verona. Ashantee War. Dispute with
United States about Oregon territory. Habeas Corpus suspended in
Ireland. Good harvest. Low corn prices. Large importations of wheat from
Ireland. General prosperity. Agricultural distress.

1823. Letters LXXXIII to LXXXVIII (31st Aug.).--Malthus' 'Measure of
Value,' and article on Tooke. Malthus Associate of Royal Society of
Literature. Ricardo's 'National Bank' (written). Death of Ricardo, 11th
Sept. Essays of Elia. Byron in Greece. Burmese War. French invasion of
Spain. Recognition of South American Independence. Huskisson at Board of
Trade. Amendment of Navigation Laws. Canning's Jamaica circular.
Catholic Association. Poor harvest, but medium prices of corn. Low
general prices. Increased general imports.



  Accumulation, what it implies, 39, 47-50;
    of produce and of capital, 54;
    its effects, 45, 52, 71, 99, 168;
    Ricardo's difference from Malthus upon, 168, cf. 185-191, 203.

  'Additions to Essay on Population,' 105, 128.

  Agriculture, improvements, 8, 46, 59, 180;
    monopoly of home market, 56;
    distress, 3, 212;
    prosperity, 141;
    burdens, 3;
    restrictions in favour of home agriculture, see Corn Laws;
    Anon. tract on, 91.

  Allen, John, 6.

  America, its future prospects, 77;
    high wages in, 118, 197, 198, 203, 204, 205;
    profits, 41;
    Ambassador, 156;
    emigration to, 161.

  'Appendix' to tract on Bullion, 17;
    to 'Observations,' 61.

  Appreciation as distinguished from Depreciation, 82.

  Attwood, Mr., 3.

  Austin, H., of Gloucestershire, 117, 169.

  Austin, Mrs., daughter of Ricardo, 117, 213.


  Bain, Prof. A., 'Life of Jas. Mill,' Pref. viii, x, 44, &c.
    See Mill, Jas.

  Bank, Ricardo's speech at B.-court, 104;
    its bargains with Government, &c., 89, 110;
    its profits and Charter, 90;
    its bullion, 100;
    its notes, 102;
    cash payments, 115;
    incapacity of directors, 104, 185;
    'an unnecessary establishment,' 89;
    views on, 102.

  Balance of Trade, 11.

  Banks, Country, 89.

  Baring, Mr., 161.

  Basevi, 67, 108.

  Belsham, neighbour in Gloucestershire, 140, 159.

  Bentham, Jeremy, Pref. xi. seq., 3, 51, 55, 91, 140, 141, 151, 152,

  Berkeley, Col., 147.

  Berlin Decrees, &c., 27.

  Binda, Mr., 117, 125.

  Blake, Wm., F.R.S., 75, 115.

  Boddington, Mr., 6.

  Böhm Bawerk, Dr. Eugen von, Pref. xvii, 230.

  Bosanquet, Chas., 113.

  ---- Jacob, 113.

  Bowood, 141, 156.

  Bowring, J., Life of Bentham, 55, &c.

  'British Review,' 145, 147.

  Broglie, Duc de, 210, 211.

  Brougham, Henry, Pref. x, 63, 156.

  Buchanan, David (editor of 'Wealth of Nations'), 125, 128.

  Bullion Committee, 2, 12, 24, 25, 26, 32, 89; Outl. xix.

  Bullion, merchants, 3;
    every man a dealer in it, 10;
    debate in Lords, 26;
    Bank supplies of, 100;
    Ricardo's tract on, see Ricardo;
    as a commodity, 9.

  Burdett, Sir F., 55, 64, 152.


  Cairnes, J. E., 113.

  Capital, home and foreign, 7;
    when 'scanty,' 43;
    rapid increase without low rate of interest, 8;
    abundant, 18.
    See Accumulation and Profits.

  Carey, Henry C., 68.

  Carlile, Richard and Ann, case of, Pref. xi.

  'Champion' newspaper, 208.

  Chandler, Mrs., neighbour in Gloucestershire, 159.

  'Chronicle' newspaper, 104;
    Outl. xix.

  Clerk, George, 87, 125.

  Clubs, King of, 3, 5;
    note to III, 25, 110, &c.;
    Geological Club, 64;
    Political Economy Club, see Pol. Econ.

  Clutterbuck, Mr., 41, 152, 213.

  Cobbett, Wm., Pref. xv, 148, 159, 161, 162, 168, 208, 213.

  Cobden, Richard, Pref. x, 160.

  Commons, debates in, 64, 84, &c.

  Competition, 'general law of,' 10, 42, 51;
    its effect in equalizing profits, 195, 203;
    competition of sellers more effective than that of buyers, 173;
    acts feebly in some cases, 202, 203.

  Constant, Benjamin, 91.

  Consumption and Production, 36, 39, 185, &c.;
    and Accumulation, 45, &c.

  Continental System, 27.

  Coppleston, Dr., 212.

  Corn, demand for not unlimited, 4;
    corn laws, 34, 48, 58, 153, 201;
    Corn Committee, 42;
    new corn law, 64;
    corn as measure of value, 193, 221.

  Corn-prices, as regulating others, 34, 84, 90;
    relation to profits, 37.

  Cost of production, 175, &c.;
    as explaining value, 230, cf. 55.

  Coulson, Walter, 168.

  Countervailing duty on corn, 64, Pref. xi.

  Crombie, Alex., 82.

  Currency, 'redundant,' 11, 19;
    how affected by the Peace, 38;
    relation to foreign trade, 7 seq., 38;
    'Economical and Secure,' 96, 100, 103, 108, 112.
    See Bullion, &c.

  Custom house, delays, 137, 140.


  Debate, House of Lords on Bullion, 26;
    ditto on Bank Restriction, 150.

  Definitions deprecated by Say, 209;
    unfairly used by Malthus, 229, 237.

  Demand, unlimited, 34, 43, 44;
    effective, 36, 39, 43;
    its meaning, 42, 43, 54;
    relation to supply, 41, 42, 44, 148, 173;
    relation to market and natural price, 53, 148, 174, 176.

  Depreciation, Torrens' criticism of Malthus' use of, 75, 81;
    Tooke on depreciation, 27, 82;
    a public evil, 85;
    depreciation and exchanges, 15;
    depreciation and corn measure of value, 221.

  Destutt, De Tracy, 211.

  Distribution, to Ricardo the chief subject of Pol. Econ., 175;
    in case of wages and profits, 185, 189;
    of money in the world, 22.

  'Domestic competition,' bringing down unusual profits, 192 seq.

  Dumont, P. E. L., 3, 64, 210.


  Eckersall, Miss, 117.

  'Economical and Secure Currency.' See Currency.

  Edinburgh Review, 8, 10, 56, 65, 116, 120, 154, 170, 171, 184, 198,

  Elphinstone, W. F., 113.

  Empson (Wm.), 238;
    quotes letters of Ricardo's, 56, 65, 116, 120, 167, 175, 240.

  Encyclopædia Brit., 55, 157, 158, 165, 171.

  Essex, expenses of farming in, 97.

  Exchanges, with Hamburgh, 24, 32,
    with Holland, 27 seq.

  Exchequer bills, 90.

  Experience, danger of appeals to in Pol. Econ., 96.

  Exports, 7, 20, &c.;
    of bullion, 3, 14, 19, 25.
    See Imports.

  Extension of Market, chief cause of, 99.

  'External commodities,' 193, cf. 79.


  Facility of production, including skill, 93;
    affecting value, 170;
    affecting profits, 8;
    'the essence of high rents,' 101, cf. 127.

