THE LIBRARY 
 
 OF 
 
 THE UNIVERSITY 
 
 OF CALIFORNIA 
 
 RIVERSIDE 
 
 GIFT OF 
 
 Dr. Gordon S. Wat kins
 
 

 
 LETTERS OF RICARDO 
 
 TO 
 
 MALTHUS
 
 HENRY FROWDE 
 
 OXFORD UNIVERSITY PRESS WAREHOUSE 
 AMEN CORNER, E.G.
 
 LETTERS 
 
 OP 
 
 DAVID RICARDO 
 
 TO 
 
 THOMAS ROBERT MALTHUS 
 
 1810-1823 
 
 EDITED BY 
 
 JAMES BONAR 
 
 M.A. OXFORD, LL.D. GLASGOW 
 
 AT THE CLARENDON PRESS 
 
 1887 
 
 [ All rights reserved ]
 
 CONTENTS. 
 
 PACK 
 
 1. PREFACE vii 
 
 2. OUTLINE OF SUBJECTS ...... xix 
 
 3. LETTERS I TO LXXXVIII 1-240 
 
 4. CHRONICLE . . . . . . .241 
 
 5. INDEX 245
 
 PREFACE. 
 
 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 Kicardo 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 dis- 
 putants, 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 l . 
 
 1 Cf. Letter LXXX, p. 200, cf. 236, etc.
 
 viii Preface. 
 
 These Letters indeed show on almost every page how com- 
 pletely 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. in, 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. 1 25), 
 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). Kicardo, a self- 
 made and largely a self-educated man 1 (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 2 . But, in his think- 
 ing, he was under no slavery to details ; be was even con- 
 scious 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 
 
 1 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.
 
 Preface. ix 
 
 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 himself. 
 
 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. in, 176, 1 81). But they are free in their criticism; 
 they never dream of allowing it to affect their good temper 
 (pp. 1 75, 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 1 , 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. 
 1 Mr. Malthus ' (he says) ' was an aristocratic parson when 
 he first published his Essay on Population . . . but in going 
 
 1 Letter to George Rogers, ilth Jan. 1832, in the 'Place' Collection, 
 British Museum.
 
 x Preface. 
 
 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 1 .' 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 2 , though his 
 sentiments were unpalatable and he was usually in a 
 hopeless minority. 
 
 1 The political philosophy of Malthus is described by the present editor at 
 some length in ' Malthus and his Work,' Book III. 
 
 3 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 Gamier's life of Eicardo in Diet, de 1'Econ. Polit., and Bain's Life of 
 Jas. Mill.
 
 Preface. xi 
 
 Bentham claimed to be the spiritual grandfather of 
 Ricardo *, 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 2 , imprisoned for 
 blasphemous libel, he is not unfairly described by Wilber- 
 force as simply ' carrying into more weighty matters those 
 principles of free trade which he has so successfully ex- 
 pounded ' 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 3 , 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 4 , 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 5 , 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 io#. 
 
 1 See note to Letter XXI. 2 March 26, 1823. 
 
 s Speech of March 18, 1823. * May 21, 1823, etc. 5 June 17, 1822.
 
 xii Preface. 
 
 a quarter, to remain as a ' countervailing duty ' roughly 
 equal in amount to the peculiar burdens of the British 
 agriculturist l . 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 2 .' 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, Kicardo'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 in- 
 dividuals, 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 3 .' 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 
 
 1 April 29, cf. May 7, 1822. 
 
 3 MacCulloch's ' Funding and Taxation,' Preface to ist Ed. (1845). 
 
 3 Bentliam, ' Priiic. of Morals and Legislation,' I, IV.
 
 Preface. xiii 
 
 is most perfect in which all sanctions concur to make it the 
 interest of all men to be virtuous,' in other words, to pro- 
 mote the general happiness l . 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 Econo- 
 mists 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 considera- 
 tion 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 allow- 
 ance 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 
 
 1 Kicardo's Wks. p. 554 (from ' Observations on Parliamentary Reform ').
 
 xiv Preface. 
 
 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 1 ; but he insists that all political 
 restraints and preferences must be taken away from indus- 
 try, and ' the obvious and simple system of natural liberty' 
 will ' establish itself of its own accord.' It is not surpris- 
 ing 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 
 
 1 B. IV, ch. IX, middle, p. 307. i (McCulloch's ed.).
 
 Preface. xv 
 
 lifetime, and which he himself welcomed with some mis- 
 givings. 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 indis- 
 pensable 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 1 . 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. f It would puzzle a good accountant ' (he 
 says in the House 2 ) ' 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 3 
 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 4 .' 
 There was chivalry in his praise of Cobbett's Letter to 
 the Luddites 5 ; 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, 
 
 1 E. g. by Held, ' Sociale Geschichte Englands, ' article Ricardo, and by 
 Western in the House June II, 1823, more coarsely by Cobbett in passages 
 quoted in Note to Letter LXIX, and many others. 
 
 2 June n, 1823, in reply to Western. 
 
 3 E. g. Grenfell, March n, 1823. 
 
 4 Feb. 21, 1823, etc. 
 
 5 May 30, 1823. He adds a crumb of criticism : Cobbett underestimated 
 the effect of machinery in throwing men out of work.
 
 xvi Preface. 
 
 against landlords, bank directors, and all classes of mono- 
 polists, 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 l ; but he made his general 
 statements too absolute. He sometimes guarded himself by 
 saying (as he does in these Letters) : What I am layig 
 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 the first will fall in relation to the other. This is not all ; 
 if two things are produced with a like amount of fixed 
 
 1 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.
 
 Preface- xvii 
 
 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 * ; 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 2 . 
 
 It is not difficult for men living two generations after 
 Rlcardo, and having (as he himself expressed it 3 ) ' 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 impor- 
 tunities of friends had induced an unsystematic writer to 
 attempt a systematic treatise 4 . 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 
 Bb'hm Bawerk in Germany, to take up the task of giving a 
 theory of value that will embrace all cases of it, not exclud- 
 ing these 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 5 .' 
 
 1 Letter LXXVI. 
 
 2 Ch. xxxi. of Pol. EC. and Tax. ; a chapter added in the 3rd ed., 1821. 
 8 Speech of gth May, 1822. 
 
 * This had been acutely observed (without aid from these Letters) by a 
 writer in the Harvard ' Journal of Economics,' July, 1887. 
 6 Eicardo, Pol. EC. and Tax. Sect. I. 
 
 b
 
 xviii Preface. 
 
 Malthus has left a clear statement of the points at issue 
 between Bicardo 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, de- 
 termines the rate of profits. But, in regard to the first, he 
 hardly gives Ricardo sufficient credit for his large conces- 
 sions. 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 productive- 
 ness of the staple industry, Ricardo's view seems nearer the 
 truth than his own. The inadequacy of the whole discus- 
 sion 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 in- 
 dustrial 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.
 
 OUTLINE OF SUBJECTS. 
 
 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 Depre- 
 ciation 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. JVe 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, 1 809. 
 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 : 
 
 i . The amount of the currency of a nation is determined 
 for it not simply by its size and population but by the 
 
 b2
 
 xx Outline of Subjects. 
 
 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 (VII). 
 
 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 proposi- 
 tions : 
 
 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, XVII). 
 
 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, LXXX). 
 
 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 ').
 
 Outline of Subjects. xxi 
 
 4. Improvements in agriculture or machinery by increas- 
 ing productiveness permanently increase profits (XX, cf. 
 V and XXIII). 
 
 To these may be added 
 
 5. Consumption and accumulation equally promote de- 
 mand, 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 con- 
 sumption (XXI). 
 
 7. It is worth while to establish the truth of a principle, 
 even if we cannot establish its utility (XXI). 
 
 In Letters XXIII to LXVIH, and in LXXVIH to LXXX, 
 the positions are as follows : 
 
 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 (XXVI). 
 
 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, XXVIH, cf. XLIX). 
 
 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 neces- 
 sary in other cases (XXIX). 
 
 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
 
 xxii Outline of Subjects. 
 
 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, XXXIV, XXXV). 
 
 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 manu- 
 factured 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 pro- 
 gress 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). 
 
 1 6. 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). 
 
 1 8. Low prices are not necessarily a discouragement to 
 production (XXXIX). 
 
 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 
 (XLVHI, cf. LXIX). 
 
 20. Profits depend on wages ; wages on the supply and 
 demand of labour, and on the cost of the labourers' neces- 
 saries (XLIX). 
 
 21. Profits will therefore rise if the last are easily pro- 
 duced, unless through stationariness of population demand 
 for labour has increased (L).
 
 Outline of Subjects. xxiii 
 
 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 (LXIII). 
 
 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. LXX). 
 
 28. Rent is always a transfer, and never a creation of 
 wealth (LIII, LXVLTI). 
 
 29. There cannot be two rates of profit at the same time 
 in the same country (LXX VIII), 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 con- 
 tinue 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 follows : 
 
 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 pro- 
 duction (LXV). 
 
 2. A universal over-production is impossible (LXX II, 
 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 (LXXIII).
 
 xxiv Outline of Subjects. 
 
 3. It is not demand, but supply, which regulates value, 
 and supply is itself determined by comparative cost of 
 production (LXXIII, LXXIV). 
 
 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 unpro- 
 ductive consumers, and the employers who pay them are 
 thereby causing instead of curing the over-production 
 (LXXVI, LXXVII). 
 
 7. A diminished demand for labour may mean, not the 
 employment of fewer men, but the payment of lower wages 
 (LXXVII). 
 
 In Letters LXXVILT 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 
 (LXXVn, LXXVHI). 
 
 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 (LXXXLTI, LXXXV to LXXXVIII). 
 
 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).
 
 LETTERS OF DAVID RICARDO 
 
 TO 
 
 THOMAS ROBERT MALTHUS. 
 I. 
 
 MY DEAR SlR STOCK EXCHANGE, 25^ Feb., 1810. 
 
 I HAVE just time, after a very busy day, to tell you 
 that I will endeavour to get Mr. Mushet l 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 occasion. 
 
 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 dura- 
 tion; 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 trans- 
 mission of a subsidy will produce certain effects on the 
 exchange, the only question between us is as to their 
 
 1 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. 
 
 B
 
 2 Letters of Ricardo to Malthus. 
 
 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. 
 
 II. 
 
 MY DEAR SlR STOCK EXCHANGE, 22 March, 1810. 
 
 Mrs. Ricardo is expecting Mrs. Malthus to accom- 
 pany 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 accom- 
 pany 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 1 , Mr. Sharp 2 , Mr. Tennant 3 , 
 and Mr. Dumont 4 . 
 
 1 John Whishaw, of Lincoln's Inn, the editor of Mungo Park's ' Life and 
 Travels' (1815, etc.) : see Edin. Eev., Feb. 1815; Brougham's 'Statesmen 
 in Time of George III,' ed. 1855, i. 369. 
 
 2 Richard Sharp, called ' Conversation Sharp,' author of ' Letters and 
 Essays in Prose and Verse' (1834), member of the Bullion Committee. 
 
 3 Probably Smithson Tennant, the chemist. 
 
 4 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
 
 Quantity and Value. 3 
 
 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 1 
 
 Yours very truly, 
 
 DAVID RICARDO. 
 
 NOTE. Speaking in the House of Commons on Agricultural 
 Distress, on May 7, 1822, Kicardo 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 
 
 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. 
 
 B 2
 
 4 Letters of Ricardo to Malthus. 
 
 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 in- 
 creasing 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 i2th 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.' 
 
 III. 
 
 MY DEA.R SlR 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 1 . 
 It appears to me that you ascribe the difference in the 
 
 1 See note at the end of this letter.
 
 Demand for Gold and Silver. 5 
 
 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 in- 
 creased 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 com- 
 modities, 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 aug- 
 mentation of their quantity. In any point of view how- 
 ever I do not see how it bears materially on the question 
 between us, namely whether the precious metals are fre- 
 quently 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 cause. 
 
 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
 
 6 Letters of Ricardo to Malthus. 
 
 (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 (1. c. 
 p. 138 ..). To judge by a letter of Mackintosh to Sharp on 2pth 
 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, &c. 
 
 IV. 
 
 MY DEAR SIR, LONDON, loAug., 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
 
 Real and Nominal Value. 7 
 
 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 con- 
 tinent of Europe, the planters in those colonies may first 
 export them to England, and from England to the con- 
 tinent. 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 improve- 
 ments in economy [in] its use [we] 1 , and is never the 
 cause 2 . 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 3 . I 
 did not like to copy the first half over again. 
 
 With best compliments to Mrs. Malthus, I remain, 
 
 Yours very sincerely, 
 
 DAVID RICAKDO. 
 
 1 The same phrase occurs in Appendix to ' High Price of Bullion ' (Ricardo'i 
 Works, p. 297) etc. 
 
 3 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. 
 
 3 Eastened with wax at one corner.
 
 8 Letters of Ricardo to Malthus. 
 
 V. 
 
 MY DEAR SlR STOCK EXCHANGE, ij 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 ques- 
 tion between us. I have little doubt however that for a 
 long period, during the interval you mention *, there has 
 been an increased rate of profits, but it has been ac- 
 companied 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 con- 
 clusion 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 com- 
 modities 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 2 , 
 and will consider of the other matters in your letter, so as 
 to be prepared to give you my theory when we meet. 
 
 1 Probably 1793 to 1810. See Malthus' Pol. Econ. (1820), p. 324, etc. 
 
 * Probably Wealth of Nations (McCulloch's ed., 1863) I. xi. 95. I, 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.
 
 Bullion as a Commodity. 9 
 
 The facts you have extracted from Wetenhall's tables 
 are curious 1 ) 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 KICARDO. 
 
 VI. 
 
 DEAR SIR, 
 
 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 differ- 
 ence 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 
 
 1 Wetenhall's ' Course of Exchange.' See note to Letter XI.
 
 io Letters of Ricardo to Malthus. 
 
 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 commer- 
 cial men the sellers, of money are in all cases called pur- 
 chasers, 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 in- 
 crease, and its price would in the first instance be consider- 
 ably augmented; but this would be the only change it 
 would undergo ; it would continue to be imported and ex- 
 ported 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 cer- 
 tainly 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 1 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 
 
 1 Edinb. Review, Feb. 181 1. See ' Malthus and his Work,' p. 385.
 
 Redundant Currency. 1 1 
 
 currency may be, and frequently is, a cause of an unfavour- 
 able 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 be- 
 come 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 redun- 
 dancy of the currency produced in one of the ways above 
 mentioned, and not to the demand for particular commodi- 
 ties. 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
 
 1 2 Letters of Ricardo to Malthus. 
 
 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 expor- 
 tation 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 *. 
 I will, however, endeavour to learn every particular con- 
 cerning it, and hope to be able on Saturday next to pay 
 you a visit in Hertfordshire, when we will further discuss 
 these seeming difficulties. 
 
 I am, dear Sir, with great respect, 
 
 Your obedient Servant, 
 
 DAVID EICAEDO. 
 
 THBOGMORTON STBKKT, i8th June, 1811. 
 
 VII. 2 
 DEAR SIR, 
 
 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 evening. 
 
 The information which you are desirous of obtaining 
 respecting the premium on bills in Jamaica from the year 
 
 1 Some information on that point had been given by Mr. Thomas Hughan, 
 a West Indian merchant, before the Bullion Committee (Evidence, pp. 55-61). 
 ' Franked by Richard Sharp.
 
 Definition of Redundant. 1 3 
 
 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 1 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 appre- 
 hend, 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 com- 
 modities 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 com- 
 modity 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 compara- 
 tively 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 com- 
 parative cheapness of money being the only satisfactory
 
 14 Letters of Ricardo to Malthus. 
 
 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 in- 
 compatible. 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 com- 
 modities in the exporting country, and this I contend is
 
 Depreciation measured by Exchanges. 15 
 
 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 op- 
 posite 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 reconcile. 
 With respect to the other point, namely, that the 
 exchange accurately measures the depreciation of the 
 currency l , I cannot but humbly retain that opinion not- 
 withstanding 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 circum- 
 stances so often mentioned, there should be a slight altera- 
 tion in the value of the currencies of any two countries, it 
 
 1 See note to Letter XII.
 
 1 6 Letters of Ricardo to Malthus. 
 
 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 per- 
 manence 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 1 . I hope before the 
 summer is over to pay you a visit at Hertford. 
 
 I am, dear Sir, 
 
 Yours very sincerely, 
 DAVID RICARDO. 
 
 NEW GBOVE, MILE END, 17 July, 1811. 
 
 VIII. 
 
 DEAR SIR, 
 
 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. 
 
 1 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* 
 (ist ed. 1767), more especially ch. iii, 'Is the loss which the course of ex- 
 change marks upon the trade of Great Britain with France real or apparent ? '
 
 Ricardo as an Author. 17 
 
 A friend of mine has been writing on the subject of 
 bullion. I take the liberty of sending you the MS 1 . 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 RICAEDO. 
 
 STOCK EXCHANGE, i^th Oct., 1811. 
 
 IX. 
 
 DEAR SlR, THROGMORTON STREET, 22nd Oct., i8n. 
 
 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, how- 
 ever, 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 cur- 
 rency bears to the uses for which it is required in the 
 
 1 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. 
 
 C
 
 1 8 Letters of Ricardo to Malthus. 
 
 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 transac- 
 tions are so alive to their advantage and profit, particularly 
 in the present improved state of the division of employ- 
 ments' 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 1 The second 
 what is their practice 1 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 1 . 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 
 
 1 ' 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).
 
 Interest and Practice of Nations. 19 
 
 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 super- 
 abundant, 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 super- 
 abundant 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 indi- 
 cate but an excess of currency, and it may surely be cor- 
 rectly 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.
 
 2O Letters of Ricardo to Malthus. 
 
