Front Page Titles (by Subject) 2.: ricardo to horner - The Works and Correspondence of David Ricardo, Vol. 6 Letters 1810-1815
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2.: ricardo to horner - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 6 Letters 1810-1815 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 6 Letters 1810-1815.
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First published by Cambridge University Press in 1951. Copyright 1951, 1952, 1955, 1973 by the Royal Economic Society. This edition of The Works and Correspondence of David Ricardo is published by Liberty Fund, Inc., under license from the Royal Economic Society.
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ricardo to horner1
As gold is the standard of currency in England, and silver in all other countries, there can be no fixed par of exchange between England and those countries, it being subject to all the variations which may take place in the relative value of gold and silver. Thus if 33 schillings 8 grotes of Hamburgh currency be equal in value to a pound sterling or of a guinea, when silver is at 5/4 pr. ounce, (and which it was when Mr. Eliason declared in his evidence before the house of Commons that 33.8 was the par with Hamburgh2 ) they can no longer be so when silver falls to 5/2, or 5/- pr. oz, because a pound sterling in gold being then worth more silver is also worth more of Hamburgh currency.
To discover the real par, therefore, we must ascertain what the relative proportion between gold and silver was when the par was 33.8, and what its relative value at the time we wish to calculate it. Thus in 1797 the price of gold was £3. 17. 10½, and of silver 5/4 pr. oz of silver; and in 1798 gold was of equal value with 14.6 was £3. 17. 10½, and silver 5s d pr. oz, so that an ounce of gold was then worth 15.44 oz of silver.
If £1‐ sterg. at par be worth 14.6 of silver, then at 15.44 it will be at 6 pct. premm. on 33.8 is 2 schillings, so that the par when gold is to silver as 15.44 to 1 will be 35 schillings 8 grotes.
In 1798 Mr. Mushet in his tables states the exchange at38.2 and observes that it was 13 pc. in favor of England but according to my view of it, it was then only 7 pct. in favor of England.1 Indeed I doubt whether it was nearly so much. In the year 1797 there was much difference of opinion about the par of exchange with Hamburgh, Mr. Eliason stated it at33.8, and Mr. Boyd I think above 35.2 —If 35 be taken as the standard or par in 1797, then in 1798, 37 would be the par and consequently 38.2 only 3 pct. in favour of England. Lord King observes that probably the real par is rather below 35,3 so that I think Mr. Mushet has attached too much weight to Mr. Eliason’s evidence on this disputed point.
The above calculation may perhaps be more easily made by stating as follows
As 14.6 : 33.8 : : 15.44 : 35.7
And if 35 be the par of 1797
As 14.6 : 35 : : 15.44 : 37
The par, being 33.8 when gold was in the proportion of14.6 more valuable than silver, will be when gold is to silver
But if the par were in 1797, 35, when gold was to silver as 1 to 14.6, then when gold is to silver
6th. feb. 1810
[1 ]MS in the possession of Lady Langman (Papers of Francis Horner).
[2 ]See evidence of Daniel Eliason in ‘Reports from the Committee of Secrecy on the Outstanding Demands of the Bank; and on the Restriction of Payments in Cash’, 1797 (Reports from Committees of the House of Commons, vol. xi, p. 159).
[1 ]An Enquiry into the Effects produced on the National Currency, and Rates of Exchange, by the Bank Restriction Bill ..., by Robert Mushet, of His Majesty’s Mint, London, Baldwin, 1810, Appendix. In 2nd ed., 1810, Mushet’s estimate for 1798 is reduced to 5.7 per cent. in favour of England.
[2 ]In his evidence before the Lords’ Committee on the Restriction of Cash Payments, 1797, Walter Boyd gives the par of exchange as ‘34 Schillings 3 Grotes Banco’ (Journals of the House of Lords, vol. xli, p. 221).
[3 ]Thoughts on the Restriction of Payments in Specie at the Banks of England and Ireland, London, Cadell and Davies, n.d. , p. 89. In the ‘second edition enlarged’, published under the title Thoughts on the Effects of the Bank Restriction, ibid., 1804, the statement is slightly altered (‘about 35’, p. 151).