  Fact versus Principle, 18.

  Fall or rise of money and of goods compared, 194-197.

  Foligny, M. de, 137.

  Ford Abbey, 51, 140, 141.

  'Foreign commodities,' 79; cf. 193.

  Fragment of letter, 105, 216-219.

  'Fragment on Government' (Bentham's), 55.

  France, 24, 169, 170, 211; cf. 92, 93.

  French Revolution, 8, 151, 210.


  Gallois, the publicist, 211.

  Garnier (Germain), 212.

  Gell, Sir Wm., 173.

  General glut, 188 seq.;
    impossible, 14.
    See Over-production.

  General prosperity, 86.

  'General reasoning' versus 'repeated experience,' 190.

  Geological Society, 64, 75.

  George IV, his character, 172.

  Gilbart, J. W., 85.

  Godwin, Wm., 198, 206, 207.

  Gold, exportation prohibited, 28;
    unlike other commodities, 5;
    imports of, 24;
    conditions of exportation, 27.

  Goldsmid, Aaron Asher, 24.

  Grant, Chas., 130.

  Greenough, G. B., 75.

  Grenfell, Pascoe, 89, 96, 109.

  Grenville, Lord, 113, 150.

  Grote, Geo., 96, 157.


  Haileybury College, a student of, 87;
    pamphlets on, 113, 125, 126;
    Mackintosh Professor there, 149;
    others of the staff, 137;
    disturbances of students at, 104, 213;
    the subject before India House, 127, 130.

  Hamburgh, table of exchanges with, 24, 32, 33.

  Hamilton, Prof., 136, 137.

  Hardwicke, Lord, 42.

  Harvest, effects of bad, 21, 139.

  Held, Adolf, Pref. xv.

  High price of raw produce, its causes and effects, 47, 90;
    Ricardo's views on it change, 126;
    Malthus' view discussed, 127.

  Hitchings, Mr., 134.

  Hobhouse, 177; Miss, 159.

  Holland, table of exchanges with, 28-31;
    visits to, 118.

  Holland House, 125, 207.

  Holland, Dr., 151.

  Horner, Francis, 6, 81, 115.

  Hughan, Thos., West India Merchant, 12.

  Humboldt, Alex., 138.

  Hume, J. Deacon, 27.

  ---- Joseph, 96, 133, 208, 240.

  Hunt, 'Orator,' 152, 161, 163.

  Hone, William, 45.


  Idleness of the inhabitants of fertile lands, 138;
    cf. Otaheite.

  Impey, Mr., 131.

  Imports, 4, 7, 12, 21, 196;
    of bullion, 25, &c.

  Income tax, 112, cf. Pref. xv.

  India, E. I. College, see Haileybury.
    E. India Co., its profits, 50;
    illustrations from, 202, &c.;
    Mill's book on, 146, 147, 149.

  'Inquiry into principles of Malthus relative to Demand,' 191.

  Interest, rate of, 8, 35, 41, &c.
    See Profits and Capital.

  Interest, of nations and of individuals, 18, 19;
    of mankind, 188, 198.

  Ireland, Malthus' visit to, 137, 138.


  Jackson, Randle, 113, 114, 130.

  Jacob, William, 63, 67.

  Jamaica, premium on bills in, 12, 13.


  King, 'of Clubs.' See Clubs.

  King, Lord Peter, 148, 150.

  Kinnaird, Douglas, 130.

  Knyvett's concert, 2.


  Labour, as measure of value, 214 seq.;
    as cause of value, 192.
    Other references _passim_.

  Labourers, as over-reached by employers, 139;
    as injured by depreciation of money, 85.

  Lansdown, Marquis of, 141, 156.

  Lauderdale, Lord, 56, 57, 65, 115.

  Leases in relation to prices, 47, 61.

  Le Bas of Haileybury College, 137.

  Level of currency, 16, 19, 34, 196.

  Lisbon, gold imported from, 24.

  Liverpool, Lord, letter of Torrens to him, 111;
    motion in House of Lords, 150.

  Locke, John, 221.

  Lords Committee on Corn, 42;
    debates on Currency, 26, 150.

  Luxury, of idleness, 138;
    love of luxuries displaced by other motives, 39;
    luxuries curtailed by dear corn, 34, 35.


  MacCulloch, J. R., articles on Ricardo in Edinburgh Review, 154, 184;
    and in Scotsman, 146, 184;
    on Malthus in Scotsman, 168;
    on Value, 221, 230.
    Other references, Pref. xii, xvii, 44, 49, 171, 240.

  Macdonnel, Mr., 160.

  Machinery, Ricardo's views of, changing, 184, cf. Pref. xvii;
    effect of improved, 99, 102, 188.

  Mackintosh, Sir James, 6, 81, 149, 151.

  Mallet, Mr. 140, 149.

  Malthus, T. R., character, see Pref. viii;
    letter to Place, 207;
    travels in France, 169;
    article on Depreciation, 10, 27;
    tract on Rent, 58, 127, 128;
    'Political Economy,' 123, 138, 145, 166;
    Say's Letters to him, see Say;
    'Observations' and 'Grounds of an Opinion,' 56, 61;
    Essay on Population and Additions, 105, 107, 119, 128, 138, 143,
    Notes on Adam Smith, 56;
    tract on Measure of Value, 214 seq.;
    tracts on East India College, 125, and see Haileybury;
    Utilitarian view of his subject, 175;
    article (by him?) on Godwin, 198, 206;
    Death, 45.

  Marcet, Dr., 141; Mrs., 132, 133.

  Market and Mint price, of bullion generally, 27;
    of gold, 150;
    of silver, 24, 115.

  Measure of Value, cost, 175;
    corn, 193 seq., 214 seq.;
    gold, 230, 231.

  Mill, James, Pref. viii, ix, xi, 44, 50, 51, 55, 92, 103, 109, 117,
               131, &c.;
    his 'Political Economy,' 172.

  ---- John S., 25, 132, 172.

  Mocatta and Goldsmid, 24.

  Money, like other commodities, 73;
    on what its value depends, 78;
    paper money ought to be Government monopoly, 89;
    fall or rise unimportant in comparison with that of goods, 198;
    as measure of value, 225, 230.

  Monopoly and rent, 56, 61;
    prices, 56, 202.

  'Moral Sentiments,' Pref. xiii.

  Motives for production, adequate and inadequate, 38-40, 185.

  Murray, John, the publisher, 106, 108, 112, 127, 133, 207.

  Mushet, Robert, First Clerk to Master of the Mint, 1, 3.


  Napier, Macvey, 157, 158.

  Napoleon, 27, 70, 84, 91.

  National estimate of profits, 40;
    national interest, 18;
    growth of national wealth, 40.

  'Natural level' of money, 19, cf. 34, &c.;
    price of corn, 71;
    wealth, 182.

  'Neat produce,' 181;
    revenue, 178;
    surplus from land, 180.

  Necessaries, 138, 197, 215, 224.

  Necker, M., 91, 210.

  Newmarch, William, 26.

  Nominal and real value, 7, 198;
    wages, 123.