 X. 
 
 MY DEAR SlE ^ EW GKOVE, 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 1 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 
 
 1 See above, p. 15.
 
 Permanent Redundancy. 21 
 
 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 coun- 
 try 2 per cent, above their former level, and that such rise 
 being confined to this country alone it would check export- 
 ation 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 cur- 
 rencies 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 1 . I have 
 
 1 See ' High Price of Gold Bullion,' Kicardo's Works (McCulloch's edition), 
 pp. 264, 282.
 
 22 Letters of Ricardo to Malthus. 
 
 uniformly maintained that the money of the world is dis- 
 tributed 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 export- 
 ing 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 com- 
 pared with those countries by 3, 5, 6, and 8 per cent, re- 
 spectively, and consequently the exchange may permanently 
 continue depressed in th[ose proportions. If an excess of 
 currency once occurs, [the unfavourable exchange must 
 continue till some alteration 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 atten- 
 tion, 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 cur- 
 rency is the natural effect of such a cause, but that this is 
 not the case in a subsidy ; that the exportation of commo- 
 dities 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
 
 Effects of a Subsidy. 2 3 
 
 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 com- 
 modities 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 exporta- 
 tion 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, my dear Sir, 
 
 Yours with great esteem, 
 
 DAVID RICARDO. 
 
 XI 1 . 
 
 MY DEAK SlR LONDON, 2gth 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 i9th 
 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 
 
 1 The Fragment on p. 105 should perhaps come here.
 
 Letters of Ricardo to Malthus. 
 
 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 1 9th 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 1 informs me that at the period of the im- 
 provement 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 2 , and the following appear 
 to be the variations in the exchange and the price of gold 
 about Christmas last. 
 
 
 Exchange 
 with 
 Hamburgh. 
 
 Doubloons, 
 per oz. 
 
 Portuguese 
 gold, 
 [per oz.] 
 
 1811. 
 
 
 t. d. 
 
 t. d. 
 
 Nov. 29 
 
 24 
 
 4 15 
 
 
 Dec. 3 
 
 24-6 
 
 
 4 18 6 
 
 ,, 6 
 
 24-6 
 
 4 14 6 
 
 4 18 6 
 
 13 
 
 25 
 
 4^6 
 
 
 20 
 
 25 
 
 
 
 4 19 o 
 
 31 
 
 276 
 
 
 
 1812. 
 
 
 
 
 Jan. 3 
 
 27-6 
 
 4 14 o 
 
 4 18 6 
 
 3i 
 
 27-6 
 
 
 4 18 6 
 
 Feb. 21 
 
 28 
 
 
 4 17 o 
 
 Mar. 20 
 
 2 9 
 
 , I 4 15 6 
 
 31 
 
 29-4 
 
 4 14 6 
 
 4 13 6 
 
 April 2i 
 
 29-4 
 
 4 17 6 
 
 4 17 6 
 
 June 5 
 
 28-6 
 
 
 4 18 6 
 
 July 31 
 
 28-9 
 
 4 19 o 
 
 500 
 
 Aug. 28 
 
 28-9 
 
 500 
 
 
 The price of dollars yesterday was 6/3! per oz., higher 
 
 1 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 1 8 ro. 
 
 * Wetenhall got his information from Mocatta and Goldsmid. See Bullion 
 Report, Evid. p. 2.
 
 The Old Question. 25 
 
 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 there- 
 fore conclude. Pray make my kind compliments to Mrs. 
 
 Malthus, 
 
 And believe me, my dear Sir, 
 
 Yours very truly, 
 
 DAVID KICARDO. 
 
 [At the end is written in pencil in Malthus's hand- 
 writing, 'Was any bullion imported from Hamburg in 
 March ? '] 
 
 XII. 
 
 MY DEAR SIR, LONDON, 17 Dec., 1812. 
 
 I have written to Mr. Thornton T to request him to 
 meet you at dinner, at my house, on any day most con- 
 venient 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 1 ? I assure you it would be quite con- 
 venient, 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 con- 
 sideration 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 un- 
 
 1 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.
 
 26 Letters of Ricardo to Malthus. 
 
 favourable 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. i848) 1 , refers to this 
 dispute between Ricardo and Malthus, on the relation of the cur- 
 rency to the balance of trade, and quotes long extracts from the 
 article of Malthus in the Edinburgh Review, where (as in this 
 correspondence 2 ) 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 3 . Tooke (followed later by New- 
 march, hardly a less authority) sides with Maltbus, and thinks that 
 
 1 Part III. ch. i. 5 : ' On the Opinions of the Bullion Committee on the 
 Phenomena of the Circulation in 1809-1811,' pp. 100-110. 
 3 See especially Letters IV and VI. s Tooke, Hist, of Prices, p. 359.
 
 Ultra-Bullionists. 2 7 
 
 Kicardo'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 1 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 Con- 
 tinent, 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 6d. the pound, and 
 at the same time it was fetching 43. or 5*. 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 con- 
 vince ' them, namely his ' Thoughts and Details on the High and 
 Low Prices of the last Thirty years,' (1823). 
 
 XIII. 
 
 MY DEAR SIR, LoNDON ' 30f/t ^ ec -> l813 ' 
 
 I have been amusing myself for one or two evenings 
 in calculating the exchanges, price of gold, etc., at Amster- 
 dam, and I enclose the result of my labour. I have every 
 reason to believe that my calculations are correct, though 
 
 1 As was shown also in ' Letters on the Corn Laws,' by H. B. T. (J. Deacon 
 Hume.) London, 1834.
 
 28 Letters of Ricardo to Malthus. 
 
 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! 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. 
 
 [TABLES ENCLOSED IN LETTER- XII.] 
 
 Columns n 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 6s. yd. and the exchange with Amsterdam 
 2 8*. Against 6*. yd. in column u 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 P er cent.
 
 Exchange with Holland. 29 
 
 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 1 6 per cent, premium, the agio 3 per cent., 
 the exchange with London 31, and the price of gold in 
 London 185 10*., from which country would gold be ex- 
 ported and with what profit ? 
 
 Against 16 per cent, in column i the par of exchange in 
 column 8 is 39-64, and against 5 10$. the price of gold in 
 London in column 9 the multiplier -708 stands in column 10. 
 39-64 multiplied by -708 gives 28-06 as the par for bank 
 notes ; therefore, when the exchange is at 31, it is un- 
 favourable to Holland, and gold may be exported from 
 thence with a profit of loj per cent, nearly. Or thus: 
 an oz. of standard gold, when the marc could be bought 
 at 1 6 per cent, premium at Amsterdam, would cost 154-3 
 Flemish shillings banco, when the agio was 3 per cent., 
 which reduced into English money at 31 [Flemish] shillings 
 per sterling will give 164 19$. 6%d. But it will sell in 
 London for 5 ios. which is a profit of io per cent, 
 nearly.
 
 Letters of Ricardo to Malthus. 
 
 1 
 
 2 
 
 3 1 
 
 4 
 
 5 
 
 e 2 
 
 Price of gold at 
 Amsterdam. 
 Premium on 
 / 355 P r marc. 
 
 Value of a 
 marc in 
 current 
 guilders. 
 
 Correspond- 
 ing price 
 of an 02. 
 of standard 
 gold in 
 London. 
 
 Correspond- 
 ing price 
 of an oz. 
 of standard 
 silver in 
 London. 
 
 Value of 
 an oz. of 
 
 standard 
 gold in 
 Flemish 
 current 
 shillings. 
 
 Value of 
 an oz. of 
 standard gold 
 in Flemish 
 Banco 
 shillings. 
 Agio 3 p. c. 
 
 Par /. 155 
 
 /335 
 
 t. d. 
 
 68-00 
 
 137 
 
 133 
 
 i p. c. prem. 
 
 358-55 
 
 
 pence 
 67-32 
 
 138-4 
 
 134-3 
 
 2 
 
 362-10 
 
 
 66-67 
 
 119-8 
 
 I3V7 
 
 1 
 
 165-65 
 
 
 66-02 
 
 141-1 
 
 1*7-2 
 
 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 
 8 
 
 379-85 
 383-40 
 
 
 
 63-55 
 62-06 
 
 146-6 
 148 
 
 142-5 
 
 I4VQ 
 
 Q 
 
 386-95 
 
 
 62*3Q 
 
 149-1 
 
 145.3 
 
 IO 
 
 389-37 
 390-50 
 
 3 i? io| 
 3 18 I 
 
 62 
 
 I50-3 
 150-7 
 
 146-0 
 146-1 
 
 II 
 
 394-05 
 
 3 18 10 
 
 
 152-1 
 
 147-6 
 
 12 
 
 307-60 
 
 1 IQ 6i 
 
 
 153-5 
 
 I4Q-O 
 
 13 
 14 ,, 
 
 401-15 
 404-70 
 
 403 
 4 o Il4 
 
 
 
 154.8 
 156-2 
 
 I50-3 
 I5I-7 
 
 15 
 
 408-25 
 
 418 
 
 
 157.5 
 
 1^2-Q 
 
 16 
 
 411*80 
 
 4 2 4? 
 
 
 158-0 
 
 1*4.-* 
 
 17 
 18 
 
 19 
 
 20 
 21 ,, 
 
 4I5-35 
 418-90 
 422-45 
 426 
 429-55 
 
 4 3 o| 
 439 
 4 4 5i 
 4 5 2 
 4 5 i2- 
 
 
 160.3 
 161-7 
 163-1 
 164.5 
 165-8 
 
 155-6 
 157-0 
 158-3 
 159-6 
 
 161-0 
 
 1 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. 
 
 3 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 , 
 200 onsen* of pure silver in a guilder. Gold and silver are sold by the marc 
 in Holland perfectly pure b . 
 
 British standard gold II fine, i alloy; silver 11-3 fine, 18 dwts. alloy. 
 
 * 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.).
 
 Exchange with Holland. 
 
 7 
 
 8 
 
 9 
 
 10 
 
 11 
 
 12 
 
 Real par 
 of exchange 
 in Flemish 
 current 
 shillings per 
 sterling 
 in gold. 
 
 Keal par of 
 exchange in 
 Flemish Banco 
 shillings per 
 sterling in gold. 
 Agio 3 p. c. 
 
 When the 
 price of gold 
 in London 
 in bank 
 notes is 
 
 The bullion 
 par must be 
 multiplied by 
 
 Price of 
 standard 
 silver in 
 London in 
 bank notes 
 per oz. 
 
 Par of 
 exchange 
 with 
 Amsterdam 
 in Banco. 
 Agio 3 p. c. 
 
 
 
 *. d. 
 
 
 *. d. 
 
 
 35' 20 
 
 34-17 
 
 
 
 
 
 C 1 -) 35-55 
 
 v~ 1 
 
 34-51 
 
 400 
 
 973 
 
 5 ? 
 
 37-48 
 
 (2-) 35-9 
 
 34-85 
 
 410 
 
 961 
 
 5 3 
 
 36-88 
 
 (3.) 36-25 
 
 35-19 
 
 420 
 
 949 
 
 5 4 
 
 36-60 
 
 (4.) 36-61 
 
 35-54 
 
 430 
 
 938 
 
 5 5 
 
 35-75 
 
 (5-) 36-95 
 
 35-87 
 
 440 
 
 .927 
 
 5 6 
 
 35-21 
 
 (6.) 37-31 
 
 36-22 
 
 45 
 
 916 
 
 5 7 
 
 34-68 
 
 (7-) 37-66 
 
 36-56 
 
 460 
 
 95 
 
 5 8 
 
 34-17 
 
 (8.) 38-01 
 
 36-90 
 
 470 
 
 895 
 
 5 9 
 
 33-67 
 
 (9-) 38-36 
 
 37-24 
 
 480 
 
 885 
 
 5 10 
 
 33-19 
 
 38-61 
 
 37.48 
 
 
 
 
 
 (10.) 38-71 
 
 37-58 
 
 49 
 
 875 
 
 5 " 
 
 32-72 
 
 (11.) 39-06 
 
 37-92 
 
 4 10 o 
 
 865 
 
 6 o 
 
 32-27 
 
 (12.) 39-62 
 
 33-27 
 
 4 ii o 
 
 856 
 
 6 i 
 
 31-84 
 
 (I3-) 39-77 
 
 38-62 
 
 4 13 o 
 
 838 
 
 6 2 
 
 31-42 
 
 (14.) 40-12 
 
 38-96 
 
 4 15 o 
 
 820 
 
 6 3 
 
 30-98 
 
 (15.) 40-48 
 
 39-30 
 
 4 17 o 
 
 803 
 
 6 4 
 
 30-58 
 
 (i 6.) 40-83 
 
 39-64 
 
 4 19 o 
 
 .786 
 
 6 5 
 
 30-17 
 
 (17.) 41.18 
 
 39-98 
 
 500 
 
 779 
 
 6 6 
 
 29.79 
 
 (18.) 41.54 
 
 40-32 
 
 520 
 
 764 
 
 6 7 
 
 29-41 
 
 (19.) 41-89 
 
 40-67 
 
 540 
 
 749 
 
 6 8 
 
 29-04 
 
 (20.) 42-24 
 
 41-02 
 
 560 
 
 735 
 
 6 9 
 
 28-69 
 
 (21.) 42-59 
 
 41-36 
 
 580 
 
 .721 
 
 6 10 
 
 28-33 
 
 
 
 5 10 o 
 
 708 
 
 6 ii 
 
 27-99 
 
 
 
 
 
 7 o 
 
 27.66 
 
 
 
 
 
 7 i 
 
 27.32 
 
 
 
 
 
 7 2 
 
 27-02 
 
 
 
 
 
 
 7 3 
 
 26-71 
 
 
 
 
 
 
 
 
 7 4 
 
 26-40 
 
 
 
 
 
 
 7 5 
 
 26-11 
 
 
 
 
 
 
 7 6 
 
 25.82
 
 32 Letters of Ricardo to Malthus. 
 
 XIV. 
 
 >r , LONDON, i Jan., 1814. 
 
 MY DEAR SIR, 
 
 Having finished a table for the Hamburgh ex- 
 changes, similar to that which I have already sent you 
 for Holland, I thought you might like to have a copy of 
 it 1 . 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*. and the price of 
 dollars 6*. ii^d. By the table it appears that with [such] 
 a price of dollars the exchange at par would be 25*. ; con- 
 sequently it is now unfavourable to Hamburgh 1 2 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 2 , 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. 
 
 1 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). 
 
 2 His favourite country-seat, in Gloucestershire.
 
 Exchange with Hamburgh. 
 
 33 
 
 "'~ =9 
 
 ^ a OO M O\ >-i i>- to !- N ON O\ N vo rO N rfi^o to rf) 
 
 e3 2P Jj ON fpO OO >-i ^fOp MtOO'^ONTt-ON'Th f jh ? 
 
 lOTt-cONMMOON ONOO OO /-\O O O 10 to rf T|- 
 2-3-3 rrSfOrorOcO3rONNpiNNNNCN 
 
 H 
 
 3U 
 
 ^ 01 '"" HN "IN K > ' "N ""IN "IN IN "IN HN 
 
 SSoO 'MMCT(-U5 t^O) O W M N -^ 10 J-^00 O I-, M N 
 
 * 3 ^'2 >. 
 
 "iVO \O VO VO ^O VO *O ^O 
 
 -I 
 
 ^ 
 
 . S ' e .2 cc M o\oo t>*vo ui 10 >o ui ic\o GO o co\o ON ^ ON 10 M oo 
 
 "SSS^* ONONONONO\OS Osco cocoopoocoGocot>.j 
 
 |^ S 1 
 
 ! 
 
 oooooooooooooooooooooo 
 
 2 2 a g" 
 
 c^ O HI N ro ^t" io^O ^>.oo C\ O M ro 10 > ON O N. -^t-vo CO O 
 
 <rt 
 
 B 
 
 I*is 
 
 Ilil* 
 
 g|3^ 
 
 o'C M C 
 
 SK^-H 
 
 h 
 
 rfS 
 
 . o n a j 
 
 ^^ONroOO lOfStO'^-t^.i-i'O to'w 
 O\ w Tj-VO ON N U30O M lOOO N \O 
 O O O\CO t--. ^-.VO o to rl- ro O N N 
 t>. *~.\O VOVOvOVOVOVOVOVONOVOvO 
 
 ^0 
 
 hall 
 
 g - c'|_g'gl2 O M-oo tfi t^. crsoo mt--N r>. \o oo N vo M to o\ -<J-oo rcoo N i-^ N 
 
 1-5 z~ t*.. s* . 66>H>-it-"NN5rOrOT!-^|-T|-ioiO t/-.\o "O vo 1-- *~- i~OO 06 06 c?\ 
 firorCcOcrSfOfOrOf^cofOfOcOoororor'ScOcCfOrOrOrCccmco 
 
 g g ' 5 ^- 
 
 11-53 
 cu * 
 
 *d "^ 
 
 Bg 
 
 ON>OI-I i~-.fCONtOM i~-rf5O\tow t-.roONto r-mostow t>.rfso\ 
 trj T|- tp tp\p \Oi>X:Op OsONO M f N N rO"<t--'J-O tO\O I-- t-^OO OO 
 
 o "' "^ js 
 
 ffi roa'C 
 
 Irli 
 
 0, = 
 
 D
 
 34 Letters of Ricardo to Malthus. 
 
 XV. 
 
 [Addressed to Penr[h]yn Arms, Bangor, North Wales.] 
 MY DEAR SIR, 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) cer- 
 tainly do. With the same capital there would be less pro- 
 duction 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 de- 
 pends 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 manu- 
 factures than to refuse to import corn and other com- 
 modities 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,
 
 Protection and Rate of Interest. 35 
 
 . 
 
