Chapter V: Part 5

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

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

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

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

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

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

Yours,
DAVID RICARDO.

_7th Oct., 1815._

XXXVII.

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

[_Oct. 1815?_]

MY DEAR SIR,

I have an account before me of the capital actually employed on a farm of 200 acres in Essex. It amounts to L3433 or about L17 per acre[114], of which not more than L1100 or L1200 is of that description which is not subject to the same variation of value as the produce of the land itself, for L2200 consists of the value of the seeds in the ground, the advances for labour, the horses and live stock, etc. etc. If then the money value of the produce from the land should fall _from facility of production_ it must ever continue to bear a greater ratio to the whole money value of the capital employed on the land, for there will be a great increase of average produce per acre, whilst the fall in money value will be common to both capital and produce, and it cannot therefore be true that rent, profits, and wages can all _really_ fall at the same time.

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

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

XXXVIII.

LONDON, _17 Oct., 1815_.

MY DEAR SIR,

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

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

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

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

Yours very truly,
DAVID RICARDO.

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

XXXIX.

LONDON, _17 Oct. 1815_.

MY DEAR SIR,

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

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

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

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

Ever truly yours,
DAVID RICARDO.

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

XL.

GATCOMB PARK, _24th Dec., 1815_.

MY DEAR SIR,

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

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

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

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

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

Ever yours,
DAVID RICARDO.

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

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

Yours most truly,
DAVID RICARDO.

XLI.

GATCOMB PARK, _2 Jan., 1816_.

MY DEAR SIR,

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

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

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

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

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

Yours very truly,
DAVID RICARDO.

XLII.

LONDON, _10th Jan., 1816_.

MY DEAR SIR,

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

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

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

Very truly yours,
DAVID RICARDO.

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

XLIII.

LONDON, _7 Feb., 1816_.

MY DEAR SIR,

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

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

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

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

Very truly yours,
DAVID RICARDO.

XLIV.

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

LONDON, _23rd Feb., 1816_.

MY DEAR SIR,

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

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

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

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

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

Very truly yours,
DAVID RICARDO.

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

XLV.

LONDON, _5 March, 1816_.

MY DEAR SIR,

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

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

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

Very truly yours,
DAVID RICARDO.

XLVI.

LONDON, _24th April, 1816_.

MY DEAR SIR,

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

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

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

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

Very truly yours,
DAVID RICARDO.

XLVII.

LONDON, _28 May, 1816_.

MY DEAR SIR,

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

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

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

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

Believe me,
Ever truly yours,
DAVID RICARDO.

XLVIII.

GATCOMB PARK, _9th Aug., 1816_.

MY DEAR SIR,

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

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

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

Ever truly yours,
DAVID RICARDO.

....

XLIX.

GATCOMB PARK, _5 Oct., 1816_.

MY DEAR SIR,

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