  Notes, to Letter II (Supply and Demand);
    III (King of Clubs);
    XII (Tooke on Depreciation and Exchanges);
    XVIII (Corn Committee, 1814);
    XX (Adam Smith on Indian trade);
    XXI (Bentham);
    XXIX (Torrens);
    XXXI (Depreciation);
    XXXV (Say's Correspondence with Ricardo);
    XLII (MS. mentioned in letter);
    XLIV (Torrens and Ricardo);
    LXIV (Say's Correspondence);
    LXVII, LXVIII (Ricardo in Parliament);
    LXIX (I) (Sinking Fund), (II) (Cobbett);
    LXX, LXXV, LXXXI (Say's Correspondence);
    LXXX (Francis Place);
    LXXXIII (Labour as Measure of Value);
    LXXXIV (Corn as Measure of Value);
    LXXXVI (Cost and Value);
    LXXXVIII (Death of Ricardo).


  Omnium, 24, 37, 85.

  Otaheite, its fertility, 93 seq., 101.

  Overproduction, 14, 38, 39, 170, 178, 185;
    cf. note to II.

  Owen, Robert, Pref. xi, 170.


  Paget, Thos., 213.

  Parsimony, 39, 190.

  Peace, economical effects of, 38, 84.

  Peninsular war, metal currency out of circulation in, 100.

  Phelps, of Gloucestershire, 141.

  Phillips, William, 64, 81.

  Pierstorff, Dr. Julius, 230.

  Place, Francis, Pref. ix, 43, 96, 207, 209.

  Political Economy, of what advantage to governments, 171;
    inquiry not into production but into distribution, 175;
    into effects not into motives, 185;
    into principles not facts, 18;
    corn, labour, and commodities the all-important subjects, 198;
    two tasks of Pol. E., Pref. xviii.

  Political Economy Club, 182, 183, 208, 209.

  Poor Rates, effect on quantity of available food, 107, 144;
    Laws, 126, 144, 225.

  Population, principle of, 42, 69, 180, 186, 189;
    turned by Ricardo against arguments of Malthus, 68, 70, 98, 99, 101,
                                                    205, 215;
    whether food precedes, 144.

  Prices. See Wages, Profits, &c.

  Private work, its effect on general demand for labour, 98.

  Productive and unproductive consumption, 185 seq.

  Profits, rate of, 8, 35, 36, 38, 39, 40, &c.;
    on what hypothesis everywhere the same, 58;
    rate depends on what, 34, 46, 52, 53;
    how related to wages, 49, 52, 97;
    to facility of production of food, 45, &c.;
    cannot be at two rates in same country, 192;
    rate lowered by commercial restrictions, 36, 38;
    when permanently high, 41.


  Quantity and Value, 3, 4, 5, 188, &c.;
    and Profits, 46, 188;
    not quantity but proportions determinable, 175, cf. 211.

  Quarterly Review, 179, 212.

  Queen Caroline, 173, 177.

  ---- Sophia, 145.

  Quin, Mr., 168.


  Radicalism, 163.

  Real price, 135;
    value, 7, 198;
    wages, 123.

  Redundancy of Money, 10 seq.;
    permanent, 21;
    how cured, 22, 23;
    of labour and capital impossible, 174.

  Reform, views of Ricardo and Malthus, Pref. ix, 55, 151, 152, 163,

  Relief Works, 126, 128.

  Rent, Malthus' tract on, 58;
    always a transfer not a creation of wealth, 59, 155;
   neglected by Say, 181;
    other references, _passim_.

  Restrictions on Corn trade. See Corn.

  Resumption of cash payments by the Bank, 115, 150, 167.

  'Retrograde Capital,' 39.

  Ricardo, David, character and habits. See Pref. viii seq.;
    Corn pamphlet, 64;
    Bullion pamphlet, 21, 72;
    Appendix to ditto, 7, 17, 18, 23, 27, 72, 109; cf. Outl. xix;
    Sinking Fund, 55, 62, 157, 160;
    'Political Economy and Taxation,' 114, 132, 135, (2nd ed.) 166, 170,
                                      175, 176, 180, 184, 206;
    'Economical and Secure Currency,' 100, 103, 110;
    other MSS., 178, 228;
    Sale and popularity of works, 112, 166;
    converts, 169, 173;
    walks with Mill, 150;
    patriarch, 146;
    optimism, 72, 183;
    diffidence, 157, 158, 181, 200;
    'a poor master of language,' 176, cf. Pref. ix;
    travels in France, &c., 136, 210;
    profits on Stock Exchange, 85, 147;
    fear of dogmatism, 149, 174;
    appearance of paradox, 145;
    misunderstood, 178, 179, 212;
    Sheriff of Gloucestershire, 147, 149, 151, 155;
    M.P. for Portarlington, 152, 154;
    Death, 240;
    Letters not in this collection, 157, 184;
    public services, 167;
    speeches referred to, _passim_.
    quoted, Pref. xv, 3, 4, 160, 162, 221.

  Ricardo, David, son of above, 41, 87.

  ---- Mortimer, 41.

  ---- Osman, 41, 137, 191.

  Rogers, George, Pref. ix.

  Roget, Dr., 141.

  Romilly, Sir Samuel, 3, 140, 141, 152.

  Rush, American Minister, 156.


  Saving, 'excessive,' 38, 39, 188.

  Say, J. B., Letters to Ricardo;
    Notes to XXXV, LXIV, LXX, LXXV, LXXXI;
    Letters to Malthus, 169, 173, 178, 181;
    other references, Pref. vii, 51, 53, 82, 91;
    ('travaillez toujours'), 105, 125, 145, 154, 173, 192;
    severely characterised, 178, 179.

  ---- Horace, 91.

  ---- Louis, 211.

  Scarlett, Mr., 6.

  Scotch Farmers, 61.

  'Scotsman' newspaper, 146, 168, 184.

  'Services,' Say's doctrine of, 170, 174, 181, 209.

  Sharp, Richard, 2, 25, 149, 151.

  Silver, as a standard, 101;
    under mint price, 115;
    over ditto, 24.

  Sinking Fund, Ricardo's article in Encyclopædia Britannica,
    see Ricardo.

  Sismondi, 210, 211.

  Smith, Adam, on Indian trade quoted, 50.
    Other references, _passim_.

  ---- Robert and Sydney, 6.

  ---- Thos., of Gloucestershire, 45, 54, 116, 118, 125, 138, 140,
                                  173, 214.

  Smyth, Wm., 81, 82, 83, 139, 149.

  Social wealth, 182.

  Spain, New, 138.

  Spence, William, 44, 76.

  Stael, Baron de, 210, 211;
    Madame de, 91, 210.

  Stagnation, not overproduction but derangement, 189, 191.

  Standard of living, 138, 197.

  Steuart, Sir Jas., 16, 144.

  Stocks, up and down in war times, 85;
    Stockholders sufferers, 62.

  Subsidies, 1, 15, 88;
    effect on Exchanges, 15, 20 seq.;
    relation to price of corn, 88.

  'Sun' newspaper, 115.

  'Superabundant supply,' 3, and whole of note to II.

  'Superior genius,' 174.

  Supply, in relation to demand, 173-175, &c.
    See Demand.


  Tables, exchange with Hamburgh, 24, 33;
    with Holland, 28-31.

  Taxation, relation to Rent, 59, 65;
    not a cause of dear corn, 64;
    too little considered by Economists, 164;
    taxation and altered value of money, 3;
    Say's views on English, 174, 179.

  Tennant, Smithson, 2.

  Theoretical and practical bias, 96;
    theory and experience, 78.

  Thornton, Henry, 25, 26.

  'Times' newspaper, 130.

  Tithes, 65, 171.

  Tooke, Thomas, 26, 27, 81, 82, 184, 191, 212.

  Torrens, Robert, 63, 64, 65, 75;
    life, 76, 79, 81, 82, 90, 111, 112, 115, 116, 133, 149, 168, 170,
          182, 195, 208.