 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 proposi- 
 tion in Political Economy than that restrictions on importa- 
 tion of corn in an importing country have a tendency to 
 lower profits. Remember me kindly to Mrs. Malthus. 
 
 Yours very truly, 
 
 DAVID EICARDO. 
 
 XVI. 
 
 GATCOMB PABK, NEAR MINCHIN HAMPTON, GLOUCESTERSHIRE, 
 
 25^/4 July, 1814. 
 
 MY DEAR SIR, 
 
 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 x . 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, 
 
 1 This actually happened; and the letter is re-addressed first to 'Ayles- 
 bury ' and then to ' Hayleybury '. 
 
 D 2
 
 36 Letters of Ricardo to Malthus. 
 
 but now you add or rather your argument leads to that 
 conclusion, ' if the consequence of such restriction be a 
 great reduction of capital. 1 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 in- 
 dependently 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 ap- 
 pears 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 op- 
 posite reason profits will diminish when capital and pro- 
 duce 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 1 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 com- 
 
 1 Here and elsewhere written ' expence '.
 
 Profits and Price of Corn. 37 
 
 modities 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 hun- 
 dred 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 delight- 
 ful, 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 RICAKDO. 
 
 I believe that in this sweet place I shall not sigh after 
 the Stock Exchange and its enjoyments. 
 
 XVII. 
 
 MY DEAR SlR, GATCOMB PAKK, n Aug., 1814. 
 
 I received your letter last Sunday, and in the 
 evening of that day Mrs. Eicardo 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
 
 38 Letters of Ricardo to Malthus. 
 
 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 diminu- 
 tion 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 manu- 
 factured 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 pro- 
 portion as the rise of labour, and consequently his per-
 
 Saving' and Spending. 39 
 
 centage 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 con- 
 sumed, 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 de- 
 mand, 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
 
 4O Letters of Ricardo to Malthus. 
 
 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 in- 
 dividuals 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. 
 
 XVIII. 
 
 GATCOMB PARK, MINCHIN HAMPTON, 
 MY DEAR SlB, 3o&Aug., 1814. 
 
 I left London on the 1 9th, 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
 
 Demand and Supply. 41 
 
 absolutely necessary. David x , who is come to pass his holi- 
 days 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]y- 
 bury. 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 com- 
 modity 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 per- 
 manently 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 
 
 1 Ricardo's second son. The eldest was Osman, the third Mortimer. Kicardo 
 had five daughters, three of whom were married, one to Mr. Clutterbuck, 
 mentioned later in the correspondence. (See Gentl. Mag. 1823, pt. ii. 376.)
 
 42 Letters of Ricardo to Malthus. 
 
 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 consump- 
 tion ? 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 imme- 
 diately 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 [attri- 
 bute 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 1 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 BICARDO. 
 
 NOTE. The ' Editor ' was Lord Hardwicke, who moved for the 
 Committee roth June, 1814, and presented its report to the House 
 on 23rd Nov. 1814. See Hansard, under date Feb. 17, 1815, p. 796 ;
 
 Nature of Demand. 43 
 
 Ann. Eegister 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. 
 
 XIX. 
 
 MY DEAR SlR 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
 
 44 Letters of Ricardo to Malthus. 
 
 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 1 , that in refer- 
 ence 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 com- 
 paratively greater. Wherever capital is scanty, the neces- 
 saries 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 conse- 
 quence 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 
 
 1 Announced as early as 1807 in the reply to Spence (' Commerce De- 
 fended '). Eicardo's friendship with James Mill seems to have begun about the 
 year 1 8 1 1 : ' 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 J as. Mill to MacCulloch, 1 9th Sept. 1823 (Bain's Life of 
 Ja?. Mill, p. 209).
 
 Wants Unlimited. 45 
 
 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 incli- 
 nation 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. Bicardo and I are going this morning to Chelten- 
 ham, which is eighteen miles distant from us ; we shall 
 return to-morrow. 
 
 Mr. Smith 1 , whom I met at your house, lives about nine 
 miles from here. 
 
 ... 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 2 , 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. Bicardo, 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. 
 
 XX. 
 
 MY DEAR SlR GATCOMB PARK, lyrd Oct., 1814. 
 
 On the day that you were writing your last letter 
 to me, I was travelling to London with Mrs. Ricardo, 
 
 1 Thomas Smith of Easton Grey. His name is on the list of subscribers to 
 Hone's Testimonial, 1818. 
 
 2 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.
 
 46 Letters of Ricardo to Malthus. 
 
 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 x 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 ap- 
 pears to me to be very little difference in these statements. 
 You infer that my doctrine is not correct because im- 
 provements 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 
 
 1 Here and elsewhere spelt ' favoring '.
 
 Prices and Profits. 47 
 
 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 propo- 
 sition, and are by no means at variance with it. You 
 add to your statement [ c ]that in the interval between the 
 two extremes (of high profits and low profits caused by 
 facility or difficulty of procuring food) considerable varia- 
 tions 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 accumu- 
 lation of capital, may be paving the way for permanently 
 diminished profits. It appears to me important to ascer- 
 tain 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 accumula- 
 tion of capital, which by creating new demands for labour 
 may give a stimulus to population and consequently pro- 
 mote the cultivation or improvement of inferior lands ;
 
 48 Letters of Ricardo to Malthus. 
 
 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 
 [we] 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 senti- 
 ments 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
 
 Accumulation of Capital. 49 
 
 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 ac- 
 cording 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*, con- 
 cisely 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 
 
 1 Ed. 5th (1789), In McCulloch's ed. (1863), pp. 336, 337. See quotation 
 at end of letter.
 
 5O Letters of Ricardo to Malthus. 
 
 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 with- 
 out 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 
 BO low that no profit could be made by them. That by a more
 
 Competition. 5 1 
 
 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 de- 
 mand, besides, though in the beginning it may sometimes raise the 
 price of goods, never fails to lower it in the long run. It en- 
 courages 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 pro- 
 mote.' 
 
 XXI. 
 
 MY DEAR SlR, GATCOMB PARK, 18 Dec., 1814. 
 
 Since I received your last letter I have been un- 
 expectedly 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 Chelten- 
 ham, and have also been as far as Devonshire, to the old 
 Abbey which Mr. Bentham 1 at present inhabits. I ac- 
 companied M. Say, the author of ficonomie Politique, on 
 a visit to him and Mr. Mill 2 ; 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 
 
 1 See note at end of this letter. 
 
 4 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 Jos. Mill, pp. 129 seq). It is in the valley of the Axe, four 
 miles from Chard, on the borders of Devonshire and Somerset.
 
 52 Letters of Ricardo to Malthus. 
 
 county. He does not appear to me to be ready in con- 
 versation 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 excur- 
 sion to any other quarter. 
 
 I perceive that we are not nearly agreed on the subject 
 which we have been lately discussing. I have been en- 
 deavouring to get you to admit that the profits on stock 
 employed in manufactures and commerce are seldom per- 
 manently 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. Accumula- 
 tion 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
 
 Rate of Profits. 53 
 
 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 some- 
 what diminished. 
 
 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 any- 
 where 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 dimmish 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 question. 
 
 M. Say, in the new edition of his book, p. 99, vol. i, 
 supports, I think, the very [same] doctrine that demand
 
 54 Letters of Ricardo to Mai thus. 
 
 is regulated by production. Demand [is] always an ex- 
 change 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 shoe- 
 maker'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
 
 Bentham and Ricardo. 55 
 
 Mrs. Ricardo, I must falter out my excuses if you are 
 inexorable. With kind regards to Mrs. Malthus, 
 
 I am, ever yours truly, 
 
 DAVID EICARDO. 
 
 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 tele ct, tete 
 with Ricardo. He would borrow a sixpenny book instead of 
 buying it. There was an epanchement 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 c 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. Con- 
 sidering 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 Encyclo- 
 paedia Britannica on the grounds that, first, it was not worth pay- 
 ment, 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 gome 
 years before this time, though not published in England till long 
 afterwards) there was no more than a general agreement between 
 the two men.
 
 56 Letters of Ricardo to Malthus. 
 
 XXII. 1 
 
 MY DEAR SlR, GATCOMB PARK, 13 Jan., 1815. 
 
 I am pleased to learn that you are busy writing 
 with a view to immediate publication 2 . 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 3 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 pre- 
 paring. 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 mis- 
 taken (and I believe you hold the same opinion as him), 
 in supposing the farmer to lie under any particular dis- 
 advantage 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 
 
 1 The first sentences of this letter are quoted by Empson, Edinb. Review, 
 Jan. 1837, p. 498. 
 
 8 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. 
 
 3 Here as elsewhere spelt ' endeavor.'
 
 Commerce and Agriculture. 57 
 
 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 IJevel, 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
 
 58 Letters of Ricardo to Malthus. 
 
 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 every- 
 where 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 a8th. . . Pray take a 
 bed at our house. . . 
 
 Truly yours, 
 
 DAVID RICARDO. 
 XXIII. 
 
 [Headed by Malthus in pencil, Feb. 1815. Post Office mark, Feb. 6.] 
 
 MY DEAR SIR, 
 
 I have now read with great attention your essay on 
 the rise and progress of Rent 1 , 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 con- 
 taining many original views which are not only important 
 
 1 ' An Inquiry into the Nature and Progress of Rent and the principles by 
 which it is regulated.' 1815.
 
 Doctrine of Rent. 59 
 
 as connected with rent, but with many other difficult points, 
 such as taxation, etc., etc. 
 
 I cannot, however, help regretting that you did not con- 
 sider 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 hus- 
 bandry, 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 encour- 
 age 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 bene- 
 ficially to the public interest, at the expense of the profits 
 of stock J . 
 
 Viewing rents in this light, it follows that I must with- 
 draw 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 differ- 
 ence 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 
 
 1 In the original, ' trade' has been written first and then struck out in favour 
 of ' stock.'
 
 60 Letters of Ricardo to Malthus. 
 
 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 [importing 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 con- 
 sistent 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 1 8s. 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 
 \ 4*. 
 
 Ever yours, 
 
 DAVID RICARDO. 
 
 XXIV. 
 
 MY DEAR SIR, loth Feb -> I8i s- 
 
 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 J . 
 
 1 ' 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- 3 6 7-39-
 
 Rent and Profit. 61 
 
 In the case of the Scotch farmers who made such large 
 profits on their capital during the latter part of their leases 1 , 
 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 em- 
 ployed. 
 
 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 2 , 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 3 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 restric- 
 tions 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 
 
 1 Cf. ' Nature and Progress of Rent,' p. 30, note. 
 
 * 'Eent,' 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. 
 3 ' Grounds of an Opinion.' See note on Letter XXII, p. 56.
 
 62 Letters of Ricardo to Malthus. 
 
 at their fair value ; but in an economical view, although 
 you have here and there allowed that we might be bene- 
 fited 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 1 , 
 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 2 , 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. 
 
 XXV. 
 
 MY DEAR SlR, LONDON, gth March, 1815. 
 
 My acquaintance lies so little amongst political 
 economists that I have very few opportunities of knowing 
 
 1 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. 
 
 8 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.
 
 A Concession. 63 
 
 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 im- 
 provements in agriculture on the other. I made no allow- 
 ance for the altered value of the raw material in all manu- 
 factured goods l . 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 eco- 
 nomy. Mr. Brougham has, I think he said, promised to 
 introduce him to you. Mr. Jacob 2 has handled both him 
 
 1 Cf. Ricardo's Pol. Econ., ch. vi. 65 (ed. McCulloch). 
 
 8 In his 'Letter to Samuel Whitbread, Esq., M.P. ; being a Sequel to Con- 
 siderations on Protection of Brit. Agriculture, with Remarks on the Publica- 
 tions of a Fellow of University College, and Mr. Ricardo, and Mr. Torrens.'
 
 64 Letters of Ricardo to Malthus. 
 
 and me rather roughly; but he will not condescend to 
 argue with us. I shall be very easy if he is the most for- 
 midable opponent that is to attack me, for he seems totally 
 ignorant of the scientific part of the subject. 
 
 The opposition to the bill 1 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 out- 
 rage. 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 2 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. 
 
 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. 
 
 1 The New Corn Law, prohibiting importation when the home price of 
 wheat should be under 8o. a quarter. 
 
 a Possibly William Phillips, F.R.S., F.G.S., the Quaker and eminent 
 mineralogist and geologist, member of the Geological Society. Born I773> died 
 1828. Hi car do in early life was himself devoted to geological study.
 
 Taxation and Prices. 65 
 
 But, if he were right, the high price would not be accom- 
 panied 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 de- 
 gree, 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. 
 
 Malthus. 
 
 Ever yours, 
 
 DAVID RICARDO. 
 
 XXVI. 1 
 
 MY DEAR SlR UPPER BKOOK STREET, 14 March, 1815. 
 
 I have read Mr. Torrens' pamphlet 2 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 3 . I think he is an adversary worthy of your pen, 
 
 1 Part of this letter (5th sentence to 8th) is quoted by Empson, Edinb. 
 Review, Jan. 1837, P- 499- 
 
 2 '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 Eicardo. 
 On the whole, Torrens stands rigidly by Adam Smith as against his successors, 
 especially Malthus. See Note to Letter XXIX. 
 
 3 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.' 
 
 P
 
 66 Letters of Ricardo to Malthus. 
 
 and the friends of truth cannot fail to profit by the discus- 
 sion. 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 ques- 
 tion. My opinion is that corn can only permanently rise 
 in its exchangeable value when the real expenses a 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 exchange- 
 able 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 T o 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., 
 
 1 Here as elsewhere spelt in the old fashion ' expences.'
 
 Price of Corn. 67 
 
 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 l , or rather it has 
 been taken from my office. If I can get another, it sha[ll] 
 accompany this. The improvements] in agriculture I be- 
 lieve 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 2 ] speaking 
 of Mr. Jacob's pamphlet with so much [praise 2 ] as you did 
 when Mr. Basevi 3 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 land- 
 lord 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 BICARDO. 
 
 XXVII. 
 
 MY DEAR SIR, LONDON, 17 March, 1815. 
 
 If your statement 4 was correct, this extravagant 
 consequence would follow from it : That in proportion as 
 
 1 Probably one of the two he published on the Currency in 1812 and 1813 
 respectively. 
 
 a MS. hopelessly torn. 
 
 3 The name appears as Baswi in Ricardo's letters to Say. Even in Ricardo's 
 clear handwriting Basevi and Baswi would be hardly distinguishable. 
 
 1 Probably the statement given at the beginning of next letter. 
 
 F 2
 
 68 Letters of Ricardo to Malthus. 
 
 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 x , notwithstanding that in the latter period 
 many more than double the quantity of hands were em- 
 ployed 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 how- 
 ever 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 ex- 
 pense, the price of produce will not rise. Suppose the pro- 
 duce 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 in- 
 creases 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 pro- 
 portion to the number of men employed, it will rise to 4 16*., 
 because to raise ten millions of quarters an average of three 
 
 1 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.
 
 Expenses of Cultivation. 69 
 
 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 l ; 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 ; conse- 
 quently 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 i6s., but to 4 48., because 
 as 5 : 5? : : 4 : 4 4*. But, if the price was only 4 49., 
 more corn would be required by the labourer than fourteen 
 bushels, that calculation being founded on a greater ex- 
 changeable value of corn. It appears too that your state- 
 ment 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 neces- 
 saries on which a part of their wages are expended. 
 
 What a dreadful change in our political horizon has 
 
 1 Because the remaining six would purchase what eight purchased before.
 
 7O Letters of Ricardo to Malthus. 
 
 occurred within a few days 1 ! 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. 
 
 XXVIII. 
 
 MY DEAR SIR, LONDON ' 2I Marck > l8l s- 
 
 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 popula- 
 tion, 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. 1 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 
 
 1 Napoleon landed near Frejus on a6th Feb., 1815.
 
 Diminishing Returns. 71 
 
 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 num- 
 ber 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 conse- 
 quence 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 i\ 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
 
 72 Letters of Ricardo to Malthus. 
 
 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 em- 
 ployed 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. 
 XXIX. 
 
 MY DEAR SIR, LONDON, 27** March, 1815. 
 
 No particular event which I recollect ever oc- 
 casioned 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 every- 
 thing else, we shall be easy under our new situation in 
 another fortnight. I am glad, however, to turn my atten- 
 tion to other subjects. 
 
 I have observed in the bullion pamphlet 1 that many 
 who say they consider money only as a commodity, and 
 subject to the same laws of variation in value from de- 
 mand and supply as other commodities, seldom proceed 
 
 1 Or rather in the Appendix to it, p. 292 (McCulloch's ed.).
 
 Money as a Commodity. 73 
 
 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 uni- 
 form 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 com- 
 petition 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 manu- 
 facturer 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 in-
 
 74 Letters of Ricardo to Malthus. 
 
 creases 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. Be- 
 tween 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 dif- 
 ference 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
 
 Profits lowered by High Price of Corn. 75 
 
 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 1 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 2 his book was 
 spoken of the other day with great approbation. Mr. 
 Blake 3 and Mr. Greenough 4 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 
 
 1 See the Note at the end of this letter. 
 
 2 Ricardo was one of the original members of the Geological Society. See 
 McCulloch's ed. of his Works, p. xvii. 
 
 3 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. 
 
 4 Probably G. B. Greenough, F.R.S., F.S.L., and President of the Geolo- 
 gical Society, who wrote on Geology, 1819.
 
 76 Letters of Ricardo to Malthus. 
 
 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 RICAKDO. 
 
 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 1 8 1 o-i i , 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' (puhl. 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,' hut 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.
 
 The Greater Surplus the Greater Rent. 77 
 
 XXX. 
 
