The Online Library of Liberty

A project of Liberty Fund, Inc.

• Preface to Volumes Vi - Ix
• Introductory Notes to the Correspondence
• 1.: Ricardo to Horner
• 2.: Ricardo to Horner
• 3.: Ricardo to Sir Philip Francis
• 4.: Mill to Ricardo1[answered By 5]
• 5.: Ricardo to Mill3[reply to 4—answered By 6]
• 6.: Mill to Ricardo1[reply to 5]
• 7.: Ricardo to Dumont
• 8.: Malthus to Ricardo1[answered By 9]
• 9.: Ricardo to Malthus1[reply to 8.—ANSWERED By 10]
• 10.: Malthus to Ricardo1[reply to 9]
• 11.: Malthus to Ricardo
• 12.: Ricardo to [malthus][fragment]
• 13.: Malthus to Ricardo
• 14.: Ricardo to [malthus] [a Note On the Jamaica Exchange]
• 15.: Malthus to Ricardo 3[answered By 16]
• 16.: Ricardo to Malthus 2[reply to 15.—ANSWERED By 17]
• 17.: Malthus to Ricardo 1[reply to 16]
• 18.: Ricardo to Perceval 1[answered By 19]
• 19.: Perceval (by Rosenhagen) to Ricardo 1[reply to 18]
• 20.: Ricardo to Bentham 2
• 21.: Malthus to Ricardo 1
• 22.: Mill to Ricardo 1[answered By 23]
• 23.: Ricardo to Mill 1[reply to 22.—ANSWERED By 24]
• 24.: Mill to Ricardo 1[reply to 23]
• 25.: Ricardo to Malthus 1[answered By 26]
• 26.: Malthus to Ricardo 1[reply to 25.—ANSWERED By 27]
• 27.: Ricardo to Malthus 1[reply to 26]
• 28.: Malthus to Ricardo1
• 29.: Ricardo to Tierney 1[answered By 30]
• 30.: Tierney to Ricardo1[reply to 29]
• 31.: Malthus to Ricardo1
• 32.: Ricardo to Malthus3[answered By 33]
• 33.: Malthus to Ricardo5[reply to 32]
• 34.: Ricardo to Horner1
• 35.: Malthus to Ricardo2
• 36.: Ricardo to Malthus1[fragment]
• 37.: Ricardo to Malthus1
• 38.: Ricardo to Malthus1
• 39.: Ricardo to Malthus2
• 40.: Ricardo to Malthus 1
• 41.: Ricardo to Malthus2
• 42.: Ricardo to Malthus1
• 43.: Ricardo to Malthus1
• 44.: Ricardo to Trower1
• 45.: Ricardo to Malthus1
• 46.: Ricardo to Malthus1
• 47.: Trower to Ricardo1[answered By 48]
• 48.: Ricardo to Trower1[reply to 47]
• 49.: Mill to Ricardo1
• 50.: Ricardo to Malthus1[answered By 51]
• 51.: Malthus to Ricardo3[reply to 50.—ANSWERED By 53]
• 52.: Ricardo to Bentham and Mill1
• 53.: Ricardo to Malthus1[reply to 51.—ANSWERED By 54]
• 54.: Malthus to Ricardo1[reply to 53.—ANSWERED By 55]
• 55.: Ricardo to Malthus3[reply to 54.—ANSWERED By 56]
• 56.: Malthus to Ricardo1[reply to 55.—ANSWERED By 58]
• 57.: Mill to Ricardo1
• 58.: Ricardo to Malthus1[reply to 56.—ANSWERED By 59]
• 59.: Malthus to Ricardo3[reply to 58.—ANSWERED By 60]
• 60.: Ricardo to Malthus1[reply to 59.—ANSWERED By 62]
• 61.: Mill to Ricardo1
• 62.: Malthus to Ricardo1[reply to 60.—ANSWERED By 64]
• 63.: Sinclair to Ricardo1
• 64.: Ricardo to Malthus1[reply to 62.—ANSWERED By 67]
• 65.: Sinclair to Ricardo1[answered By 66]
• 66.: Ricardo to Sinclair1[reply to 65]
• 67.: Malthus to Ricardo2[reply to 64.—ANSWERED By 70]
• 68.: Mill to Ricardo1
• 69.: Place to Ricardo1
• 70.: Ricardo to Malthus1[reply to 67.—ANSWERED By 72]
• 71.: Ricardo to Say2
• 72.: Malthus to Ricardo1[reply to 70.—ANSWERED By 73]
• 73.: Ricardo to Malthus1[reply to 72]
• 74.: Ricardo to Malthus1[answered By 75]
• 75.: Malthus to Ricardo1[reply to 74.—ANSWERED By 76]
• 76.: Ricardo to Malthus2[reply to 75]
• 77.: Ricardo to Malthus3[answered By 78]
• 78.: Malthus to Ricardo2[reply to 77]
• 79.: Trower to Ricardo2