  Tracy, Destutt de, 211.

  'Traveller' newspaper, 168.

  'Trienniality,' 55.


  Ultra-Bullionists, 27.

  Utility and Truth of propositions, 53, but cf. 182;
    Utility and Value, 92, 93, 173, 174, 179, 182, 183.


  Value, real and nominal, 7;
    of currency, 82;
    doctrine of Value a cardinal point in Ricardo's system, 149;
    how viewed by Malthus, 171, 175;
    and by Say, 92, 93, 173, 181, 209;
    Measure of Value, 148;
    Ricardo's doctrine modified, 139;
    Quantity and Value, 3 seq., 53.
    See also Measure.

  Vansittart, Nicholas, 3, 5.

  'Verbal disputes in Political Economy,' 192, cf. 165.


  Wages, foundation of capital, 49;
    do not depend on day's produce, 97;
    in proportion not to the produce but to the demand for labour, 98;
    'Real,' 123;
    too high and too low, 186, 188;
    depends on facility of obtaining necessaries, 34;
    effect of high wages on prices, 39;
    wages low in 1817, 142;
    remedy for low wages, 166.

  Wants of men unlimited, 34, 45, 49;
    effects of changing wants and tastes, 1, 38, 49, 53.

  War, effects on trade, 8, 9, 39, 72, 84;
    Peninsular, 100.

  Warburton, Henry, 96, 115, 117, 139, 140, 149, 172.

  Wealth, as abundance, 211;
    proper sense, 153;
    natural and social, 182.

  Wellington, Duke of, 84, 87.

  West, Edward, 63.

  Western, Mr., 213.

  Westminster Election, 152.

  Wetenhall, tables, 9, 24, 60.

  Whishaw (or Wishaw), John, 2, 83, 118, 138, 139, 148, 149, 163.

  Whitbread, Samuel, 63, 84.

  Wilberforce, William, Pref. xi, 89.

  Woolaston, Dr., 139.

  Workmen, combinations, 144.


  Young, Arthur, 97.



[1] Cf. Letter LXXX, p. 200, cf. 236, etc.

[2] See the obituary notice in Annual Register 1823, which appears (on
comparison with MacCulloch's Preface to Ricardo's Works, p. xxxii) to
have been written by James Mill. See also Prof. Bain's Life of James
Mill, p. 210.

[3] He left £700,000. Gent. Mag. 1823.

[4] Letter to George Rogers, 11th Jan. 1832, in the 'Place' Collection,
British Museum.

[5] The political philosophy of Malthus is described by the present
editor at some length in 'Malthus and his Work,' Book III.

[6] Brougham's testimony is the more valuable because he is by no means
a disciple or admirer of Ricardo as an Economist. 'Statesmen of the Time
of George III,' vol. ii. pp. 166 seq. For other authorities on the
subject see Joseph Garnier's life of Ricardo in Dict. de l'Écon. Polit.,
and Bain's Life of Jas. Mill.

[7] See note to Letter XXI.

[8] March 26, 1823.

[9] Speech of March 18, 1823.

[10] May 21, 1823, etc.

[11] June 17, 1822.

[12] April 29, cf. May 7, 1822.

[13] MacCulloch's 'Funding and Taxation,' Preface to 1st Ed. (1845).

[14] Bentham, 'Princ. of Morals and Legislation,' I, IV.

[15] Ricardo's Wks. p. 554 (from 'Observations on Parliamentary

[16] B. IV, ch. IX, middle, p. 307. 1 (McCulloch's ed.).

[17] E.g. by Held, 'Sociale Geschichte Englands,' article Ricardo, and
by Western in the House June 11, 1823, more coarsely by Cobbett in
passages quoted in Note to Letter LXIX, and many others.

[18] June 11, 1823, in reply to Western.

[19] E.g. Grenfell, March 11, 1823.

[20] Feb. 21, 1823, etc.

[21] May 30, 1823. He adds a crumb of criticism: Cobbett underestimated
the effect of machinery in throwing men out of work.

[22] E.g. 'The greatest advantage will be sought and obtained at all
times by the employer of capital.' Evidence before Lords' Resumption
Committee, 1819, Ques. and Answ. 75.

[23] Letter LXXVI.

[24] Ch. xxxi. of Pol. Ec. and Tax.; a chapter added in the 3rd ed.,

[25] Speech of 9th May, 1822.

[26] This had been acutely observed (without aid from these Letters) by
a writer in the Harvard 'Journal of Economics,' July, 1887.

[27] Ricardo, Pol. Ec. and Tax. Sect. I.

[28] Robert Mushet of the Mint. He published 'An Enquiry into the
Effects produced on the National Currency and Rates of Exchange by the
Bank Restriction Bill' in this very year 1810.

[29] John Whishaw, of Lincoln's Inn, the editor of Mungo Park's 'Life
and Travels' (1815, etc.): see Edin. Rev., Feb. 1815; Brougham's
'Statesmen in Time of George III,' ed. 1855, i. 369.

[30] Richard Sharp, called 'Conversation Sharp,' author of 'Letters and
Essays in Prose and Verse' (1834), member of the Bullion Committee.

[31] Probably Smithson Tennant, the chemist.

[32] P. E. L. Dumont of Geneva, the friend of Mirabeau and Romilly, best
known as the admirer of Bentham, whose works he brought out in French as
a labour of love. See Bentham's Works, ed. Bowring, vol. x. pp. 184-5.
Like Whishaw, Sharp, and Tennant, he was a member of the 'King of
Clubs.' See following letter.

[33] See note at the end of this letter.

[34] The same phrase occurs in Appendix to 'High Price of Bullion'
(Ricardo's Works, p. 297) etc.

[35] Malthus regarded the change in the currency as in some cases the
effect (and not the cause) of a change in trade. See references under
Letters VI, XII.

[36] Fastened with wax at one corner.

[37] Probably 1793 to 1810. See Malthus' Pol. Econ. (1820), p. 324, etc.

[38] Probably Wealth of Nations (McCulloch's ed., 1863) I. xi. 95. 1,
where the precious metals are said to be especially useful in the case
of a roundabout trade of consumption. Cf. Edinb. Rev. Feb. 1811, p. 362.

[39] Wetenhall's 'Course of Exchange.' See note to Letter XI.

[40] Edinb. Review, Feb. 1811. See 'Malthus and his Work,' p. 285.

[41] Some information on that point had been given by Mr. Thomas Hughan,
a West Indian merchant, before the Bullion Committee (Evidence, pp.

[42] Franked by Richard Sharp.

[43] See note to Letter XII.

[44] The passages were probably the first three or four chapters of the
third book of Sir Jas. Steuart's 'Inquiry into the Principles of
Political Economy' (1st ed. 1767), more especially ch. iii, 'Is the loss
which the course of exchange marks upon the trade of Great Britain with
France real or apparent?'

[45] Ricardo's 'Appendix' to the fourth edition of his tract on the
'High Price of Gold Bullion.' This Appendix embodies most of the
opinions set forth in these early letters. See his Works (ed. McCulloch)
pp. 291 seq. Cf. 'Malthus and his Work,' p. 287.

[46] 'It is self-interest which regulates all the speculations of trade;
and, where that can be clearly and satisfactorily ascertained, we should
not know where to stop if we admitted any other rule of action.'
Appendix to 'High Price of Bullion' (Works, p. 292).

[47] See above, p. 15.

[48] See 'High Price of Gold Bullion,' Ricardo's Works (McCulloch's
edition), pp. 264, 282.