 MY DEAR SlR, 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 be- 
 longed 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 de- 
 mand for home and foreign commodities without their 
 price being permanently raised, as no new difficulties may 
 attend their production. When America becomes popu- 
 lous 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
 
 78 Letters of Ricardo to Malthus. 
 
 treble their present amount, yet will not the profits of 
 stock be leas 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 con- 
 ceive that many more men might not be profitably em- 
 ployed 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 ex- 
 ceeded [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 com- 
 modities 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.
 
 Corn Prices and General Prices. 79 
 
 XXXI. 
 
 MY DEAR SIR, 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 impro- 
 bable that all manufactures should rise at home, and yet 
 that those on which [the wages of] labour are expended 
 should not rise 1 ? Is not the price of soap, candles, etc., 
 though foreign commodities 1 , 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 commodi- 
 
 1 They were only foreign in the sense of being articles, not only manu- 
 factured in this country but also imported from abroad, e. g. soap (under 
 a heavy duty) from France, Italy, and Spain.
 
 8o Letters of Ricardo to Malthus. 
 
 ties 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*., 
 wages would vary only 10*. on four quarters, and conse- 
 quently 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 be- 
 tween farmer and landlord; and 88 would be to 272 as 32 
 to i oo. 
 
 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 
 i oo capital or expenses on the new land 19-7. 
 
 Rent . . [i]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*. 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 in-
 
 Depreciation. 8 1 
 
 creased, 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 manner. 
 
 I yesterday met Mr. Smyth 1 , 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 op- 
 portunity 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 cur- 
 rency 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 
 
 1 Probably William Smyth, Professor of Modern History at Cambridge, 
 friend of Mackintosh and Horner. 
 
 G
 
 82 Letters of Ricardo to Malthus. 
 
 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 vdlite 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 Edin- 
 burgh 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) ; (1. c. p. 8.) 
 
 XXXII. 
 
 MY DEAE SlB, LONDON, 21 April, 1815. 
 
 I was sorry you could not join our party on Wed- 
 nesday. 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 gentle- 
 manly 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 sub- 
 ject. He said that Dr. Crombie T and you had met pur- 
 
 1 Dr. Alexander Crombie, schoolmaster, theologian, and economist, had 
 published in the Pamphleteer, vol. x, in 1813, a 'Letter to David Kicardo, 
 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 Agricul- 
 tural 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.
 
 Pro/its from Land and Manufactures. 83 
 
 posely to discuss the question, and from him he had under- 
 stood 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 circum- 
 stances 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 [manufactures to procure other enjoyments for 
 
 G 2,
 
 84 Letters of Ricardo to Malthus. 
 
 the so[ciety 1 ], and profits on the land would rise at the ex- 
 pense 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 cir- 
 cumstances 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 manu- 
 factures 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 manufac- 
 tures 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. 
 
 XXXIII. 
 
 (Addressed to Claverton House, near Bath.) 
 MY DEAR SlR UK-BE BEOOK STBEET, 27^ 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 
 1 Hopelessly torn by the seal.
 
 Loans on the Stock Exchange. 85 
 
 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 1 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 2 ; 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, be- 
 
 1 Probably they had had a private conversation on the subject. On the 
 28th June Whitbread made a lengthened speech in the House to this effect. 
 
 3 A loan of 36,000,00x5 was contracted in 1815. See Gilbart's 'History and 
 Principles of Banking' (2nd ed. 1835), p. 54.
 
 86 Letters of Ricardo to Malthus. 
 
 cause 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 un- 
 observed advantages attending the high price of corn and 
 labour ' when not arising solely from difficulty of produc- 
 tion,' [by] which I think you imply that no such ad- 
 vantages attend high prices if attended with difficulty of 
 production. 
 
 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 accom- 
 plished. I shall certainly leave London the very earliest 
 day possible. 
 
 The price of labour in America appears to me enor- 
 mously high as compared with the price of wheat; but 
 we should not fail to remember how very low the ex- 
 changeable value of wheat is there, and how much of it 
 must be given for the manufactured necessaries and com- 
 forts of life. . . . 
 
 Ever truly yours, 
 
 DAVID RICARDO.
 
 Hopes of Peace. 87 
 
 XXXIV. 
 
 MY DEAR SIR, 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 Gat- 
 comb 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 despotism. 
 
 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 com- 
 ply 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
 
 88 Letters of Ricardo to Malthus. 
 
 work in arranging and balancing my accounts ever since 
 I have been here. I recur now, howeyer, 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 pro- 
 duction not to be desirable in itself. In our own case the 
 high bullion price of corn is not wholly owing to the barren- 
 ness of the land to be taken into cultivation, but from what- 
 ever 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 contradic- 
 tion 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 proposition 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. 
 XXXV. 
 
 MY DEAR SIR, GATCOMB PARK, loth 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
 
 The Bank of England. 89 
 
 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 1 , 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 compensa- 
 tion 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 com- 
 missioners might be appointed, independent of all minis- 
 terial 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 
 
 1 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.
 
 9O Letters of Ricardo to Malthus. 
 
 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 in- 
 vest 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 * ; 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 
 
 1 Cf. Ricardo's Pol. Econ. and Tax. ch. vi, Profits.
 
 J. B. Say. 91 
 
 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 1 , 
 in the title page of which your name is mentioned. 
 
 Ever yours, 
 
 DAVID KICARDO. 
 
 . . . Have you seen Monsieur Say's [Catec]hisme d'Econo- 
 mie Politique ? He has softened but not [expungjed the 
 objectionable definitions. 
 
 NOTE. Correspondence between Bicardo and J. B. Say is 
 given in the ' (Euvres Diverges ' 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 eon of a Lyons mer- 
 chant, 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 re- 
 turned to France in 1789 and entered the employment of a Life 
 Insurance Company, the manager of which (Claviere) 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 Bicardo ten years later. After serving in the revolutionary 
 army in 1792, he left commerce for journalism. His chief book, 
 Le Traite de 1'Economie Politique, appeared in 1803. Too inde- 
 pendent to please Napoleon, he was forced to quit his new pro- 
 fession 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 Govern- 
 ment to report on the economical condition of England. He was 
 
 1 Probably ' An Address to the Nation on the relative importance of Agri- 
 culture and Manufactures, with remarks on the doctrines of Mr. Malthus,' 
 1815.
 
 92 Letters of Ricardo to Malthus. 
 
 cordially received by Eicardo, 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, I5th November, 1832. 
 
 Eicardo writes to him from Gatcomb Park on i8th Aug., 1815, 
 thanking him for the copy of the (first edition of the) ' Catechisme 
 de 1'Economie Politique,' which he had just sent. Though com- 
 plimenting 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 Eicardo'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. Eicardo 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 * 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 oppo- 
 sition 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.' 
 (GEuvres Diverses de Say, pp. 409-11. Eicardo wrote in English, 
 but in this and the other cases the editors give only the French.) 
 
 Say's answer follows (pp. 411-13), 2nd Dec., 1815 : ' Nous nous 
 occupons heureusement vous et moi de choses de tous les temps 
 1 High Price of Corn, 1815.
 
 Facility of Production. 93 
 
 plutot que de celles du moment actuel, qui ne sont pas gaies, 
 malgre" les fStes que Ton 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 Eicardo is right in regard 
 to the growth of the manufacturer's capital, and promises to in- 
 troduce the qualification suggested by Ricardo in his next edition. 
 In the controversy between Malthus and Ricardo he finds it dif- 
 ficult 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.' 
 
 XXXVI. 
 
 MY DEAR SIR, 
 
 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 1 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 
 
 1 Spelt throughout ' Othaeite.'
 
 94 Letters of Ricardo to Malthm. 
 
 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 im- 
 mediate 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 sup- 
 pose 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 per- 
 sons were to come amongst us with their capital, skill, etc., 
 would not the same consequences follow as I have just
 
 Productiveness of Capital. 95 
 
 stated 1 ? Now every improvement in machinery is pre- 
 cisely 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 every- 
 thing 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 pro- 
 ductiveness 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 com- 
 bat[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 con- 
 cerned, 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
 
 96 Letters of Ricardo to Malthus. 
 
 the commodities which they manufacture of less exchange- 
 able 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 1 
 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. . . . 
 
 Yours, 
 jth Oct., 1815. DAVID RICARDO. 
 
 1 Probably Henry Warburton, mentioned e.g. in Personal Life of Geo. 
 Grote, p. 75. In a MS. letter from Joseph Hume to Francis Place, I9th 
 Oct., 1839 (i n * ne Place Collection), he refers to Mr. Warburton as a friend 
 of Place who had been too much neglected by the Whigs in office.
 
 Wages and Profits. 97 
 
 XXXVII. 
 
 [Not dated or headed, but fastened to preceding.] 
 MY DEAR SIR, [0e*. 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 1 , of which not more than 
 iTOO 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 i measures, will be that 4 measures of corn, 
 cloth and cotton will be worth only the price of a day's 
 
 1 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. 
 
 H
 
 98 Letters of Ricardo to Malthus. 
 
 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 in- 
 creased 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 station- 
 ary 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 other- 
 wise 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 shoe- 
 makers 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
 
 Accumulation and Improvements. 99 
 
 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 con- 
 sequence of the improvement should lead to further ac- 
 cumulation 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 con- 
 tinued 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 facility. 
 
 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. 
 
 H 2
 
 TOO Letters of Ricardo to Malthus. 
 
 XXXVIII. 
 
 MY DEAR SIR, 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. 1 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 2 . 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 
 
 1 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 1 was that the Bank should be obliged to deliver uncoined 
 bullion, at the Mint price (^instead of coined money) in exchange for its notes. 
 
 2 Presumably Ricardo's first pamphlet, of 1 8 10. Cf. Works (McCulloch's ed.) 
 p. zxiii.
 
 Infinite Demand for Capital. 101 
 
 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 pop- 
 ulation and capital from increasing without limit ? I acknow- 
 ledge 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 barrennesSj 
 however scarce corn may be. I agree with you too that,
 
 IO2 Letters of Ricardo to Malthus. 
 
 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. 
 
 XXXIX. 
 
 MY DEAR SIR, 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 *. 
 
 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 
 
 1 They amounted to 27,300,000 ('Econ. and Sec. Currency,' Wks., p. 450, 
 but cf. p. 41 3).
 
 Effect of Low Prices. 103 
 
 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 pro- 
 duction 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. 
 
 XL. 
 
 MY DEAR SlR GATCOMB PABK, 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. 1 is recovered. Mr. Mill recommends its 
 
 1 Probably ' Econ. and Secure Currency.' See note to Letter XLII.
 
 IO4 Letters of Ricardo to Malthus. 
 
 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 in- 
 tention 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 con- 
 siderable 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 incomprehen- 
 sible to the generality of readers. The Chronicle, I see. has 
 reported what he thought or heard I said, but he has im- 
 puted to ine 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 m ore 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 re- 
 porters 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
 
 Mai thus at Work. 105 
 
 disturbance 1 will give you some security against its recur- 
 rence in future. 
 
 I conclude that you have quite finished writing the altera- 
 tions and amendments which you projected for the new 
 edition of your book 2 . 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 XI.] 
 
 [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 RICAKDO. 
 
 1 See Malthus and his Work, p. 422. 
 
 2 ' 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.
 
 io6 Letters of Ricardo to Malthus. 
 
 XLL 
 
 MY DEAR SlR 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 sup- 
 posed, the day after the Bank Court. I should have con- 
 sidered 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 1 . 
 
 It is exceedingly provoking that you should have been 
 so much interrupted by college affairs as not to have made 
 mo're 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 im- 
 portant, 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 2 ; and a little delay 
 in the publication is not very important. 
 
 1 The Post Office London Directory of the time gives Ricardo's full City 
 address as 4 Shorter's Court, Throgmorton Street. 
 
 2 The advice was taken.
 
 The Essay on Population. 107 
 
 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 altera- 
 tions 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 ex- 
 cellent. 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 1 . I re- 
 member 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 cor- 
 rectly. 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 diffi- 
 culty or facility of production or from some cause particu- 
 larly affecting the value of money, and that no alteration 
 
 1 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.
 
 io8 Letters of Ricardo to Matthus. 
 
 of price proceeding from these causes affect[s] general 
 profits, allowing always some effect for cheapness of the 
 
 raw material. . . . 
 
 Yours very truly, 
 
 DAVID RICARDO. 
 
 XLIL 
 
 MY DEAR SlR LONDON, loth 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 even- 
 ing. 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 l 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 hurry. 
 I cannot think it inconsistent to suppose that the money 
 
 1 See note at end of this letter.
 
 Economical and Secure Ciirrency. 109 
 
 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 RICAKDO. 
 
 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. Bicardo, as appears from Letter XL, had already sub- 
 mitted 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 r \ ' 
 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 ' Eco- 
 nomical and Secure Currency' (i 8 1 6), which has one. The 'Reso- 
 lutions 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 Bicardo in the frag- 
 ment quoted had probably been saying, that these Resolutions, if 
 he printed them, would fill nearly eight pages, etc. 
 
 XLIII. 
 
 MY DEAR SIR, LONDON, 7 m, 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
 
 no Letters of Ricardo to Malthus. 
 
 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 1 . 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 sus- 
 pense 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 2 . 
 You would be surprised at the abjectness of the city men, 
 and the great influence which the directors have in conse- 
 quence 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. 
 
 1 ' Economical and Secure Currency.' See note to previous letter. 
 a Of. ' Econ. and Secure Currency,' Wks., pp. 433, 434.
 
 Relative Importance of Economical Problems. 1 1 1 
 
 I have not thought much on our old subject ; my diffi- 
 culty 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 ex- 
 changeable value, I should have gained half the battle. . . . 
 
 Very truly yours, 
 
 DAVID RICARDO. 
 
 XLIV. 
 
 [On the back of this are jotted figures and lists of books in Malthus' 
 handwriting.] 
 
 MY DEAK SIR, LONDON, 23^ 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 mating 
 great progress in it. I wish much to see a regular and con- 
 nected 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 J ? 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 afi'ect the prices 
 
 1 Letter to the Earl of Liverpool on Agriculture, 1816.
 
 ii2 Letters of Ricardo to Malthus. 
 
 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 under- 
 took it. 
 
 The sale of my last pamphlet has far exceeded its merits. 
 Murray is printing a second edition J . 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 2 ? 
 
 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 Eicardo above all his contemporaries, 
 he finds frequent occasion to differ from him. Indeed he occa- 
 sionally claims that Eicardo 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 pro- 
 ducing the latter, and will even import the former (Eicardo, Works, 
 pp. 76, 77 ; cf. Torrens, Preface to Essay on External Corn Trade, 
 p. vii). Yet the doctrine has always passed as Eicardian jxir 
 
 1 The edition reprinted in Wks., ed. McCulloch, pp. 391 seq. 
 
 2 The question was whether the Income Tax, being a war tax, was to cease 
 with the war. The Ministry were forced to yield.
 
 Haileybury College. 113 
 
 excellence (see e. g. Cairnes, Leading Principles of Political Eco- 
 nomy, Part III. ch. i. p. 371, and Logical Method, p. 81), and we 
 should not guess, from Letter XL VII 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 he un- 
 animity amongst Economists on all fundamental principles. 
 
 XLV. 
 
 MY DEAE SIR, LONDON, 5 March, 1816. 
 
 The public papers have ere this informed you of the 
 result of yesterday's ballot at the India House ; Mr. Jack- 
 son'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 1 comments on some passages in your 
 pamphlet 2 lead me to think that he must have misunder- 
 stood 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 candi- 
 dates should be finally and irrecoverably dismissed from all 
 chance of going out to India 3 . 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 punish- 
 ment 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 4 spoke very kindly and very hand- 
 somely of the professors ; yet I thought that he was by far 
 
 1 Not Chas. Bosanquet who wrote on the Bullion Report, but Jacob 
 Bosanquet, a Director of the East India Company. 
 
 2 Letter to Lord Grenville occasioned by his observations on E. India Co.'s 
 education of Civil Servants, 1813. 
 
 3 See Mai thus and his Work, p. 424. 
 
 4 Hon. Wm. F. Elphinstone, a Director of the East India Company. 
 
 I
 
 1 1 4 Letters of Ricardo to Malthus. 
 
 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 consider- 
 able 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 1 . . . . 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 2 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 3 . When you have 
 read them, pray send them with your observations to 
 Brook Street by the coach. . . . 
 
 Very truly yours, 
 
 DAVID RICARDO. 
 
 XLVI. 
 
 MY DEAR SIR, LONDON, 24^ 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 
 
 1 Written without a capital, as the days of the week usually are in these 
 letters. 
 
 8 From the description which follows, this must be the last section (' Mr. 
 Malthus's opinions on Rent') in ' Political Economy and Taxation,' 1817. 
 
 * From Letters LII, LIU, it is clear that the printer had to wait for the 
 whole MS. much longer than was at first intended.
 
 Slow Progress in Writing. 115 
 
 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 re- 
 ceived 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 ad- 
 vances 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 fur- 
 ther. Obstacles almost invincible oppose themselves to 
 my progress, and I find the greatest difficulty to avoid con- 
 fusion in the most simple of my statements. 
 
 Have you seen Torrens' letters to the Earl of Lauderdale 
 in the ' Sun 1 ' 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 actu- 
 ally under the mint price. The change is surprising [and 
 has been] brought about in a very unexpected [manner]. . . 
 
 Very truly yours, 
 
 DAVID RICARDO. 
 
 I 2
 
 1 1 6 Letters of Ricardo to Malthus. 
 
 XL VII. 
 
 MY DEAR SIR, 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 writ- 
 ings 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 con- 
 tradictions with which Political Economy is encumbered x . 
 