• 80.: Malthus to Ricardo1[answered By 81]
• Malthus to Horner4
• 81.: Ricardo to Malthus3[reply to 80.—ANSWERED By 82]
• 82.: Malthus to Ricardo2[reply to 81.—ANSWERED By 83]
• 83.: Ricardo to Malthus1[reply to 82.—ANSWERED By 84]
• 84.: Malthus to Ricardo3[reply to 83.—ANSWERED By 85]
• 85.: Ricardo to Malthus1[reply to 84.—ANSWERED By 86]
• 86.: Malthus to Ricardo1[reply to 85.—ANSWERED By 87]
• 87.: Ricardo to Malthus2[reply to 86.—ANSWERED By 88]
• 88.: Malthus to Ricardo1[reply to 87.—ANSWERED By 89]
• 89.: Ricardo to Malthus1[reply to 88.—ANSWERED By 90]
• 90.: Malthus to Ricardo1[reply to 89]
• 91.: Ricardo to Malthus1[answered By 92]
• 92.: Malthus to Ricardo3[reply to 91.—ANSWERED By 93]
• 93.: Ricardo to Malthus1[reply to 92.—ANSWERED By 94]
• 94.: Malthus to Ricardo2[reply to 93]
• 95.: Malthus to Ricardo1[answered By 96]
• 96.: Ricardo to Malthus1[reply to 95]
• 97.: Malthus to Ricardo1
• 98.: Ricardo to Murray1
• 99.: Malthus to Ricardo1[answered By 100]
• 100.: Ricardo to Malthus1[reply to 99.—ANSWERED By 101]
• 101.: Malthus to Ricardo1[reply to 100.—ANSWERED By 103]
• 102.: Trower to Ricardo1
• 103.: Ricardo to Malthus1[reply to 101.—ANSWERED By 110]
• 104.: Grenfell to Ricardo1
• 105.: Whishaw to Ricardo2
• 106.: Say to Ricardo1[answered By 107]
• 107.: Ricardo to Say1[reply to 106.—ANSWERED By 117]
• 108.: Ricardo to [say]1[answered By 117]
• 109.: Mill to Ricardo5[answered By 114]
• 110.: Malthus to Ricardo1[reply to 103.—ANSWERED By 116]
• 111.: Grenfell to Ricardo1
• 112.: Grenfell to Ricardo1[fragment]
• 113.: Grenfell to Ricardo1
• 114.: Ricardo to Mill3[reply to 109.—ANSWERED By 134]
• 115.: Grenfell to Ricardo1
• 116.: Ricardo to Malthus2[reply to 110.—ANSWERED By 126]
• 117.: Say to Ricardo1[reply to 107 & 108]
• Say to Ricardo
• 118.: Grenfell to Ricardo1
• 119.: Grenfell to Ricardo1
• 120.: Trower to Ricardo1[answered By 136]
• 121.: Grenfell to Ricardo1
• 122.: Grenfell to Ricardo1
• 123.: Grenfell to Ricardo1
• 124.: Grenfell to Ricardo1
• 125.: Grenfell to Ricardo1
• 126.: Malthus to Ricardo5[reply to 116.—ANSWERED By 127]
• 127.: Ricardo to Malthus1[reply to 126.—ANSWERED By 128]
• 128.: Malthus to Ricardo1[reply to 127.—ANSWERED By 130]
• 129.: Malthus to Ricardo1[answered By 130]
• 130.: Ricardo to Malthus1[reply to 128 & 129.—ANSWERED By 137]
• 131.: Malthus to Ricardo2[answered By 132]
• 132.: Ricardo to Malthus1[reply to 131.—ANSWERED By 137]
• 133.: Grenfell to Ricardo1
• 134.: Mill to Ricardo1[reply to 114.—ANSWERED By 135]
• 135.: Ricardo to Mill1[reply to 134.—ANSWERED By 138]
• 136.: Ricardo to Trower2[reply to 120.—ANSWERED By 141]
• 137.: Malthus to Ricardo3[reply to 130 & 132]
• 138.: Mill to Ricardo2[reply to 135]
• 139.: Malthus to Ricardo1
• 140.: Ricardo to Mill2[answered By 142]
• 141.: Trower to Ricardo1[reply to 136.—ANSWERED By 147]
• 142.: Mill to Ricardo1[reply to 140.—ANSWERED By 143]
• 143.: Ricardo to Mill3[reply to 142.—ANSWERED By 145]
• 144.: Ricardo to Malthus1[answered By 148]
• 145.: Mill to Ricardo1[reply to 143.—ANSWERED By 149]
• 146.: Malthus to Ricardo1[answered By 150]
• 147.: Ricardo to Trower1[reply to 141.—ANSWERED By 154]
• 148.: Malthus to Ricardo1[reply to 144.—ANSWERED By 150]
• 149.: Ricardo to Mill1[reply to 145.—ANSWERED By 151]

3.