[49] The Fragment on p. 105 should perhaps come here.

[50] Aaron A. Goldsmid, of Mocatta and Goldsmid, bullion brokers. See
Report of Bullion Committee, Evidence of Witnesses, pp. 1-18, 61. He was
nephew of Abraham and Benjamin Goldsmid, who died by their own hand in

[51] Wetenhall got his information from Mocatta and Goldsmid. See
Bullion Report, Evid. p. 2.

[52] Henry Thornton, M.P., member of the Bullion Committee, author of
'An Enquiry into the Nature and Effects of the Paper Credit of Great
Britain,' 1802. See J. S. Mill, Political Economy III. xi. § 4.

[53] Part III. ch. i. § 5: 'On the Opinions of the Bullion Committee on
the Phenomena of the Circulation in 1809-1811,' pp. 100-110.

[54] See especially Letters IV and VI.

[55] Tooke, Hist. of Prices, p. 359.

[56] As was shown also in 'Letters on the Corn Laws,' by H. B. T. (J.
Deacon Hume.) London, 1834.

[57] When the price of gold in Holland is above 10 p.c. premium, and the
mint in England is open to the public, silver will be the standard in
London. Consequently its market and mint prices will agree, and gold
will be above the mint price. When under 10 p.c., silver will be above
the mint price, and gold will be the standard.

When the price of gold in Holland was above 9 p.c. premium, the English
£ sterling would be estimated in silver and therefore the par of
exchange would invariably continue 38.61 currency; and 37.48 Banco if
the agio were 3 p.c.

[58] The agio is variable, but is supposed to be constant in this table
for the purpose of calculation.

A marc weight = 3798 grains troy. A marc is divided into 5120 onsen[a],
200 onsen[a] of pure silver in a guilder. Gold and silver are sold by
the marc in Holland perfectly pure[b].

British standard--gold 11 fine, 1 alloy; silver 11·2 fine, 18 dwts.

    [a] The word is indistinct.

    [b] The gold mark is meant. See Adam Smith's account of the
        Bank of Amsterdam in 'Wealth of Nations,' IV. iii. p. 212 n.
        (McCulloch's ed.).

[59] A good commentary on these Tables and on the whole of these early
letters will be found in the Evidences of the Witnesses examined before
the Bullion Committee (1810).

[60] His favourite country-seat, in Gloucestershire.

[61] This actually happened; and the letter is re-addressed first to
'Aylesbury' and then to 'Hayleybury'.

[62] Here and elsewhere written 'expence'.

[63] Ricardo's second son. The eldest was Osman, the third Mortimer.
Ricardo had five daughters, three of whom were married, one to Mr.
Clutterbuck, mentioned later in the correspondence. (See Gentl. Mag.
1823, pt. ii, 376.)

[64] Announced as early as 1807 in the reply to Spence ('Commerce
Defended'). Ricardo's friendship with James Mill seems to have begun
about the year 1811: 'With an estimate of his [Ricardo's] value in the
cause of mankind, which to most men would appear to be mere
extravagance, I have the recollection of a dozen years of the most
delightful intercourse, during the greater part of which time he had
hardly a thought or purpose, respecting either public or his private
affairs, in which I was not his confidant and adviser.' Letter of Jas.
Mill to MacCulloch, 19th Sept. 1823 (Bain's Life of Jas. Mill, p. 209).

[65] Thomas Smith of Easton Grey. His name is on the list of subscribers
to Hone's Testimonial, 1818.

[66] Malthus was in the habit of spending his Christmas with his wife's
relations at St. Catherine's near Bath, and it was in one of these
visits that he died there, 1834. See Malthus and his Work, p. 415.

[67] Here and elsewhere spelt 'favoring'.

[68] Ed. 5th (1789). In McCulloch's ed. (1863), pp. 336, 337. See
quotation at end of letter.

[69] See note at end of this letter.

[70] Mill had permanently taken up his abode with Bentham there in the
summer of this year (1814). His biographer gives a long description of
the house (_Life of Jas. Mill_, pp. 129 seq). It is in the valley of the
Axe, four miles from Chard, on the borders of Devonshire and Somerset.

[71] The first sentences of this letter are quoted by Empson, Edinb.
Review, Jan. 1837, p. 498.

[72] He was writing the tract entitled: 'Grounds of an Opinion on the
Policy of Restricting the Importation of Foreign Corn, intended as an
Appendix to "Observations on the Corn Laws."' It might however have been
the tract on Rent to which Ricardo is here alluding. See Letter XXIII.

[73] Here as elsewhere spelt 'endeavor.'

[74] 'An Inquiry into the Nature and Progress of Rent and the principles
by which it is regulated.' 1815.

[75] In the original, 'trade' has been written first and then struck out
in favour of 'stock.'

[76] 'An Essay on the Influence of a Low Price of Corn on the Profits of
Stock, shewing the inexpediency of Restrictions on Importation, with
Remarks on Mr. Malthus's two last Publications,' 1815. Ricardo's Works
(McCulloch), pp. 367-390.

[77] Cf. 'Nature and Progress of Rent,' p. 30, note.

[78] 'Rent,' pp. 21, 34. In the latter, Malthus says 'it would return
only the common profits of stock with little or no rent.' Cf. ib. p. 36.

[79] 'Grounds of an Opinion.' See note on Letter XXII, p. 56.

[80] Probably the passage in Book II, ch. v, quoted by Ricardo in Pol.
Econ. ch. ii (on Rent), p. 39 foot (McCulloch's ed. of Works). It
contains the Physiocratic paradox that in manufactures nature does
nothing, man does all; in agriculture nature does nearly all and man
very little.

[81] Ricardo's opinion, expressed frequently and emphatically afterwards
in the House of Commons, and most fully on paper in his article on the
Sinking Fund written for the Encycl. Brit., was that no safeguards could
prevent the Sinking Fund from being appropriated by a needy government,
and that it was therefore from the point of view of the public interest
a mere snare and delusion.

[82] Cf. Ricardo's Pol. Econ., ch. vi. 65 (ed. McCulloch).

[83] In his 'Letter to Samuel Whitbread, Esq., M.P.; being a Sequel to
Considerations on Protection of Brit. Agriculture, with Remarks on the
Publications of a Fellow of University College, and Mr. Ricardo, and Mr.
Torrens.' Dated 25th Feb. 1815. He discusses West in a long 'Note,' and
the two others in a longer 'Appendix.' Ricardo (whose tract on 'The
Influence of a Low Price of Corn on the profits of Stock' he has just
read) has, he says, 'little practical knowledge,' but brings forward
'truisms mixed with vagaries, clothed in the technical cant of political
economy.' Torrens does not escape much more easily.

[84] The New Corn Law, prohibiting importation when the home price of
wheat should be under 80_s._ a quarter.

[85] Possibly William Phillips, F.R.S., F.G.S., the Quaker and eminent
mineralogist and geologist, member of the Geological Society. Born 1773,
died 1828. Ricardo in early life was himself devoted to geological

[86] Part of this letter (5th sentence to 8th) is quoted by Empson,
Edinb. Review, Jan. 1837, p. 499.

[87] 'Essay on the External Corn Trade,' 1815, Part II, ch. ii: 'Is the
general principle' of free trade 'liable to limitations in the case of a
country more heavily taxed than other growing countries?' (To which
Torrens answers: No), ch. iii. Should there be limitations where an
artificial range of prices has been created by continued protection? (To
which he answers: No, but the re-introduction of free trade should be
gradual.) It was probably on such subjects as Tithes and Taxation that
he differed most from Ricardo. On the whole, Torrens stands rigidly by
Adam Smith as against his successors, especially Malthus. See Note to
Letter XXIX.