 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, notwith- 
 standing 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 prin- 
 ciples on Political Economy which have not the sanction 
 either of your or his authority, which renders it much less 
 
 1 This sentence ig quoted by Empson, Edin. Review, Jan., 1837, p. 498.
 
 Work better left to others, 1 1 7 
 
 important that I should persevere in the task which I com- 
 menced of giving my opinions to the public. Those prin- 
 ciples 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. 
 
 xiviir. 
 
 MY DEAR SIR, GATCOMB PABK, 9 tt ^.,'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 tra- 
 veller, and my daughter I have always thought the very 
 worst I ever met with.
 
 1 1 8 Letters of Ricardo to Malthus. 
 
 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 diffi- 
 cult of production or require a great deal of labour to pro- 
 duce them. The more I reflect on the subject the more I 
 am convinced that the latter cause has an incessant opera- 
 tion. 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 un- 
 doubtedly 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
 
 Rate of Profits and of Wages. 1 1 9 
 
 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 de- 
 mand 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. 
 
 XLIX. 
 
 MY DEAK SIR, GATCOMB PABK, 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 con- 
 tinued 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 1 . I shall be glad to see in a con- 
 nected form your matured opinions on the progress of rent, 
 profits, and wages, and in what manner they are affected 
 
 1 Essay on Population.
 
 1 20 Letters of Ricardo to Malthus. 
 
 by the increasing difficulty of procuring food, by the in- 
 crease 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] x . 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 im- 
 peded 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 Lon- 
 
 1 Part of this sentence is quoted by Empson in Edin. Review, Jan., 1837, 
 p. 498.
 
 Food and Wages. 121 
 
 don 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 RICAHDO. 
 
 L. 
 
 MY DEAE SlR Bow, MIDDLESEX, 1 1 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 produc- 
 tion, 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 noo instead of 
 1000 quarters of corn, and when corn falls in consequence 
 from 5 to 4 io#. per quarter, the money as well as the 
 corn wages of labour may rise, for capital may have in-
 
 122 Letters of Ricardo to Malthus. 
 
 creased 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 stan- 
 dard, 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.
 
 Real and Money Wages. 123 
 
 LI. 
 
 MY DEAR SlB, LONDON, i 4 ft 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 pro- 
 duction 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 T (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 neces- 
 saries, 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 
 
 1 See Malthus, Pol. Econ. (1820), p. 241 : 'The real wages of labour con- 
 sist 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).
 
 124 Letters of Ricardo to Mai thus. 
 
 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 ap- 
 pear 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 por- 
 tion of produce is paid to the landlords for rent, the pro- 
 portion 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 in- 
 comprehensible. 
 
 Ever yours, 
 
 DAVID RICARDO. 
 
 LIL 
 
 MY DEAR SIR, GATCOMBPABK, $rd Jan., 1817. 
 
 A long time has elapsed since I had the pleasure of 
 seeing you, during which time I have often intended writ- 
 ing, 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
 
 Ricardo at work. 125 
 
 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, how- 
 ever, 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 l , 
 which I regret, as I believe the task was not very agree- 
 able to you, and as it may have prevented you from pro- 
 ceeding 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 put- 
 ting 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 reso- 
 lutely 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 no- 
 ticed them, and shall perhaps make them the subject of 
 some comment. 
 
 1 ' Statements respecting the East India College,' etc., 1817.
 
 126 Letters of Ricardo to Ma I thus. 
 
 I fear I shall not have the satisfaction of receiving your 
 acquiescence to my doctrines, particularly as I have re- 
 verted to my former views respecting taxes on raw pro- 
 duce. 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 1 . I am not one of those 
 who think that the raising of funds for the purpose of em- 
 ploying 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. 
 
 LIII. 
 
 MY DEAR SlR UPPER BROOK STREET, LONDON, 24 Jan., 1817. 
 
 I have read your pamphlet 2 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 
 
 1 See the long and interesting Report of Select Committee of House of 
 Commons on the Poor Laws. Ann. Keg. i8i7,Chron. pp. 263-302. Cf. Ann. 
 Reg. 1816, Chron. pp. 151 and 345. 
 
 a ' Statements respecting the East India College,' 1817.
 
 Immediate and Temporary Effects of Changes. 1 2 7 
 
 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 re- 
 newed 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 tem- 
 porary 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 1 . There is 
 one passage in particular which expresses fully my opinions. 
 I have not the book by me, and cannot refer you to the 
 
 1 Rent, p. 8. The second is the fact that the necessaries of life create their 
 own demand by leading to an increase of population.
 
 128 Letters of Ricardo to Malthus. 
 
 page, but it begins, ' I have no hesitation in stating that in- 
 dependently of irregularities in the currency/ etc. It is in 
 the essay on Rent x . 
 
 Surely Buchanan is right and your comment 2 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 3 . 
 
 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 encour- 
 age industry of a different kind and under the superinten- 
 dence 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. 
 
 LIV. 
 
 MY DEAR SIR, 
 
 I am not in the least acquainted with the subject on 
 which your papers 4 treat, but that is no reason why I should 
 not mention what appears to me defective. In page 8 5 you 
 add \ to the births for probable omissions, and j 1 ^ for deaths ; 
 but you do not tell your reader why these proportions are 
 
 1 P. 40. - ibid., p. 15. 
 
 8 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' (ist ed., 
 1817), McC. ed., pp. 243 seq. 
 
 4 ' Additions to the Fourth and Former Editions of an Essay on the Prin- 
 ciple of Population,' etc., 1817. 
 
 8 Should be p. 17.
 
 Tables of Mortality. 129 
 
 taken rather than \ or , 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 arith- 
 metical ratio while your application is to a geometrical 
 series. I submit whether this is correct. 
 
 If, as you say in page 14*, births are to burials as 47 
 to 30, and the mortality as I to 47, the addition to the popu- 
 lation would be little more than ^ instead of $, 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 
 1 0,483,0002. 
 
 In page i6 3 the mortality is supposed to be as before, 
 i in 47, and the births to the population as i to 29 i, and 
 the population to be 9,287,000. This latter sum divided by 
 29! 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 (r 97,595 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 10,531,000. 
 
 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. 
 
 P. 21. 
 
 10,488,000 is the figure given by Malthus, 1. c. p. 18. 
 Should be p. 21. Ricardo may have had a proof before him. 
 
 K
 
 130 Letters of Ricardo to Malthus. 
 
 LV. 
 
 MY DEAR SIR, 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 it. 
 
 Mr. Grant 1 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 Handle 
 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 ab- 
 breviated statement. Mr. Kinnaird 2 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; 
 
 1 Charles Grant, M.P., later Lord Glenelg. He was a Director in the 
 preceding year (1816). 
 
 3 Hon. Douglas J. W. Kinnaird.
 
 H alley bury College. 131 
 
 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 compul- 
 sion under which parents were of sending their children to 
 this particular institution. He seemed to me to adopt 
 Mi\ 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 im- 
 mediately 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 KICARDO. 
 
 K
 
 132 Letters of Ricardo to Malthus. 
 
 LVI. 
 
 MY DEAR SlR LONDON, gth 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. 1 
 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 2 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 3 will immediately publish a second 
 
 1 Pol. Econ. and Tax. ch. xxxii. 
 
 2 One of whom, was probably James Mill. See ' Autobiography of John S. 
 Mill,' p. 2 7. 
 
 3 ' Conversations on Political Economy' (anon. 1816), in which the inter- 
 locutors are ' Mrs. B.' and ' Caroline.'
 
 Authors and Publishers. 133 
 
 edition 1 . 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 con- 
 troversy, 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 
 difficulty. 
 
 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 2 , was very limited ; he talked of it's not having 
 exceeded 1 56 copies. Since writing the above I have seen 
 Mr. Hume 3 ; 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 KICARDO. 
 
 LVII. 
 
 MY DEAE SIR, 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 
 
 1 In original, ' addition.' a On the External Corn Trade. 
 
 3 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.
 
 1 34 Letters of Ricardo to Malthus. 
 
 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 considera- 
 tion 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 investi- 
 gation. 
 
 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 -KICABDO. 
 
 We returned from Gloucestershire on Tuesday last. 
 
 Lvni. 
 
 MY DEAR SIR, LONDON ' 26 ^^> I8l 7- 
 
 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 inconvenient. 
 
 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
 
 Ricardos Book in the Press. 135 
 
 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 inten- 
 tion. 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 ob- 
 jection to insert the note you mention 1 , 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 let.ter at intervals between other en- 
 gagements, as I have been repeatedly interrupted. I now 
 hear the postman's bell, and must hasten to conclude. 
 
 Very truly yours, 
 
 DAVID RICARDO. 
 
 LIX. 
 
 MY DEAR SIR, 
 
 I came up to London last night by the mail from 
 Salisbury, and have just seen your letter. Mr. Whishaw 
 
 1 I. e. the note which now appears Eic. Wks., p. 253, (' Upon showing this 
 passage to Mr. Malthus at the time when these papers were going to the
 
 136 Letters of Ricardo to Malthus. 
 
 told ine 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 diffi- 
 culty about the bed. 
 
 Yours very truly, 
 
 DAVID RICARDO. 
 
 LONDON, 3 June, 1817. 
 
 LX. 
 
 MY DEAR SlR, 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 Heidel- 
 berg. I met Mr. Hamilton 1 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 ex- 
 pedition 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 
 
 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 MB own, 
 power of purchasing other commodities. 
 
 1 Professor of Hindu literature and of the History of Asia, at Haileybury 
 College.
 
 Sufferings of the Poor. 137 
 
 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 1 and the gentleman, whose name I forget, 
 who teaches the French language at that institution 2 . 
 
 I hope you have been enjoying your excursion and that 
 you found less distress in Ireland than has been repre- 
 sented 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 plenty. 
 
 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 3 . 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 
 attention. 
 
 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 steps westerly in your winter vacation, and that you 
 
 1 Professor of Mathematics. 
 
 8 M. de Foligny, according to the E. India Register for this year, (1817). 
 3 Probably the ' Petit Volume contenant quelques ape^us des Homines et 
 de la Socie"teV See CEuvres Diverges, pp. 66 1 seq.
 
 138 Letters of Ricardo to Malthus. 
 
 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. 
 
 LXI. 
 
 MY DEAR SIR, GAKJOMB PAEK, 4 Sept., 1817. 
 
 I thank you very much for your kind letter of the 
 1 7th 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. Hum- 
 bold[t] in his account of New Spain x 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 dis- 
 posable 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 
 
 1 See the passages quoted by Malthus, Pol. Econ. (1820), pp. 382 seq. Cf. 
 ' Additions' to Essay, pp. 243 n., 235.
 
 Pursuit of Happiness. 139 
 
 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 enjoy- 
 ments of his employer. 
 
 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 
 those 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 l . 
 
 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 pros- 
 perity. 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 subject 2 . 
 
 1 Probably Dr. W. H. Wollaston or Woolaston, F.R.S., the chemist. 
 8 Pp. 8 1 seq. of McCulloch's edition of Works.
 
 140 Letters of Ricardo to Malthus. 
 
 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 1 . 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. 
 
 1 'British India.'
 
 Hopes of Prosperity. 141 
 
 LXII. 
 
 MY DEAR SIR, 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. Koget 1 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 R.omilly and Lady 
 Romilly have been on a visit at Mr. Phelps' a near 
 neighbour of mine. They went from here to Bowood 2 and 
 from thence they were going to Ford Abbey, Mr. Bent- 
 ham'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 circum- 
 stances 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. 
 
 1 The physician who, along with Dr. Marcet, attended Sir Sam. Romilly on 
 the day before his death (Nov. 1818). 
 
 2 Lord Lansdowne's house in Wiltshire.
 
 142 Letters of Ricardo to Malthus. 
 
 LXIII. 
 
 MY DEAR SIR, GATCOMB PABK, 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 ulti- 
 mately 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 follow- 
 ing statement : ' Capital is wholly employed in the pur- 
 chase 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
 
 Evils of a Dearth. 143 
 
 materials and machinery were greatly increased in quan- 
 tity, might not the increased aggregate quantity of ma- 
 terials and machinery be of a greater money value than 
 before, although each particular portion should be at a 
 less 1 ? Might we not by importation appropriate to our- 
 selves 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 1 , 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* 2 . 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 
 
 1 Essay on Pop., 4th ed. See above, p. 128. 
 
 2 See next page.
 
 144 Letters of Ricardo to Malthus. 
 
 kindly told me you would do ; but Mrs. Kicardo 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. 
 
 * \Foot-note, eventually ousting the textl\ 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 com- 
 modities 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
 
 Authors and Critics. 145 
 
 not be understood by the mass of readers, but to you who 
 are acquainted with my peculiar views, if you please, they 
 need no explanation. . . . 
 
 Ever yours, 
 
 DAVID RICARDO. 
 LXIV. 
 
 MY DEAR SIR, 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 1 , 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 2 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 
 
 1 Queen Sophia went there with Princess Elizabeth at the end of November. 
 (Ann. Register, 1817, Chron., p. 123.) 
 
 2 Probably the ' Political Economy,' 1820. 
 
 L
 
 146 Letters of Ricardo to Mai thus. 
 
 nature of rent, which was before so clear, obscure. Rent 
 is nothing more than the hire paid for land. I feel de- 
 lighted that they have given me so desirable a companion. 
 In the Scotsman, a Scotch newspaper, I have been ably 
 defended the writer 1 has evidently understood what I 
 meant to say, which the reviewer has not done. 
 
 I have been reading Mill's book 2 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 3 . The Political 
 Economy is, I think, excellent, and the part that I have 
 read may be considered as the author's view of the pro- 
 gress 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 de- 
 scendants, 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 
 
 1 J. E. McG'ulloch, in all probability. 2 ' British India.' 
 
 3 Mill's estimate, however, has seldom been accepted by later authorities.
 
 J. B. Say. 147 
 
 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 applica- 
 tion 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 ' (Euvres Diverges ' (vol. i. p. 41 3) is printed 
 a letter of Ricardo to Say, dated from Gatcomb, i8th 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 in- 
 structive 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 
 Bays 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 Traite 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.' 
 
 L 2
 
 148 Letters of Ricardo to Malthus. 
 
 LXV. 
 
 MY DEAR SIR, LONDON, 30^ Jan., 1818 '. 
 
 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 2 , Mr. Whishaw and you have done me a great 
 deal of honour in making my work 3 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 1 ? At 
 any rate then demand and supply are not the sole regu- 
 lators 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 varia- 
 tion of permanent price in the expenses of production. 
 
 1 Written by oversight 1817. The postmark and all the internal evidence 
 show that 1818 must be the year. 
 
 J Less famous perhaps by his numerous writings and speeches on the cur- 
 rency 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 xxv. 
 
 3 ' Political Economy and Taxation.'
 
 The Central Doctrine. 149 
 
 Diminish these and the commodity must finally fall, in- 
 crease 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 him- 
 self 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 place. 
 
 I am sorry that you have determined not to publish this 
 spring. 
 
 I have not seen Torrens, and do not know what his in- 
 tentions 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 x . 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 2 , 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 3 favourably 
 spoken of. I hope it may be as well thought of by others 
 
 as it is by me. 
 
 Very truly yours, 
 
 DAVID EICAKDO. 
 
 1 Mackintosh entered on his duties as Professor of Law there 1818. 
 a 1818. See Ann. Register, 1818, Chron., p. 207. 
 3 British India, publ. 1818.
 
 1 50 Letters of Ricardo to Malthus. 
 
 LXVI. 
 
 MY DEAR SIR, 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 dis- 
 solved immediately after the prorogation 1 , but as the elec- 
 tion 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 2 , on which 
 occasion Lord Grenville means to speak. Lord King men- 
 tioned 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 
 
 1 It was dissolved on loth June. 
 
 3 The Bill for renewing Restriction for another year had passed the Com- 
 mons, and was to be moved by Lord Liverpool on 26th May, 1818. Lord 
 Grenville spoke against it at great length.
 
 Political Reform. 151 
 
 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 im- 
 portant principles. Sir James Mackintosh has been reading 
 Bentham, and was just beginning to give me his opinion of 
 the book x 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 2 . 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. 
 
 LXVII. 
 
 [Addressed to Albury, Guildford.] 
 
 MY DEAR SlR, LONDON, 2^tJi June, 1818. 
 
 Your letter arrived here whilst I was in Gloucester- 
 shire. I came to town last night, having on Monday pre- 
 sided at the County meeting, and made a return of our two 
 members. 
 
 I thank you for your inquiries after the infant 3 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. . . . 
 
 1 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 
 
 1 ' 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). 
 
 3 A glimpse of his mental history is given in the remarkable letter to 
 Sharp, written from Bombay, on gth Dec. 1804. He had even then outlived 
 his reactibn against the ideas of the French Revolution. See Life, vol. i. 
 128-136. 3 A grandchild.
 
 152 Letters of Ricardo to Malthus. 
 
 rate settled, for the certainty of a seat could hardly com- 
 pensate me for the disagreeables attending the negociation 
 for it. Mr. Clutterbuck's * 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 Honour- 
 able House ; but I am fully persuaded that, if I consult 
 my own happiness onlj*, 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 2 . 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 
 [securjed by stopping very far short of universal suffrage. 
 [With] such opinions it is a mere question of principle] 3 
 (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 ex- 
 perience we should not venture on universal suffrage if it 
 
 1 Kicardo's son-in-law. See above, p. 41. "Ricardo eventually sat for 
 Portarlington in Queen's County. 
 
 a 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. 3 We should expect ' detail.'
 
 The Way to increase Wealth. 153 
 
 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 nation. 
 
 I will take care that all demands against you shall be 
 faithfully discharged. 
 
 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 1 . 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 pro- 
 portioned 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. 
 
 1 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.'
 