ricardo to sir philip francis1

New Grove Mile-end 24^th. April 1810

Sir

In compliance with your request, when I had the honour of seeing you, I will endeavor to repeat in writing, as nearly as possible, the substance of the observations, which I made in defence of the passage in my pamphlet, on which you have animadverted in the second edition of your work.2 Your dissent from my conclusions is expressed in the following words

“Supposing any given quantity of paper (and no more) to be necessary for the uses of circulation, and that any issue beyond that quantity would be superfluous, then the consequence seems to be, that, in proportion as the Bank issued more of their paper, the country banks must issue less, because so much less, on the whole, would be wanted.”1

To which I answer, that if the quantity of paper necessary for the uses of circulation were a given quantity, and would not admit of increase, the truth of the above proposition could not be successfully controverted, but, as the circulation, under the present circumstances of the restriction on the Bank-payments in specie, admits of an indefinite increase, the issues of the Bank of England will be the cause of a proportionate increase in the issues of the country-banks.

Let us suppose, that the whole amount of the paper currency in England, in circulation, is, at any one moment twenty millions, and that that sum is fully adequate to all the purposes of circulation;—that of these 20 millions, 5 millions, are exclusively current in London and consist of Bank of England notes; and that the Bank, without any alteration in the state of commerce or of credit, increase the amount of their notes one million.

The circulation of the London district being increased one fifth, from 5 to 6 millions, whilst that of the country continued as before,—the prices of commodities would be considerably raised in London, at the same time that they continue stationary in the country. Commodities would therefore be sent from the country to be sold in London, and this would continue till the usual level between London and country prices were again restored, and the additional million had been divided between London and the country, in the same proportion as the 20 millions had been originally divided.

This would be the operation if the country Banks did not increase the amount of their notes; but the conductors of those establishments are sufficiently alive to their interests readily to avail themselves of any opportunity which might offer of increasing the issue of their notes, provided they had a reasonable probability of being able to continue them in circulation. This opportunity would now be afforded them. The London currency having been increased and the prices of goods raised in the London markets, the country banks would be enabled to add to the country currency till the same effect had been produced on the prices of commodities in the country. The amount necessary for such purpose would be precisely a fifth of the country currency, or three millions, that having been the proportion in which the currency of London had been increased. The country currency would for a short time1 be relatively deficient but could not continue so, and must therefore be raised to its usual proportion to the London currency, either by participating in the million which the Bank of England had added to the general circulation2 , or by increasing the amount of the country bank notes. The bank of England then by increasing the amount of their notes one million, would enable the country banks to increase theirs three millions, so that four millions would be added to, and absorbed in the general circulation of England.

If the country banks commenced this operation by adding to the amount of their notes, whilst the amount of those of the Bank of England remained stationary, they could not maintain them in circulation. Their notes would be exchanged for Bank of England notes till they were reduced to their former amount. The steps by which this would be effected are these. There would be a rise in the prices of commodities in the country only; which would therefore be sent from London to the country to be sold for country bank notes in the dearer market; the country bank notes would be exchanged, as by law they may be, for bank of England notes, as these would be wanted to purchase again in the cheaper market, and this would continue whilst there existed any profitable difference in the prices of commodities in the two markets. By these means the country bank notes would speedily be reduced to their former amount.

I hope Sir I have been so fortunate as to make myself understood by you;—if I have not, I shall be happy to give you any further explanation of my meaning. If you see occasion still to differ from me, I shall be glad to have your reasons for so doing; but if, as I hope, you should agree with me in the principle here stated, I shall be gratified by the communication.

[On the reverse side of the sheet, in Osman Ricardo’s hand-writing:

‘The signature of this letter to Sir Philip Francis was cut off to give to Mr Edwards of Ross who wished to have my Father’s signature. O.R. Oct: 26th 1846’.]

[1 ]MS (a copy or draft in Ricardo’s handwriting) in R.P.—Headed ‘To Sir Philip Francis’ in Osman Ricardo’s handwriting.

Sir Philip Francis (1740–1818) is the reputed author of Junius; the ‘Franciscan’ theory of the authorship however was not advanced till1816.

[2 ]Reflections on the Abundance of Paper in Circulation, and the Scarcity of Specie, by Sir Philip Francis, K.B., 2nd ed., London, Ridgway, 1810.

[1 ]p. 60. The passage continues: ‘I should be much obliged to David Ricardo, as I am already on other accounts, if he would explain this matter by its process, in a plain popular way, without resorting to metaphysics; and also on what evidence he states it, as a matter of fact, or why he believes it to be probable, that any increase in the issue of Bank paper enables the country banks to add more than four times that amount of their own. [High Price of Bullion, above, III, 86–7 and cp. n. 1.] All this, he would be able to explain, if it be true, by a short paragraph in the Morning Chronicle.’

[1 ]‘for a short time’ is ins.

[2 ]Replaces ‘either by decreasing the amount of Bank of England notes’.