[88] Malthus did not carry out his intention. Though there are
occasional references in his later books to Torrens' 'Production of
Wealth,' there seems to be nothing like a reply to the strictures in
this 'Essay.'

[89] Here as elsewhere spelt in the old fashion 'expences.'

[90] Probably one of the two he published on the Currency in 1812 and
1813 respectively.

[91] MS. hopelessly torn.

[92] The name appears as Baswi in Ricardo's letters to Say. Even in
Ricardo's clear handwriting Basevi and Baswi would be hardly

[93] Probably the statement given at the beginning of next letter.

[94] This really happens in the cases made prominent by Mr. Carey,
'Social Science,' I. iv (1858), where historical circumstances have made
cultivation begin with indifferent instead of fertile soils.

[95] Because the remaining six would purchase what eight purchased

[96] Napoleon landed near Frejus on 26th Feb., 1815.

[97] Or rather in the Appendix to it, p. 292 (McCulloch's ed.).

[98] See the Note at the end of this letter.

[99] Ricardo was one of the original members of the Geological Society.
See McCulloch's ed. of his Works, p. xvii.

[100] Blake, probably William Blake, author of 'Observations on the
principles which regulate the course of Exchange and on the present
depreciated state of the Currency,' 1810.

[101] Probably G. B. Greenough, F.R.S., F.S.L., and President of the
Geological Society, who wrote on Geology, 1819.

[102] They were only foreign in the sense of being articles, not only
manufactured in this country but also imported from abroad, e.g. soap
(under a heavy duty) from France, Italy, and Spain.

[103] Probably William Smyth, Professor of Modern History at Cambridge,
friend of Mackintosh and Horner.

[104] Dr. Alexander Crombie, schoolmaster, theologian, and economist,
had published in the Pamphleteer, vol. x, in 1813, a 'Letter to David
Ricardo, containing an analysis of his pamphlet on the Depreciation of
Bank Notes'. About a year after the date of this letter he wrote
'Letters on the Agricultural Interest'. When Torrens did not get his
inspiration from Adam Smith he seems to have got it from Dr. Crombie,
for whom he had profound respect. See Torrens' Essay on Money and Paper
Currency, 1812, and Essay on External Corn Trade (Preface), 1815.

[105] Hopelessly torn by the seal.

[106] Probably they had had a private conversation on the subject. On
the 28th June Whitbread made a lengthened speech in the House to this

[107] A loan of 36,000,000 was contracted in 1815. See Gilbart's
'History and Principles of Banking' (2nd ed. 1835), p. 54.

[108] Pascoe Grenfell, member of the Bullion Committee, a strong
supporter of Wilberforce in the matter of Emancipation. His motions in
Parliament on the subject of the Bank of England are given in the
appendix to Ricardo's 'Economical and Secure Currency' (Wks. p. 451), a
pamphlet which by its author's admission (p. 395) owes much to him.

[109] Cf. Ricardo's Pol. Econ. and Tax. ch. vi, Profits.

[110] Probably 'An Address to the Nation on the relative importance of
Agriculture and Manufactures, with remarks on the doctrines of Mr.
Malthus,' 1815.

[111] High Price of Corn, 1815.

[112] Spelt throughout 'Othaeite.'

[113] Probably Henry Warburton, mentioned e.g. in Personal Life of Geo.
Grote, p. 75. In a MS. letter from Joseph Hume to Francis Place, 19th
Oct., 1839 (in the Place Collection), he refers to Mr. Warburton as a
friend of Place who had been too much neglected by the Whigs in office.

[114] In Arthur Young's Farmer's Calendar, 1815, p. 501, £10 are said to
be the average capital needed for stocking a farm in 1814, and £15 are
counted high.

[115] Probably the 'Proposals for an Economical and Secure Currency,
with observations on the profits of the Bank of England as they regard
the public and the proprietors of Bank Stock.' See Works (McCulloch's
ed.), pp. 391 sq. One 'proposal' was that the Bank should be obliged to
deliver uncoined bullion, at the Mint price (instead of coined money) in
exchange for its notes.

[116] Presumably Ricardo's first pamphlet, of 1810. Cf. Works
(McCulloch's ed.) p. xxiii.

[117] They amounted to 27,300,000 ('Econ. and Sec. Currency,' Wks., p.
450, but cf. p. 413).

[118] Probably 'Econ. and Secure Currency.' See note to Letter XLII.

[119] See Malthus and his Work, p. 422.

[120] 'Additions to the 4th and former editions of an Essay on the
Principle of Population,' published in June 1817, both in the separate
form and as part of the 5th edition of the Essay.

[121] The Post Office London Directory of the time gives Ricardo's full
City address as 4 Shorter's Court, Throgmorton Street.

[122] The advice was taken.

[123] Which gave him his first stimulus to economical study when he read
it at Bath in 1799. See McCulloch's ed. of Wks., pp. xvii, xviii.

[124] See note at end of this letter.

[125] 'Economical and Secure Currency.' See note to previous letter.

[126] Cf. 'Econ. and Secure Currency,' Wks., pp. 433, 434.

[127] Letter to the Earl of Liverpool on Agriculture, 1816.

[128] The edition reprinted in Wks., ed. McCulloch, pp. 391 seq.

[129] The question was whether the Income Tax, being a war tax, was to
cease with the war. The Ministry were forced to yield.

[130] Not Chas. Bosanquet who wrote on the Bullion Report, but Jacob
Bosanquet, a Director of the East India Company.

[131] Letter to Lord Grenville occasioned by his observations on E.
India Co.'s education of Civil Servants, 1813.

[132] See Malthus and his Work, p. 424.

[133] Hon. Wm. F. Elphinstone, a Director of the East India Company.

[134] Written without a capital, as the days of the week usually are in
these letters.

[135] From the description which follows, this must be the last section
('Mr. Malthus's opinions on Rent') in 'Political Economy and Taxation,'

[136] From Letters LII, LIII, it is clear that the printer had to wait
for the whole MS. much longer than was at first intended.

[137] This sentence is quoted by Empson, Edin. Review, Jan., 1837, p.

[138] Essay on Population.

[139] Part of this sentence is quoted by Empson in Edin. Review, Jan.,
1837, p. 498.

[140] See Malthus, Pol. Econ. (1820), p. 241: 'The real wages of labour
consist of their value, estimated in the necessaries, conveniences, and
luxuries of life.' The 2nd ed. (1836) adds, 'which the money wages of
the labourer enable him to purchase' (p. 217). In 'Definitions' (1827)
he says 'command' instead of 'purchase,' (p. 239).

[141] 'Statements respecting the East India College,' etc., 1817.

[142] See the long and interesting Report of Select Committee of House
of Commons on the Poor Laws. Ann. Reg. 1817, Chron. pp. 263-302. Cf.
Ann. Reg. 1816, Chron. pp. 151 and 345.

[143] 'Statements respecting the East India College,' 1817.

[144] Rent, p. 8. The second is the fact that the necessaries of life
create their own demand by leading to an increase of population.

[145] P. 40.

[146] Ibid., p. 15.

[147] The comments in this letter occur at greater length in the last
chapter of Ricardo's 'Pol. Econ. and Tax.': 'Mr. Malthus's opinions on
Rent' (1st ed., 1817), McC. ed., pp. 243 seq.

[148] 'Additions to the Fourth and Former Editions of an Essay on the
Principle of Population,' etc., 1817.