 154 Letters of Ricardo to Malthus. 
 
 NOTE. In the new Parliament of 1818 Portavlington was repre- 
 sented, as in the last Parliament, by Eichard 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 data, 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, CEuvres Diverses, p. 406) : ' Possesseur de vastes domaines, 
 il s'en trouvait qui, par un abus deplore par lui-meme, lui donnaient 
 entree 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. 
 
 LXVIII. 1 
 
 [On outside of letter with the frank MINCHIXG HAMPTON (sic), Aug. 20, 1818.] 
 
 MY DEAR SlE, 
 
 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 2 . Immediately on 
 reading it, I guessed that the writer of the article was Mr. 
 M'Culloch 3 , for from the publication of my book he ap- 
 pears 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 
 
 1 Franked by H. J. Shepherd (M.P. for Shaftesbury, Dorsetshire). 
 
 1 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. 
 
 3 Here, as frequently elsewhere, written M'Cullock.
 
 Rent always a Transfer. 155 
 
 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 an- 
 swered 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 crea- 
 tion 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 pleasant. ... 
 
 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 re- 
 viewer 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. W T hy 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
 
 156 Letters of Ricardo to Malthus. 
 
 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. Whis- 
 haw are well, pray remember me kindly to them. If either, 
 or both of them, should go to Bowood 1 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 aa 
 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 2 the American Ambassador, and 
 Sir Samuel Komilly. The old gentleman is becoming gay. 
 A party of four must to him be a formidably large one 3 . . . . 
 
 Ever truly yours, 
 
 D. RICAKDO. 
 
 1 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. 
 
 2 Famous by association with the Oregon dispute. He recorded his im- 
 pressions of England in a book called ' Narrative of a Residence at the Court 
 of London from 1817 to 1825,' (publ. 1833), an( i ' Memoranda of a Residence 
 at the Court of London, comprising Incidents Official and Personal, from 
 1819 to 1825,' (touching on Oregon and other questions) (1845). 
 
 3 Bentham was then over 70.
 
 Diffidence in Speaking. 157 
 
 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'slast 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). 
 
 LXIX \ 
 
 MY DEAR MAI/THUS, GATCOMBPARK, 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 2 
 for his publication. The task appeared too formidable to 
 me to think of undertaking ; and I immediately wrote to 
 
 1 Franked by himself. * See Note i at end of this letter.
 
 158 Letters of Ricardo to Malthus. 
 
 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 suc- 
 ceeding. I am very hard at work, because I wish to give 
 Mr. Napier 1 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 conver- 
 sant 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 sup- 
 pose the rise of money wages does not appear to be neces- 
 
 1 See Macvey Napier's Correspondence (Macmillan, 1879), p. 23, where 
 Jas. Mill (writing on loth Sept. 1819), says of Ricardo to Napier, 'it is un- 
 affected 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.
 
 Money, Capital, and Labour. 159 
 
 sary 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 1 you have respected my authority much too highly, 
 and I do not consent that you should attribute to that re- 
 spect 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 Cob- 
 bett's 2 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 
 
 
 
 1 Probably, that deference for Kicardo's authority was delaying his new 
 book on ' Political Economy.' 2 See note 2 at end of this letter.
 
 160 Letters of Ricardo to Malthus. 
 
 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 KICAEDO. 
 
 NOTE 1. The Sinking Fund was a frequent topic of Kicardo'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 first 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 sink- 
 ing fund, as I had hoped, I am positively so much more in debt.' 
 Eicardo's moral was that we should honestly give up pretending
 
 William Cobbett. 161 
 
 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 follow- 
 ing 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 complimentary. 
 
 M
 
 1 62 Letters of Ricardo to Malthus. 
 
 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 ap- 
 propriate 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' (1021). 
 
 The best commentary on this scurrility may be found in a speech 
 of Ricardo himself (July i, 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. 
 
 LXX. 
 
 MY DEAR MALTHUS, 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 ser-
 
 Political Reform. 163 
 
 vice, 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 Parliamen- 
 tary 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. Whis- 
 haw was willing to grant us. I am certainly not more in- 
 clined than I was before to Radicalism 1 , 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 mode- 
 rate as the universal suffrage plan is too violent: some- 
 thing 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 re- 
 volution, with no other view but to appropriate to them- 
 selves 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 dis- 
 posed, 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 ex- 
 
 1 ' 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. 
 
 M 2,
 
 164 Letters of Ricardo to Malthus. 
 
 pectations 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 pos- 
 sible 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 culti- 
 vation 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 cor- 
 rectly anticipated iny 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 con- 
 clusions from the principles which you endeavour to eluci- 
 date, will not be included in it, I mean taxation. In a 
 letter which I have lately received from Turner 1 , 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 
 
 1 Name not clear in MS.
 
 Letter to J. B. Say. 165 
 
 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 definitions. 
 
 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. EICARDO. 
 
 NOTE. The gap between the above letter (of pth 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, nth January, 1820 
 (CEuvres 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 con- 
 trary, 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
 
 1 66 Letters of Ricardo to Malthus. 
 
 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 Eicardo'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 pro- 
 position 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. 
 
 LXXI 1 . 
 
 MY DEAR MALTHUS, LONDON, 4 May, 
 
 ... I have read your book 2 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 
 
 1 Franked by himself. 
 
 a ' Principles of Political Economy considered with a view to their practical 
 application' (Murray), 1820.
 
 Effect of Agricultural Improvements. 167 
 
 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 1 . 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 improve- 
 ments 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 land- 
 lords 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 em- 
 ployed 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 com would ex- 
 change 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 2 is most 
 flattering. I am pleased at knowing that you entertain a 
 favourable opinion of me ; but I fear that the world will 
 
 1 The three foregoing sentences are quoted by Empson, Edin. Review, Jan. 
 1837, p. 478, though the letter is wrongly dated. 
 
 2 Probably the note on p. 485 : ' Mr. Kicardo deserves the thanks of the 
 country ' for having suggested to it a comparatively easy means of returning 
 to Cash Payments.
 
 1 68 Letters of Ricardo to Malthus. 
 
 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 1 . 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] 2 , 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. 
 
 M c Culloch 3 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 4 , and as his arguments are on my side, I 
 of course think his criticism just. . . 
 
 Believe me, ever truly yours, 
 
 DAVID KICARDO. 
 
 1 Ch. vii. sect. iii. pp. 351 seq. 
 
 2 Several words wanting. Page much torn. But cf. Letter LXXIII, 
 
 P- 173. 
 
 3 Hitherto ' M^ullock.' Kicardo at last falls into the Scotch way of 
 spelling. 
 
 4 ' 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.
 
 Malthtis in France. 169 
 
 LXXII 1 . 
 
 MY DEAR MALTHUS, GATCOMB PAEK, 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 2 ; it appears to me that 
 
 1 Franked by himself. 
 
 a Lettres a M. Malthus sur diffe'rents sujets d'e"conomie politique, notamment 
 sur les causes de la stagnation ge'ne'rale du commerce (Paris, 1820). In 
 addition to these 5 open letters, a letter of Say to Malthus (Feb. 1827) to- 
 gether with the reply of Malthus is given in CEuvres Diverges de J. B. Say, 
 pp. 502-515.
 
 1 70 Letters of Ricardo to Malthus. 
 
 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 1 . 
 They both appear to think that stagnation in commerce 
 arises from a counter set of commodities not being pro- 
 duced 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 pro- 
 duction ; if there is a glut of one commodity, produce less 
 of that and more of another, but do not let the glut con- 
 tinue till the purchaser chooses 2 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 3 , 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 pro- 
 ductive services have not varied if they receive the same 
 quantity of a commodity, notwithstanding the cost of pro- 
 duction 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 4 . 
 I am sorry that the government of France is prejudiced 
 
 1 Perhaps Oct. 1819 (see e.g. p. 471), ' on Mr. Owen's Plans for relieving 
 the National Distress.' 
 
 2 Spelt here, as elsewhere, ' chuses.' 
 
 s Of the 'Traite d'conomie Politique' (1819). See (Euvres Di verses, p. 
 xiii. Say had made considerable alterations. 
 
 4 See Ricardo, Pol. Econ. and Tax., ch. xx. ' Value and Riches,' Wks. pp. 
 165 seq., 3rd ed.
 
 Agreement and Controversy. 171 
 
 against Political Economy. Whatever differences of opin- 
 ion 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 1 . 
 
 Mill has been with me here for a fortnight and will stay 
 
 1 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.
 
 172 Letters of Ricardo to Malthus. 
 
 some time longer. He has it in contemplation to write a 
 popular work on Political Economy 1 , 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 in- 
 tention 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 2 . 
 
 Respecting the trial of the Queen I am more than ever 
 convinced of the impolicy and inexpediency of the pro- 
 ceedings 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. 
 
 1 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 text-books. 
 
 * See Wks. (ed. McCull.), Preface, p. xxxi.
 
 Buyers and Sellers. 173 
 
 LXXIII'. 
 
 MY DEAR MALTHUS, GATCOMB PABK, 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 con- 
 tends 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 pro- 
 portion 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 
 
 1 Franked by himself 9th Oct., which is therefore the real date of the letter.
 
 1 74 Letters of Ricardo to Malthus. 
 
 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 1 , he might, in a very little 
 time, make trade as active as ever. Men err in their pro- 
 duction; 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. 
 
 1 Written ' controul.'
 
 Quantity of Labour. 175 
 
 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 con- 
 vinced than I am 1 . 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 2 does not convey to my mind anything approxi- 
 mating 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 any- 
 thing 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 
 
 1 The foregoing three sentences are quoted by Empson, Edin. Review, Jan. 
 1837, p. 499. 
 
 a ' 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.
 
 1 76 Letters of Ricardo to Malthus. 
 
 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 1 , 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 devia- 
 tions, in proportion to labour employed. My commodity 
 and your commodity are both worth i ooo ; they will 
 therefore probably have the same quantity of labour 
 realized in each. But the doctrine is less liable to objec- 
 tions 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 
 
 1 See Pol. Econ. and Tax. ch. xxi. ' Effects of Accumulation on Profits 
 and Interest.'
 
 Queen Caroline. 177 
 
 language, and therefore I shall fail to express what I mean. 
 My first chapter x will not be materially altered ; in principle 
 I think it will not be altered at all. . . . 
 
 Ever truly yours, 
 
 DAVID RICARDO. 
 
 LXXIV 2 . 
 
 MY DEAR MALTHUS, 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 Com- 
 mons 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 
 
 1 The arrangement is altered, and we have such significant changes as 
 ' almost exclusively' instead of ' solely.' 
 
 2 Franked by himself. 
 
 N
 
 178 Letters of Ricardo to Malthus. 
 
 new arguments to prove demonstratively that a neat 
 revenue is absolutely impossible under the determination 
 to employ the whole produce in the production of neces- 
 saries, 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 1 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 be- 
 tween 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 pas- 
 sage 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 
 
 1 See Wks. p. 1 76. ' Malthus and his Work/ p. 294.
 
 Say Censured. 179 
 
 is very unjust to me, and evidently does not understand 
 my doctrine ; and for the opinions which we hold in com- 
 mon 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 1 ? Can 
 he really believe that our taxation operates as he describes l , 
 and can he think that we should be relieved, in the way 
 he represents, by the payment of our national debt 2 ? 
 
 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 [MC] 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 Gloucester- 
 shire which costs iooo['] 3 . I have answered your ques- 
 tion ; 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. 
 
 1 See Ricardo, Wks. pp. 110-112. 2 A Sinking Fund. 
 
 3 This simile is used by Mai thus in Quart. Rev. Jan. 1824, with ' old wine' 
 in place of ' oak trees.' 
 
 N 2
 
 1 80 Letters of Ricardo to Malthus. 
 
 LXXV 1 . 
 
 MY DEAR M.ALTHUS, [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, Cheap- 
 side, 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 you. . . . 
 
 It is true the case 2 in my book is stated to be tem- 
 porary, 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 
 
 1 Franked by himself. Date only on cover. 
 
 a Perhaps the passage beginning at foot of p. 41 of Wks. and pp. 65-6 
 of and 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.'
 
 Correspondence with Say. 181 
 
 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 pro- 
 duce ; 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 de- 
 stroy 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 BJCARDO. 
 
 NOTE. On the 8th May, 1821, Ricardo writes to J. B. Say from 
 London (Say, (Euvres 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
 
 1 82 Letters of Ricardo to Malthus. 
 
 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 produc- 
 tion, comparatively with the quantity of labour employed in every 
 other production. Your book (the Traite) 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 de- 
 pends 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, i9th 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,
 
 The Causes of Value. 183 
 
 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 de- 
 liberately, 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 pro- 
 duction essentially consists in the substitution of nature's gratui- 
 tous 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 Bicardo.' Again, I consider that the deter- 
 mining 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) oi the Essay on Population have been taken by some 
 English writers as ironical; and he would like Eicardo to tell 
 Malthus this is not so; he considers the position of the Essay 
 impregnable, and has a genuine esteem for the author (CEuvres 
 Diverses, pp. 4 1 8-2 2 ). 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 Bicardo : ' 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 hap- 
 piness, as well as on the means needful to that end. We reach the 
 same conclusions, though sometimes in different ways' (p. 418).
 
 184 Letters of Ricardo to Malthus. 
 
 LXXVI 1 . 
 
 [Addressed to St. Catherine's, Bath.] 
 
 GATCOMB PARK, MINCHINHAMPTON, 9 July, 1821. 
 MY DEAK SlB, 
 
 I am sorry that you will not spare me a few days 
 before you return to London. Pray reconsider your deter- 
 mination, and, if you can alter it, do. On Saturday I ex- 
 pect 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 party. 
 
 McCulloch has specifically and strongly objected to my 
 chapter on Machinery 2 ; 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 3 . 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 machi- 
 nery 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. McCul- 
 loch is lamenting over the departure from my plan of cur- 
 rency, 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 
 
 1 Franked by himself. 
 
 a 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, etc. 
 
 3 It is due to McCulloch to say that in his published notices of Eicardo he 
 conceals his consternation.
 
 Cure of Overproduction. 185 
 
 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 in- 
 deed 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 pro- 
 duction 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 pro- 
 duced 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 ade- 
 quate motive to push production to this length, and there- 
 fore it would never go so far. I do not know whether I
 
 1 86 Letters of Ricardo to Malthus. 
 
 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 inade- 
 quate motives commodities will be produced, and secondly 
 that, if their production is attended with loss to the pro- 
 ducer, 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 la- 
 bourer 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 unpro- 
 ductive 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
 
 Overproduction. 187 
 
 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 em- 
 ploying 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 KICARDO. 
 
 LXXVII 1 . 
 
 [To St. Catherine's, Bath.] 
 MY DEAR MALTHUS, GATCOMB PAKK, 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 
 
 1 Franked by himself.
 
 1 88 Letters of Ricardo to Malthus. 
 
 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 produce. 
 
 With respect to the particular subject of discussion be- 
 tween 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 quan- 
 tity 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 pro- 
 duction 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 be- 
 cause 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
 
 Reduction of Wages. 189 
 
 destined to the support of labour. The labourers are im- 
 moderately paid for their labour, and they necessarily be- 
 come the unproductive consumers of the country. I agree 
 too that the capitalists being in such a case without a suffi- 
 cient 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 con- 
 tinue to save ; none to the labourers, for which we should 
 repine, because their situation was so exceedingly favour- 
 able 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, with- 
 out 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 ac- 
 knowledge 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 quan- 
 tity 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 in- 
 creasing population, all motive for further savings will 
 cease; but there will be no stagnation; all that is pro- 
 duced will be at its fair relative price, and will be freely 
 exchanged. Surely the word stagnation is improperly ap- 
 plied to such a state of things, for there will not be a
 
 1 90 Letters of Ricardo to Malthus. 
 
 general glut, nor will any particular commodity be neces- 
 sarily 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 appre- 
 hend, 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 pro- 
 duce 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 produc- 
 tion 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 pro- 
 duction 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. 
 1 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 ;n 
 theory be pushed so far as to destro}^ the motive on the 
 part of the capitalist to continue producing to the same
 
 Stagnation of Trade. 1 9 1 
 
 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 inj urious 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 1 , 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 
 
 1 Or Bromeberrow, one of Kicardo's estates, afterwards left to his son 
 Osman.
 
 192 Letters of Ricardo to Malthus. 
 
 Consumption l , the other Observations on certain Verbal 
 Disputes in political economy 2 . 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. 
 
 LXXVIII 3 . 
 
 MY DEAR MALTHUS, GATCOMB PABK, 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 produc- 
 tion 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 sup- 
 posing two rates of profit at the same time 1 Perhaps this 
 was not meant, and your question was asked on the sup- 
 position 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 
 
 1 Anon. London, 1821. The writer criticises Malthus closely though in a 
 friendly spirit. He is less polite to Say. 
 
 2 Also anonymous. 3 Franked by himself..
 
 Corn as a Measure of Value. 193 
 
 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 1 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 1 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 
 
 1 Imported foreign goods. See below. 
 O
 
 194 Letters of Ricardo to Malthus. 
 
 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 commodities. 
 
 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 1 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.
 
 Corn and Currency. 195 
 
 Torrens told me he should send me his book 1 ; he has not 
 done so, and I have not seen it. 
 
 Ever yours, 
 
 DAVID KICARDO. 
 
 LXXIX 2 . 
 MY DEAR MALTHUS, t 28 Se &-> l8aI -3 
 
 The case you put to me appears to me to be an im- 
 possible one. How can all countries produce their commo- 
 dities 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 con- 
 tinue 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 
 
 1 ' 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. 
 
 * Franked by himself. Date only on cover. 
 
 O 2,
 
 196 Letters of Ricardo to Malthus. 
 
 from countries where the level of currency will be some- 
 what 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 pro- 
 duce, 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 di- 
 minished ; 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 t^e 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
 
 Corn and Commodities of America. 197 
 
 where they required the same quantity of labour to pro- 
 duce 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 com- 
 modities 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, / 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 l of labour. You say : ' A striking approximation 
 to this case actually exists in America.' ' The only differ- 
 ence,' 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 
 
 1 Sic, a slip of the pen for ' rise.'
 
 198 Letters of Ricardo to Malthus. 
 
 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 in- 
 creased 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 1 . The commodities which America exports will 
 not be similarly affected. Nothing is to me so little im- 
 portant 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 en- 
 joyment 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 2 ; and I am quite sure that I know the 
 writer. It is very well done and most satisfactorily ex- 
 poses Godwin's ignorance as well as his disingenuousness. 
 
 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 
 
 1 [Note by Ricardo.] On reading over my letter I am doubtful whether 
 this opinion respecting exportable commodities is correct. 
 
 2 July 1821, no. LXX. See Malthus and his Work, p. 368. Ricardo 
 evidently suspected Malthus to be the author. See conclusion of next letter.
 
 Profits and Prices. 199 
 
 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 *. In this country corn will be 
 at only half the price at which it is in another ; 100 quar- 
 ters 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 i6\ quarters for his share of the 100 quarters, the 
 other must have precisely the same quantity, and conse- 
 quently 83! quarters are paid in both cases for wages and 
 other charges. But the farmer in the fertile country em- 
 ploys only half the labour that the other employs, and con- 
 sequently 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 [emplojy 333 instead of 166 to raise 100 quarters of 
 corn ; it is indeed possible, under the extravagant supposi- 
 tion with which we have commenced, that labour might 
 continue at the same money price ; but it is quite impos- 
 sible 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 
 
 1 The writer added but struck out : ' and wages must be necessarily high, 
 in which case she may employ nearly the same amount of capital.'
 
 2oo Letters of Ricardo to Mai thus. 
 
 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 coun- 
 try 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 ! 
 
 LXXX'. 
 
 MY DEAR MALTHUS, GATCOMB PABK, n 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 pre- 
 possessed in favour of my own views ; but I do not plead 
 guilty to the charge of not giving the requisite degree of 
 
 1 Franked by himself.
 
 Profits in an Exporting Country. 201 
 
 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 sup- 
 posed to be at 10 per cent. In this instance then you must 
 acknowledge the fault was yours and not mine. You do in- 
 deed 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 com- 
 petition would lower the price of corn, in the countries to 
 which it was exported, to the growing price of the export- 
 ing 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
 
 2O2 Letters of Ricardo to Malthus. 
 
 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 land- 
 lord 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 re- 
 quire 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 bo 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 pay- 
 ment of a less portion of corn to the labourer he would still 
 have the command of a increased quantity of food and ne- 
 cessaries 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 pos- 
 sible, 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
 
 A Peculiar Case. 203 
 
 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 de- 
 monstrable that the price would sink to the growing price 
 of it in the exporting country. 
 
 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 commo- 
 dities 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
 
 2O4 Letters of Ricardo to Malthus. 
 
 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 ex- 
 pense 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 dis- 
 pute 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 be- 
 tween the two other classes, after satisfying the landlord. 
 You will always make me say that profits depend on the
 
 The Case of America. 205 
 
 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%nd 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 1 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 pro-
 
 206 Letters of Ricardo to Malthus. 
 
 duced by the employment of capital, and money were pro- 
 duced, as you suppose, without any capital, then I allow and 
 have said so in my book \ 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 in- 
 terests 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 TOO 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 ob- 
 vious 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 labourer ? 
 
 I have mentioned my suspicions respecting the writer of 
 the article on population in the Edinburgh Review to several 
 
 1 See ' Political Economy and Taxation,' chapter ou Value.
 
 Francis Place. 207 
 
 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. 
 
 LXXXI 1 . 
 
 MY DEAR MALTHUS, GATCOMB PARK > 2 ? Nov -> l821 - 
 
 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 com- 
 pliment to me indeed as pretty an one as could well be 
 paid to a person who is so uniformly your adversary. 
 
 1 Franked by himself.
 
 208 Letters of Ricardo to Malthus. 
 
 I however agree with you ; we know each other's senti- 
 ments 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 \ 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 Boss at n 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 2 , 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 3 . I think these essays are 
 well done, but you probably would not agree with me in 
 
 that opinion. 
 
 Ever yours, 
 
 D. RICARDO. 
 
 1 The Political Economy Club was founded by Tooke in 1821, though 
 there had been informal meetings of the members for eome 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 un- 
 sound newspapers, and the circulation of sound literature. 
 
 a ' Essay on the Production of Wealth,' 1821. See above, p. 195. 
 
 3 This had been its feature for some time. ' There is a canting Scotchman 
 in London who publishes a paper called the " Champion," who is everlast- 
 ingly 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.
 
 Correspondence with Say. 209 
 
 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 (CEuvres 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 com- 
 modities 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 there- 
 fore 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 ' Cat^chisme ' 
 (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 (ist 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.' 
 
 P
 
 2io Letters of Ricardo to Malthus. 
 
 He concludes his letter by lamenting that his countrymen paid 
 BO little attention to economical questions. A full half of his 
 audience in the Conservatoire des Arts et Metiers consisted of 
 foreigners English, Russians, Poles, Germans, Spaniards, Portu- 
 guese, and Greeks. The Crown Prince of Denmark got private 
 lessons from him. 
 
 LXXXII. 
 
 BfiOMESBERROW PLACE, LKDBURY, Dec. l6, l822. 
 
 MY DEAR MALTHUS, 
 
 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 em- 
 ployed 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 uncom- 
 monly prosperous one, for we have all enjoyed perfect 
 health and have met with few or no difficulties. My com- 
 panions 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 1 I met M. Sis- 
 
 1 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, ' Con- 
 siddrations BUT les principaux e've'nements de la Revolution Fran9aise,' was 
 brought out in 1818 by her son the Baron de Stael and the Due 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'econ. 
 polit.' (Sismondi's chief economical work) had appeared in 1819.
 
 Travels on the Continent. 211 
 
 mondi. He, the Duke of Broglie, and I had a long con- 
 versation 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 dis- 
 cussion 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 1 , who 
 made me acquainted with M. Destutt [de] Tracy 2 , 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 3 , 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 
 
 1 The publicist. See ' Malthus and his Work,' p. 416. 
 
 2 See Bicardo, 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. 
 
 3 Louis had been, like his brother, in the Cotton manufacture, but left it 
 for Sugar Eefining. His ' Considerations sur 1'industrie et la legislation,' etc., 
 published in 1822, is the book to which Ricardo refers. 
 
 p z
 
 212 Letters of Ricardo to Malthus. 
 
 fully assured that I do not merit it should be made 
 against me. 
 
 M. Garnier T 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 criti- 
 cises 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 book. 
 
 I hope you have been very industrious in my absence, 
 and that we shall soon see the new edition of your last 
 work 2 . 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 3 charges 
 me with maintaining the absurd doctrine that the price of 
 gold bullion is a sure test of the value of bullion and 
 
 1 Germain Gamier, 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. 
 
 2 The 'Political Economy.' The 2nd ed. did not appear till 1836, after 
 its author's death. 
 
 3 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.
 
 Misunderstood. $ i $ 
 
 currency. A Mr. Paget has addressed a (printed) letter 1 
 to me, in which I am accused of holding the same opinion, 
 and everybody knows how pertinaciously Cobbet[t] per- 
 sists 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 2 insinuations), and, if it be also 
 founded in truth and on correct views, justice will be 
 finally done to me. 
 
 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 3 . 
 
 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 i /th January 
 I shall be with Mrs. Austin at Bradley, Wottonunderedge, 
 and from the 1 7th to the 2nd February with Mrs. Clutter- 
 buck, Widcomb, Bath. Where shall you pass your holi- 
 days ? 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 
 
 1 'A Letter to David Bicardo, Esq., M.P., on the true principle of esti- 
 mating 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. 
 
 2 One of his chief Parliamentary opponents, in the agricultural interest. 
 
 3 ' Thoughts and Details on High and Low Prices ' was published early in 
 1823. Tooke was for thirty years a Russia merchant.
 
 214 Letters of Ricardo to Malthus. 
 
 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 KICARDO. 
 
 LXXXIII. 
 
 MY BEAR MALTHUS, LONDON ' ^ A P* I > I82 3- 
 
 After the most attentive consideration which I can 
 give to your book \ 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 2 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 pro- 
 posed 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 com- 
 
 1 ' 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. 
 
 8 See note to this letter.
 
 Measure of Value. 215 
 
 modity ; 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 order : 
 
 150, 100, 25 per cent. 7i, 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 * 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 change. 
 
 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 situa- 
 tion 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) f 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 
 
 1 Here as elsewhere written ' chuse.'
 
 2i6 Letters of Ricardo to Malthus. 
 
 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 1 country, which cost j^ioo 
 and which might be sold at <^iio 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 neces- 
 sity 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 j^ioo, ^50, or 5^5. 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 1 
 
 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. 
 
 1 Written here as elsewhere ' potatoe.'
 
 Invariable Value of Labour. 
 
 217 
 
 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. 
 
 
 2 
 
 3 
 
 4 
 
 5 
 
 6 
 
 7 
 
 8 
 
 
 
 
 Yearly 
 
 
 
 Quantity 
 
 
 
 
 
 Quarters 
 of corn 
 produced 
 by 10 men 
 or varying 
 fertility 
 of the 
 soil. 
 
 corn 
 wages to 
 each 
 labourer, 
 deter- 
 mined by 
 the 
 demand 
 and 
 
 Advances 
 in corn 
 wages, or 
 variable 
 produce 
 com- 
 manding 
 the labour 
 of 10 men. 
 
 Kate of 
 profits 
 under the 
 foregoing 
 circum- 
 stances. 
 
 of labour 
 required 
 to pro- 
 duce the 
 wages of 
 to men 
 under the 
 foregoing 
 circum- 
 
 Quantity 
 of profits 
 on the 
 advances 
 of labour. 
 
 Invari- 
 able value 
 of the 
 wages of 
 a given 
 number 
 of men. 
 
 Value of 
 loo qrs. 
 of corn 
 under the 
 varying 
 circum- 
 stances 
 supposed. 
 
 Value of 
 the pro- 
 duct of 
 the labour 
 of 10 men 
 under the 
 circum- 
 stances 
 supposed. 
 
 
 supply. 
 
 
 
 stances. 
 
 
 
 
 
 1 50 qrs. 
 
 1 2 qrs. 
 
 1 2O qrs. 
 
 25 P. c. 
 
 8 
 
 2 
 
 IO 
 
 8-33 
 
 12-5 
 
 !5 
 
 13 
 
 130 
 
 I5-38 
 
 8-66 
 
 1-34 
 
 IO 
 
 7-7 
 
 "S3 
 
 15 
 
 10 
 
 IOO 
 
 5 
 
 6-6 
 
 3-4 
 
 10 
 
 IO 
 
 i5 
 
 140 
 
 12 
 
 1 20 
 
 16-66 
 
 8-6 
 
 1-4 
 
 10 
 
 7.14 
 
 ii-6 
 
 140 
 
 II 
 
 no 
 
 27.2 
 
 7-85 
 
 2.15 
 
 10 
 
 9.09 
 
 12-7 
 
 130 
 
 12 
 
 1 2O 
 
 8-3 
 
 9' 2 3 
 
 0-77 
 
 10 
 
 8-33 
 
 10-8 
 
 130 
 
 10 
 
 IOO 
 
 3 
 
 7-7 
 
 2-3 
 
 10 
 
 10 
 
 13 
 
 1 20 
 
 II 
 
 IIO 
 
 9 
 
 9.17 
 
 0-83 
 
 IO 
 
 9.09 
 
 10-9 
 
 120 
 
 10 
 
 IOO 
 
 20 
 
 .8-33 
 
 1.67 
 
 10 
 
 10 
 
 12 
 
 110 
 
 10 
 
 IOO 
 
 IO 
 
 9.09 
 
 .91 
 
 IO 
 
 IO 
 
 II 
 
 110 
 
 9 
 
 90 
 
 22-2 
 
 8-18 
 
 1-82 
 
 IO 
 
 II-I 
 
 12-2 
 
 100 
 
 9 
 
 90 
 
 II-I 
 
 9 
 
 I 
 
 10 
 
 Il-I 
 
 II. I 
 
 100 
 
 8 
 
 80 
 
 25 
 
 8 
 
 2 
 
 10 
 
 12-5 
 
 12-5 
 
 90 
 
 8 
 
 80 
 
 12-5 
 
 8-88 
 
 I-I2 
 
 10 
 
 12-5 
 
 11-25 
 
 (' Measure of Value,' p. 38.) 
 Columns 5 to 9 contain the dehateahle matter.
 
 218 Letters of Ricardo to Malthus. 
 
 LXXXIV. 
 
 MY DEAR MALTHUS, LoNDON > 28 
 
 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 com- 
 modities 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 pro- 
 duced in one day and by labour only without the assist- 
 ance 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 con- 
 stantly 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
 
 Labour as a Measure of Value. 219 
 
 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 con- 
 cerned 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 12,0. Of this value only belongs to profits, 
 the rest or may be considered as the product of pure 
 labour.' This is quite true, whether we value the com- 
 modity by the quantity of labour actually employed upon
 
 22o Letters of Ricardo to Malthus. 
 
 it, by the quantity which it will command when brought 
 to market, or by the quantity of money, or any other com- 
 modity, for which it is exchanged ; , in all cases, will 
 belong to the workmen and \ to the master. ' Conse- 
 quently the value of 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 \ 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 f 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 i. 
 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^ 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 proposi- 
 tion, and say ' consequently ; ' consequently on what ? On 
 this particular case; ' consequently, the value of of the 
 produce is determined by the quantity of labour employed 
 on the whole,' that is to say ' consequently the quantity of 
 labour which \ 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 , -f, f , or of any other 
 proportions in which the whole may be divided. My only
 
 Corn as a Measure of Value. 221 
 
 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 con- 
 sideration. 
 
 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 fragment.] 
 
 NOTE. On i2th 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 1 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.) 
 
 LXXXV. 
 
 MY DEAR MAI/THUS, LONDON, 13 July, 1823. 
 
 M c Culloch 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
 
 222 Letters of Ricardo to Malthus. 
 
 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 some- 
 what 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 con- 
 ditions 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
 
 Gold and Laborer as Measures of Value. 223 
 
 quantity of labour and profits together of which com- 
 modities 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 com- 
 modities 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
 
 224 Letters of Ricardo to Malthus. 
 
 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 com- 
 modities of every description, with which in fact gold 
 would be purchased from India, if we took these com- 
 modities 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 KICARDO.
 
 A Concession. 225 
 
 LXXXVI \ 
 
 _ r [MlNCHINHAMPTON, Aug. 3, 1823.] 
 
 MY DEAR MALTHUS, 
 
 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 deter- 
 mining 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 mea- 
 sure 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 mea- 
 sure, because, if it be true of labourers exported or im- 
 ported, it must be true also of labourers born or dying in 
 the country. If by poor laws imprudent marriages are 
 
 1 Franked by himself. Date and address only on cover. 
 Q
 
 226 Letters of Ricardo to Mai thus. 
 
 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 men- 
 tioned 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
 
 Cheap Labour. 227 
 
 your measure, because you then acknowledge that commo- 
 dities do not vary according to the quantity of labour they 
 can command. I do not see how you are to extricate your- 
 self 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 con- 
 cession 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 conse- 
 quent 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 com- 
 modity, on which a quantity of labour has been bestowed, 
 will always exchange for a like quantity, together with 
 
 Q 2
 
 228 Letters of Ricardo to Malthus. 
 
 an additional quantity which will constitute the profits on 
 the advances. Now this I consider to be your main pro- 
 position, 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 commo- 
 dity 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 can- 
 not 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
 
 Increase of Value. 229 
 
 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 ' in- 
 crease 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 
 
 1 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 under- 
 stood by the use of the words themselves. You mistake 
 M c Culloch'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 b 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
 
 230 Letters of Ricardo to Malthus. 
 
 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 1 , 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 2 , 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 KICAKDO. 
 
 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 Rlcardo's whole doctrine in Bb'hm 
 Bawerk's ' Geschichte und Kritik der Kapital-Zins-Theorien,' Inns- 
 bruck, 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 Bohm Bawerk in his ' Grundziige der 
 Theorie des wirthschaftlichen Giiterwerths' (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 ? 
 
 1 Gold, with many reservations. See Wks., pp. 29 to 33. But compare 
 p. 231 below. 
 
 2 Published in 1824 by his family, and reprinted in Wks., ed. MacC., 
 pp. 499 seq.
 
 Cost and Value. 231 
 
 Logically we must answer from their cost, in other words from 
 the means of production a degree farther back, and so on back- 
 wards. 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 ' pro- 
 ducts,' 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.' 
 
 LXXXVII 1 . 
 
 GATCOMB PARK, MINCHINHAMPTON, 
 
 MY DEAR MALTHUS, is<* Aug., 1823. 
 
 It is a prudent step in you to withdraw your con- 
 cession, 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 mea- 
 
 1 Franked by himself.
 
 232 Letters of Ricardo to Malthus. 
 
 sure for a yard but a yard was not a good measure for a 
 foot. If your measure will measure my commodity accu- 
 rately, mine must do the same by yours. These are iden- 
 tical 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 desir- 
 ableness of having one ; but all we can ever hope to get is 
 one tolerably well calculated to measure the greatest num- 
 ber of commodities, and therefore I should have no hesita- 
 tion 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 circum- 
 stances 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 selec- 
 tion, 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 pre- 
 cisely 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 ac- 
 count 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.
 