[149] Should be p. 17.

[150] P. 21.

[151] 10,488,000 is the figure given by Malthus, l. c. p. 18.

[152] Should be p. 21. Ricardo may have had a proof before him.

[153] Charles Grant, M. P., later Lord Glenelg. He was a Director in the
preceding year (1816).

[154] Hon. Douglas J. W. Kinnaird.

[155] Pol. Econ. and Tax. ch. xxxii.

[156] One of whom was probably James Mill. See 'Autobiography of John S.
Mill,' p. 27.

[157] 'Conversations on Political Economy' (anon. 1816), in which the
interlocutors are 'Mrs. B.' and 'Caroline.'

[158] In original, 'addition.'

[159] On the External Corn Trade.

[160] Joseph Hume, M. P. for Melcombe Regis, and later for Montrose. He
had much knowledge of India, and was at that time (vainly) endeavouring
to get a seat on the Board of Directors.

[161] I.e. the note which now appears Ric. Wks., p. 253, ('Upon showing
this passage to Mr. Malthus at the time when these papers were going to
the press,' etc.). In that note Malthus is made to say he used the words
real price twice by mistake in Ricardo's sense, cost of production,
instead of his own, power of purchasing other commodities.

[162] Professor of Hindu literature and of the History of Asia, at
Haileybury College.

[163] Professor of Mathematics.

[164] M. de Foligny, according to the E. India Register for this year,

[165] Probably the 'Petit Volume contenant quelques aperçus des Hommes
et de la Société.' See Oeuvres Diverses, pp. 661 seq.

[166] See the passages quoted by Malthus, Pol. Econ. (1820), pp. 382
seq. Cf. 'Additions' to Essay, pp. 243 n., 235.

[167] Probably Dr. W. H. Wollaston or Woolaston, F.R.S., the chemist.

[168] Pp. 81 seq. of McCulloch's edition of Works.

[169] 'British India.'

[170] The physician who, along with Dr. Marcet, attended Sir Sam.
Romilly on the day before his death (Nov. 1818).

[171] Lord Lansdowne's house in Wiltshire.

[172] Essay on Pop., 4th ed. See above, p. 128.

[173] See next page.

[174] Queen Sophia went there with Princess Elizabeth at the end of
November. (Ann. Register, 1817, Chron., p. 123.)

[175] Probably the 'Political Economy,' 1820.

[176] J. R. McCulloch, in all probability.

[177] 'British India.'

[178] Mill's estimate, however, has seldom been accepted by later

[179] Written by oversight 1817. The postmark and all the internal
evidence show that 1818 must be the year.

[180] Less famous perhaps by his numerous writings and speeches on the
currency than by his Letter to his leaseholders in the spring of 1811,
calling on them to pay their rents in gold or else in such an amount in
notes as would cover the depreciation since the date of their leases.
The text of the letter is given by Cobbett, Paper against Gold, letter

[181] 'Political Economy and Taxation.'

[182] Mackintosh entered on his duties as Professor of Law there 1818.

[183] 1818. See Ann. Register, 1818, Chron., p. 207.

[184] British India, publ. 1818.

[185] It was dissolved on 10th June.

[186] The Bill for renewing Restriction for another year had passed the
Commons, and was to be moved by Lord Liverpool on 26th May, 1818. Lord
Grenville spoke against it at great length.

[187] 'Plan of Parliamentary Reform in the Form of a Catechism, with
reasons for each article. With an Introduction, showing the necessity of
Radical and the inadequacy of Moderate Reform' (1817).

[188] A glimpse of his mental history is given in the remarkable letter
to Sharp, written from Bombay, on 9th Dec. 1804. He had even then
outlived his reaction against the ideas of the French Revolution. See
Life, vol. i. 128-136.

[189] A grandchild.

[190] Ricardo's son-in-law. See above, p. 41. Ricardo eventually sat for
Portarlington in Queen's County.

[191] The poll was open for fifteen days, and on Saturday, July 4th, the
result was declared: Romilly (Whig) 5339, Burdett (Whig) 5238, Maxwell
(Tory) 4808, Orator Hunt 84.

[192] We should expect 'detail.'

[193] He had added (and then cancelled): 'but it appears to me that our
difference is occasioned by what I think the improper sense in which you
use the word Wealth.'

[194] Franked by H. J. Shepherd (M.P. for Shaftesbury, Dorsetshire).

[195] June, 1818. 'Mr. Ricardo,' says the reviewer, 'has done more for
the improvement [of Political Economy] than any other writer with
perhaps the single exception of Dr. Smith' (p. 60). He follows up this
laudation with a full analysis of the doctrines of the book ('Political
Economy and Taxation'), finding nothing with which he disagrees.

[196] Here, as frequently elsewhere, written M'Cullock.

[197] The estate of Lord Lansdowne, about three miles from Chippenham,
Wilts. As Lord Henry Petty, this statesman had been Chancellor of the
Exchequer in the short-lived government of 'All the Talents' in 1806. He
held office in Grey's Reform Ministry 1831. He joined with Malthus and
others in founding the Statistical Society 1834. He outlived his most
famous contemporaries, and died in 1863 in his 83rd year.

[198] Famous by association with the Oregon dispute. He recorded his
impressions of England in a book called 'Narrative of a Residence at the
Court of London from 1817 to 1825,' (publ. 1833), and 'Memoranda of a
Residence at the Court of London, comprising Incidents Official and
Personal, from 1819 to 1825,' (touching on Oregon and other questions)

[199] Bentham was then over 70.

[200] Franked by himself.

[201] See Note 1 at end of this letter.

[202] See Macvey Napier's Correspondence (Macmillan, 1879), p. 23, where
Jas. Mill (writing on 10th Sept. 1819), says of Ricardo to Napier, 'it
is unaffected diffidence that is the cause of his unwillingness, for he
is as modest as he is able.' Cf. also Bain's Life of Jas. Mill, p. 187.

[203] Probably, that deference for Ricardo's authority was delaying his
new book on 'Political Economy.'

[204] See note 2 at end of this letter.

[205] 'The principal domestic events of the year [1819] are intimately
connected with the movements of a set of men who have received the name
of Radical Reformers,' Annual Register, 1819, Hist. p. 103.

[206] Name not clear in MS.

[207] Franked by himself.

[208] 'Principles of Political Economy considered with a view to their
practical application' (Murray), 1820.

[209] The three foregoing sentences are quoted by Empson, Edin. Review,
Jan. 1837, p. 478, though the letter is wrongly dated.

[210] Probably the note on p. 485: 'Mr. Ricardo deserves the thanks of
the country' for having suggested to it a comparatively easy means of
returning to Cash Payments.

[211] Ch. vii. sect. iii. pp. 351 seq.

[212] Several words wanting. Page much torn. But cf. Letter LXXIII, p.

[213] Hitherto 'McCullock.' Ricardo at last falls into the Scotch way
of spelling.

[214] 'An important Liberal organ,' of which in 1822 the editor was
Walter Coulson a friend of Jas. Mill. (See Bain's Life of the latter, p.
183.) In 1811 the editor was Mr. Quin, and its views were at least not
liberal enough for Cobbett. See Paper against Gold, p. 310.

[215] Franked by himself.

[216] Lettres à M. Malthus sur différents sujets d'économie politique,
notamment sur les causes de la stagnation générale du commerce (Paris,
1820). In addition to these 5 open letters, a letter of Say to Malthus
(Feb. 1827) together with the reply of Malthus is given in Oeuvres
Diverses de J. B. Say, pp. 502-515.