 Labour Expended or Labour Commanded. 233 
 
 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 exa- 
 mining 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 pre- 
 mises 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 be- 
 stowed 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, accord- 
 ing 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
 
 234 Letters of Ricardo to Malthus. 
 
 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 ex- 
 change for a less quantity of labour than before. This is 
 another argument in my mind conclusive against the ex- 
 pediency of adopting your measure. 
 
 I repeat once more that the same trade precisely would 
 go on between India and Europe, as far as regards commo- 
 dities, 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 com- 
 modities 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 coun- 
 tries ; but I say it is not material to an enquiry into a 
 general measure of value, particularly if it be itself ob- 
 jected 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 no quarters of wheat 
 and an increase of one-tenth also in his cattle and imple- 
 ments ; would not his profits be 10 per cent, whatever 
 might be the price of labour the following year 1 If the 
 no 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
 
 Experience of Farmer and Labourer. 235 
 
 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 re- 
 sults 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 in- 
 crease in the measure you propose. I do not object to your 
 doing so ; but those who do not agree with you in the pro- 
 priety of adopting this measure may argue very consistently 
 in saying they are possessed of more value when they have 
 i 10 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, be- 
 cause 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
 
 236 Letters of Ricardo to Malthus. 
 
 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 1 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 quan- 
 tity 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 com- 
 ponent 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 under- 
 stand it. I still think that the invariability of your inea-
 
 No Measure of Absolute Value. 237 
 
 sure 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 accu- 
 rate 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 abso- 
 lute 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.
 
 238 Letters of Ricardo to Malthus. 
 
 LXXXVIII \ 
 
 MY DEAR MALTHUS, 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 pro- 
 duced 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 2 
 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 mea- 
 sure 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 
 
 1 Franked by himself. 2 W. of N., I. vi. 23, i.
 
 Labour an Arbitrary Measure. 239 
 
 say, I have BO ; 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 1 1 . 
 They have gained a value of i. Now where is the dif- 
 ference whether you value them in labour and say that at 
 the first period they are worth ten days' labour and sub- 
 sequently eleven, or say that at the first period they are 
 worth 10, subsequently n1 
 
 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 quan- 
 tity 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 ad- 
 vances 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 sup- 
 poses 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
 
 240 Letters of Ricardo to Malthus. 
 
 value than that which you recommend would be as infalli- 
 bly 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 nth 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 \\as 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 *. 
 
 James Mill 2 , albeit unused to the melting mood, was over- 
 whelmed with grief, and in a letter to MacCulloch, ipth Sept., 
 1823, writes of the closing scenes with much tenderness of feeling. 
 
 1 Edin. Rev., Jan. 1837, P- 499- a Life, pp. 209-213.
 
 CHRONICLE. 
 
 1 809. Ricardo's letters in ' Morning Chronicle ' (' High Price of 
 Bullion '). Quarterly Eeview founded. Corunna (Jan.), Tala- 
 vera, "VVagram, Walcheren. Continuance of Orders in Council 
 and Berlin Decrees. Perceval, Premier. King's Jubilee. 0. P. 
 riots. Bad harvest. Eise in wheat. Fall in other articles. 
 
 1810. Letters I (2 5th Feb.) to V (Aug.). Lines of Torres Vedras, 
 Busaco. Bullion Committee (report, 8th June). Burdett and 
 Parliamentary privilege. Fair harvest. Commercial and Agri- 
 cultural Depression. Many failures. South American market 
 overstocked. Trade with United States re-opened. 
 
 1811. Letters VI to X (Dec.). Eicardo's ' Eeply to Bosanquet,' 
 Malthus' article on ' Depreciation.' ' Curse of Kehama.' 
 Fuentes Onoro, Albuera. Napoleon's estrangement from Eussia. 
 Virtual close of George Ill's reign. Questions of Eegency. 
 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 Mer- 
 chants. 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. Re- 
 peal of Orders in Council (June). War with United States. 
 Catholic Association. Murder of Perceval (May). Liverpool, 
 Premier. Williams' murders in Eatcliff 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. Liitzen, Katzbach, 
 Dresden, Leipzig. Affairs of Princess Charlotte. Joanna South- 
 cote. Prosecutions for seditious libel. Eemoval of Company's 
 monopoly of East India trade. Good harvest. Eise in Colonial 
 produce. 
 
 R
 
 242 Chronicle. 
 
 1814. Letters XIV to XXI (Dec.). Malthas' '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 corn. 
 
 1815. Letters XXII to -XL (Dec.). Eicardo'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 prices. 
 
 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 Eco- 
 nomy 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.' Com- 
 mittee 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 Hailey- 
 bury. 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 Marriage?. Renewal of Alien Act. General 
 Election (June, July). Manchester strike. Fair harvest. In- 
 creased general imports and fall of general prices. 
 
 1819. Letters LXIX and LXX (Nov.). Malthus F.R.S. Ei-
 
 Chronicle. 243 
 
 cardo M.P. for Portarlington. Act for Resumption of Cash 
 payments. The ' Radicals.' Factory Act. Poor Law Amend- 
 ment. 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. 
 
 1 821. 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. Inter- 
 ference with the Press. ' Bridge Street Gang.' Coalition of 
 Liverpool ministry with the Grenvilles. Retirement of Sid- 
 mouth. 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 Agri- 
 culture.' Hicardo'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 sus- 
 pended in Ireland. Good harvest. Low corn prices. Large 
 importations of wheat from Ireland. General prosperity. 
 Agricultural distress. 
 
 1823. Letters LXXXIII to LXXXVIII ( 3 ist Aug.). Malthus' 
 ' Measure of Value,' and article on Tooke. Malthus Associate 
 of Royal Society of Literature. Ricardo's ' National Bank ' 
 (written). Death of Ricardo, nth 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.
 
 INDEX. 
 
 A. 
 
 Accumulation^ what it implies, 39, 
 47-5 J 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, 
 1 80 ; 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 ; Ambassa- 
 dor, 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. 
 
 B. 
 
 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, 1 10 ; its profits and Charter, 
 90; its bullion, 100; its notes, 102; 
 cash payments, 115 ; incapacity of 
 directors, 104, 185; 'an unneces- 
 sary establishment,' 89 ; views on, 
 102. 
 
 Balance of Trade, 1 1 . 
 
 Banks, Country, 89. 
 
 Baring, Mr., 161. 
 
 Basevi, 67, 108. 
 
 Belsham, neighbour in Gloucester- 
 shire, 140, 159. 
 
 Bentham, Jeremy, Pref. xi. seq., 3, 
 51, 55, 91, 140, 141, 151, 152, 166. 
 
 Berkeley, Col., 147. 
 
 Berlin Decrees, &c. , 27. 
 
 Binda, Mr., 117, 125. 
 
 Blake, Wm., F.R.S., 75, 115. 
 
 Boddington, Mr., 6. 
 
 Bohm Bawerk, Dr. Eugen von, Pref. 
 xvii, 230. 
 
 Bosanquet, Chas., 113. 
 
 Jacob, 113. 
 
 Bo wood, 141, 156. 
 
 Bowring, J., Life of Bentham, 55; 
 &c. 
 
 'British Review,' 145, 147. 
 
 Broglie, Due 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 ; Ri- 
 cardo's tract on, see Ricardo ; as a 
 commodity, 9. 
 
 Burdett, Sir F., 55, 64, 152. 
 
 C. 
 
 Cairnes, J. E., 113. 
 
 Capital, home and foreign, 7 > when 
 ' scanty,' 43 ; rapid increase with- 
 out low rate of interest, 8 ; abun-
 
 246 
 
 Index. 
 
 dant, 1 8. See Accumulation and 
 Profits. 
 
 Carey, Henry C., 68. 
 
 Carlile, Richard and Ann, case of, 
 Pref. xi. 
 
 ' Champion ' newspaper, 208. 
 
 Chandler, Mrs., neighbour in Glou- 
 cestershire, 159. 
 
 'Chronicle' newspaper, 104; Outl. 
 xix. 
 
 Clerk, George, 87, 125. 
 
 Clubs, King of, 3, 5 ; note to III, 25, 
 no, &c. ; Geological Club, 64 ; Po- 
 litical 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, 1 73 ; 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 ex- 
 plaining value, 230, cf. 55. 
 
 Coulson, Walter, 168. 
 
 Countervailing duty on corn, 64, 
 Pref. xi. 
 
 Crombie, Alex., 82. 
 
 Currency, ' redundant,' II, 19; how 
 affected by the Peace, 38 ; relation 
 to foreign trade, 7 oeq., 38 ; ' Eco- 
 nomical and Secure,' 96, 100, 103, 
 1 08, 112. See Bullion, &c. 
 
 Custom house, delays, 137, 140. 
 
 D. 
 
 Debate, House of Lords on Bullion, 
 26 ; ditto on Bank Restriction, 
 150. 
 
 Definitions deprecated by Say, 209 ; 
 unfairly used byMalthus, 229, 237. 
 
 Demand, unlimited, 34, 43, 44; effec- 
 tive, 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, 
 1 5 ; 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. 
 
 E. 
 
 Eckersall, Miss, 117. 
 
 ' Economical and Secure Currency.' 
 
 See Currency. 
 Edinburgh Review, 8, 10, 56, 65. 
 
 116, 120, 154, 170, 171, 184, 198, 
 
 240. 
 
 Elphinstone, W. F., 113. 
 Einpson (Wm.), 238 ; quotes letters 
 
 of Ricardo's, 56, 65, 116, 120, idf, 
 
 175, 240. 
 Encyclopaedia 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.
 
 Index. 
 
 247 
 
 Extension of Market, chief cause of, 99. 
 ' External commodities,' 193, cf. 79. 
 
 F. 
 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' (Ben- 
 
 tham's), 55. 
 
 France, 24, 169, 170, 211; cf. 92, 93. 
 French Revolution, 8, 151, 210. 
 
 G. 
 
 Gallois, the publicist, 211. 
 
 Gamier (Germain), 212. 
 
 Gell, Sir Win., 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 ; im- 
 ports of, 24 ; conditions of exporta- 
 tion, 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. 
 
 H. 
 
 Haileybury College, a student of, 87 ; 
 pamphlets on, 113,125,126; Mack- 
 intosh 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, 1 26 ; 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 Mer- 
 chant, 12. 
 
 Humboldt, Alex., 138. 
 
 Hume, J. Deacon, 27. 
 
 Joseph, 96, 133, 208, 240. 
 
 Hunt, ' Orator,' 152, 161, 163. 
 
 Hone, William, 45. 
 
 I. 
 
 Idleness of the inhabitants of fertile 
 
 lands, 1 38 ; 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 Haileybnry. 
 E. India Co., its profits, 50 ; illustra- 
 tions 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, 
 1 8, 19 ; of mankind, 188, 198. 
 
 Ireland, Malthus' visit to, 137, 138. 
 
 J. 
 
 Jackson, Randle, 113, 114, 130. 
 
 Jacob, William, 63, 67. 
 
 Jamaica, premium on bills in, 12, 13.
 
 248 
 
 Index, 
 
 K. 
 
 King, f of Clubs.' See Clubs. 
 King, Lord Peter, 148, 150. 
 Kinnaird, Douglas, 130. 
 Knyvett's concert, 2. 
 
 L. 
 
 Labour, as measure of value, 214 seq. ; 
 as cause of value, 192. Other refe- 
 rences passim. 
 
 Labourers, as over-reached by em- 
 ployers, 139; as injured by de- 
 preciation 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, in; 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. 
 
 M. 
 
 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, chang- 
 ing, 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 Depre- 
 ciation, 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 Addi- 
 tions, 105, 107, 119, 128, 138, 143, 
 183; 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, 1 75 ; 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, 
 
 5 J > 55> 9 2 > I0 3, 109. IZ 7> W> &c - 5 
 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 Govern- 
 ment monopoly, 89 ; fall or rise un- 
 important 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 Mas- 
 ter of the Mint, i, 3. 
 
 N. 
 
 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.
 
 Index. 
 
 249 
 
 '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 De- 
 mand) ; in (King of Clubs) ; xn 
 (Tooke on Depreciation and Ex- 
 changes) ; XVTII (Corn Committee, 
 1814) ; xx (Adam Smith on Indian 
 trade) ; xxi (Bentham) ; xxix 
 (Torrens) ; xxxi (Depreciation) ; 
 XXXV (Say's Correspondence with 
 Bicardo) ; XLII (MS. mentioned in 
 letter) ; XLIV (Torrens and Eicar- 
 do) ; LXIV (Say's Correspondence) ; 
 LXVII, LXVIII (Kicardo in Parlia- 
 ment) ; LXix (I) Sinking Fund), 
 (II) (Cobbett) ; LXX, LXXV, LXXXI 
 (Say's Correspondence) ; LXXX 
 (Francis Place) ; LXXXIH (Labour 
 as Measure of Value) ; LXXXIV 
 (Corn as Measure of Value) ; 
 LXXXVI (Cost and Value) ; LXXXVIII 
 (Death of Eicardo). 
 
 0. 
 
 Omnium, 24,- 37, 85. 
 
 Otaheite, its fertility, 93 seq., 101. 
 
 Overproduction, 14, 38, 39, 170, 178, 
 
 1 85 ; cf. note to n. 
 Owen, Eobert, Pref. xi, 170. 
 
 P. 
 
 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 advan- 
 tage to governments, 171 ; inquiry 
 not into production but into distri- 
 
 bution, 175; into effects not into 
 motives, 185; into principles not 
 facts, 1 8 ; corn, labour, and com- 
 modities the all-important subjects, 
 198 ; two tasks of Pol. E., Pref. 
 xviii. 
 
 Political Economy Club, 182, 183, 
 208, 209. 
 
 Poor Eates, effect on quantity of 
 available food, 107, 144; Laws, 
 126, 144, 225. 
 
 Population, principle of, 42, 69, 180, 
 1 86, 189; turned by Eicardo a- 
 gainst arguments of Malthus, 68, 
 70, 98, 99, 1 01, 205, 215 ; whether 
 food precedes, 144. 
 
 Prices. See Wages, Profits, &c. 
 
 Private work, its effect on general 
 demand for labour, 98. 
 
 Productive and unproductive con- 
 sumption, 185 seq. 
 
 Profits, rate of, 8, 35, 36, 38, 39, 40, 
 &c. ; on what hypothesis every- 
 where the same, 58 ; rate depends 
 on what, 34, 46, 52, 53 ; how re- 
 lated to wages, 49, 52, 97 ; to faci- 
 lity 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. 
 
 Q. 
 
 Quantity and Value, 3, 4, 5, 188, &c. ; 
 and Profits, 46, 1 88 ; not quantity 
 but proportions determinable, 175, 
 cf. 211. 
 
 Quarterly Eeview, 179, 212. 
 
 Queen Caroline, 173, 177. 
 
 Sophia, 145. 
 
 Quin, Mr., 168. 
 
 E. 
 
 Eadicalism, 163. 
 
 Eeal price, 135 ; value, 7, 198 ; wages, 
 123. 
 
 Eedundancy of Money, 10 seq. ; per- 
 manent, 21 ; how cured, 22, 23;
 
 250 
 
 Index. 
 
 of labour and capital impossible, 
 174. 
 
 Reform, views of Ricardo and Mal- 
 thus, Pref. ix, 55, 151, 152, 163, 
 169. 
 
 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, pa&sim. 
 
 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, (2nded.) 166, 170, 175, 176, 
 1 80, 184, 206; 'Economical and 
 Secure Currency,' 100, 103, no; 
 other MSS., 178, 228; Sale and 
 popularity of works, 112, 166; con- 
 verts, 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, 2 10 ; profits on Stock Ex- 
 change, 85, 147 ; fear of dogmatism, 
 149, 174; appearance of paradox, 
 145 ; misunderstood, 178, 179, 212; 
 Sheriff of Gloucestershire, 147, 149, 
 I 5 I > T 55 ! M.P. for Portarlington, 
 152, 154; Death, 240 ; Letters not 
 in thig 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. 
 
 3. 
 
 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, 
 5 r > 53> 82, 91 ; ('travaillez tou- 
 jours'), 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 En- 
 cyclopaedia 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., 8l, 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, I, 15, 88 ; effect on Ex- 
 changes, 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, 1 73- 
 
 175, &c. See Demand.
 
 Index. 
 
 25 1 
 
 T. 
 
 Tables, exchange with Hamburgh, 
 3 4> 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, in, 112, 115, 
 116, 133, 149, 168, 170, 182, 195, 
 208. 
 
 Tracy, Destutt de, 211. 
 
 ' Traveller ' newspaper, 168. 
 
 ' Trienniali ty,' 55. 
 
 U. 
 
 Ultra-Bullionists, 27. 
 
 Utility and Truth of propositions, 53, 
 but cf. 182 ; Utility and Value, 92, 
 93, 173, J 74> !79> l8a l8 3- 
 
 V. 
 
 Value, real and nominal, 7 ; of cur- 
 rency, 82 ; doctrine of Value a car- 
 dinal point in Ricardo's system, 
 149 ; how viewed by Mai thus, 171, 
 175; and by Say, 92, 93, 173, 181, 
 209; Measure of Value, 148; Ri- 
 cardo's doctrine modified, 139 ; 
 
 Quantity and Value, 3 seq., 53. 
 See also Measure. 
 
 Vansittart, Nicholas, 3, 5. 
 
 ' Verbal disputes in Political Eco- 
 nomy,' 192, cf. 165. 
 
 W. 
 
 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, 1 88 ; depends on facility of 
 obtaining necessaries, 34 ; effect of 
 high wages on prices, 39 ; wages 
 low in 1817, 142; remedy for low 
 wages, 1 66. 
 
 Wants of men unlimited, 34, 45, 49 ; 
 effects of changing wants and tastes, 
 i, 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. 
 
 Y. 
 
 Young, Arthur, 97. 
 
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