[217] Perhaps Oct. 1819 (see e.g. p. 471), 'on Mr. Owen's Plans for
relieving the National Distress.'

[218] Spelt here, as elsewhere, 'chuses.'

[219] Of the 'Traité d'Économie Politique' (1819). See Oeuvres
Diverses, p. xiii. Say had made considerable alterations.

[220] See Ricardo, Pol. Econ. and Tax., ch. XX. 'Value and Riches,' Wks.
pp. 165 seq., 3rd ed.

[221] Edin. Review, Aug. 1820. McCulloch proposed to make the tithes a
poundage on Rents, varying therefore with the net income and not with
the gross produce.

[222] Elements of Political Economy, 1821. See J. S. Mill,
Autobiography, pp. 27, 28, for whose use (in the first place) it was
prepared. For clear logical precision it stands alone among economical

[223] See Wks. (ed. McCull.), Preface, p. XXXI.

[224] Franked by himself 9th Oct., which is therefore the real date of
the letter.

[225] Written 'controul.'

[226] The foregoing three sentences are quoted by Empson, Edin. Review,
Jan. 1837, p. 499.

[227] 'Real value in exchange may be defined to be the power of an
object to command in exchange the necessaries and conveniences of life,
including labour,' Malthus, Pol. Econ. (1820), p. 62. 'Wages are to be
estimated by their real value, namely, by the quantity of labour and
capital employed in producing them,' Ricardo, Pol. Ec. 2nd ed. 1819, p.
44, Wks., p. 32.

[228] See Pol. Econ. and Tax. ch. xxi. 'Effects of Accumulation on
Profits and Interest.'

[229] The arrangement is altered, and we have such significant changes
as 'almost exclusively' instead of 'solely.'

[230] Franked by himself.

[231] See Wks. p. 176. 'Malthus and his Work,' p. 294.

[232] See Ricardo, Wks. pp. 110-112.

[233] A Sinking Fund.

[234] This simile is used by Malthus in Quart. Rev. Jun. 1824, with 'old
wine' in place of 'oak trees.'

[235] Franked by himself. Date only on cover.

[236] Perhaps the passage beginning at foot of p. 41 of Wks. and pp.
65-6 of 2nd ed. of Pol. Ec. and Tax. (where he is describing the effect
of agricultural improvements), 'With the same population and no more,
there can be no demand for any additional quantity of corn,' etc. etc.,
as far as the sentence, 'A considerable period would have elapsed
attended with a positive diminution of rent.'

[237] Franked by himself.

[238] Ch. xxxi, in which he explains his change of mind with great
frankness. Cf. Author's Advertisement to 3rd ed. of Pol. Econ. and Tax.,
Wks. p. 3. McCulloch's views were too early stereotyped. For his
character and habits generally, see Bain, Life of Jas. Mill, p. 183,

[239] It is due to McCulloch to say that in his published notices of
Ricardo he conceals his consternation.

[240] Franked by himself.

[241] Or Bromeberrow, one of Ricardo's estates, afterwards left to his
son Osman.

[242] Anon. London, 1821. The writer criticises Malthus closely though
in a friendly spirit. He is less polite to Say.

[243] Also anonymous.

[244] Franked by himself.

[245] Imported foreign goods. See below.

[246] 'An Essay on the Production of Wealth, with an Appendix, in which
the principles of Political Economy are applied to the actual
circumstances of this country,' London, 1821. The Preface is dated June
30, 1821.

[247] Franked by himself. Date only on cover.

[248] _Sic_, a slip of the pen for 'rise.'

[249] [Note by Ricardo.] On reading over my letter I am doubtful whether
this opinion respecting exportable commodities is correct.

[250] July 1821, no. LXX. See Malthus and his Work, p. 368. Ricardo
evidently suspected Malthus to be the author. See conclusion of next

[251] The writer added but struck out: 'and wages must be necessarily
high, in which case she may employ nearly the same amount of capital.'

[252] Franked by himself.

[253] See 'Political Economy and Taxation,' chapter on Value.

[254] Franked by himself.

[255] The Political Economy Club was founded by Tooke in 1821, though
there had been informal meetings of the members for some time before in
Ricardo's house. See Bain's Life of Jas. Mill, p. 198, where the
programme of the club is given. It included discussion and propaganda,
replies to unsound newspapers, and the circulation of sound literature.

[256] 'Essay on the Production of Wealth,' 1821. See above, p. 195.

[257] This had been its feature for some time. 'There is a canting
Scotchman in London who publishes a paper called the "Champion," who is
everlastingly harping upon the virtues of the "fireside," and who
inculcates the duty of quiet submission.' Cobbett, Pol. Reg., Nov. 2,
1816, p. 460. Cobbett, like many others, took the received Political
Economy for a doctrine of political quietism.

[258] Necker's asylum in 1790 and the scene of his death in 1804, the
refuge also of his daughter Madame de Stael, when driven from Paris by
Napoleon. Madame de Stael died here in 1817, and her last book,
'Considérations sur les principaux événements de la Revolution
Française,' was brought out in 1818 by her son the Baron de Stael and
the Duc de Broglie jointly. Sismondi had long been a familiar friend of
the house, and it was probably he who had introduced Ricardo. The
'Nouveaux Principes d'écon. polit.' (Sismondi's chief economical work)
had appeared in 1819.

[259] The publicist. See 'Malthus and his Work,' p. 416.

[260] See Ricardo, Works, p. 171; De Tracy agreed with Say's definitions
of 'value,' 'riches,' and 'utility.' He was at this time 68, and his
chequered life (of war, politics, and authorship) did not end till 1836.
His economics are properly a branch of his philosophy.

[261] Louis had been, like his brother, in the Cotton manufacture, but
left it for Sugar Refining. His 'Considérations sur l'industrie et la
législation,' etc., published in 1822, is the book to which Ricardo

[262] Germain Garnier, author of 'L'Histoire de la Monnaie' and
translator not only of 'The Wealth of Nations' but of 'Caleb Williams,'
etc., had died 4th Oct., 1821.

[263] The 'Political Economy.' The 2nd ed. did not appear till 1836,
after its author's death.

[264] April 1822, pp. 239 seq. on the State of the Currency. This is the
article closely criticised by Tooke in 'High and Low Prices,' Part i.
pp. 19 seq.

[265] 'A Letter to David Ricardo, Esq., M.P., on the true principle of
estimating the extent of the late Depreciation in the Currency and on
the effects of Mr. Peel's Bill for the Resumption of Cash Payments by
the Bank,' by Thomas Paget, Esq., 1822 (July). It contains more rhetoric
than logic.

[266] One of his chief Parliamentary opponents, in the agricultural

[267] 'Thoughts and Details on High and Low Prices' was published early
in 1823. Tooke was for thirty years a Russia merchant.

[268] 'The Measure of Value Stated and Illustrated, with an Application
of it to the Alterations in the Value of the English Currency since
1790,' London, 1823.

[269] See note to this letter.

[270] Here as elsewhere written 'chuse.'

[271] Written here as elsewhere 'potatoe.'

[272] Franked by himself. Date and address only on cover.

[273] Gold, with many reservations. See Wks., pp. 29 to 33. But compare
p. 231 below.

[274] Published in 1824 by his family, and reprinted in Wks., ed. MacC.,
pp. 499 seq.

[275] Franked by himself.

[276] Franked by himself.

[277] W. of N., I. vi. 23, 1.

[278] Edin. Rev., Jan. 1837, p. 499.

[279] Life, pp. 209-213.

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