The Online Library of Liberty

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• 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]

9.

ricardo to malthus1
[Reply to 8.—Answered by 10]

Dear Sir

I lose no time in answering your obliging letter and endeavoring 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.1

There does not appear to me to be any substantial difference between bullion2 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;3 but it has not on that account been taken out of the list of commodities. A new use has been found for a particular article, consequently there has been an increased demand for it, and an augmented supply. This new use has made every man a dealer in bullion, he buys it to sell it again, and the general competition of all these dealers will as surely, and as strictly, regulate its value in every country, as the competition of the same or other dealers will regulate the value of all other commodities. I have your sanction4 for calling every purchaser of commodities a dealer in bullion, and though in the language of commercial men the sellers of money are in all cases called purchasers, it is not on that account less true that they are sellers of one commodity and purchasers of another. The nature of corn was not changed by the discovery that a new use might be made of it by fermentation and distillation1 ; and if we should hereafter discover that it might be used for a hundred other purposes contributing to the comforts and enjoyments of mankind, the demand for it would increase, and its price would2 in the first instance be considerably augmented, but this would be the only change it would undergo;—it would continue to be imported and exported by the same rules as every other commodity. I have no doubt that on this point we should not differ; it remains therefore for you to shew 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,3 and why it should not certainly and invariably (invariably only as that term is applied to other commodities) seek the most advantageous market.

It is probable that the word “redundancy” has not been happily chosen by me to express the impression made on my mind of the cause of an unfavourable balance of trade4 , but on looking over the article in the Review5 I find that you use it precisely in the sense in which I wish to convey my meaning; for you admit that a relatively redundant currency may be and frequently is a cause of an unfavourable balance of trade but you contend that it is not the only cause. Now I, so understanding the word, contend that it is the invariable cause. This relative redundancy may be produced as well by a diminution of goods as by an actual increase of money, (or which is the same thing by an increased economy in the use of it) in one country; or by an increased quantity of goods, or by a diminished amount of money in another. In either of these cases a redundancy of money is produced as effectually as if the mines had become more productive. I do not deny that temporary fluctuations do occur in the value of the precious metals;—on the contrary I maintain that these fluctuations never cease, but I attribute them all to one cause, namely; a redundancy of currency produced in one of the ways above mentioned, and not to the demand for particular commodities. These demands are in my opinion regulated by the relative state of the currency,—they are not causes but effects.1 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 debt already contracted, forgetting that I uniformly contend that it is the relative state of the currency which is the motive to the contract itself. The corn, I say, will not be bought unless money be relatively redundant; you answer me by supposing it already bought and the question to be only concerning the payment. A merchant will not contract a debt for corn to a foreign country unless he is fully convinced that he shall obtain for that corn more money than he contracts to pay for it, and if the commerce of the two countries were limited to these transactions it would as satisfactorily prove to me that money was redundant in one country as that corn was redundant in the other. It would prove too that nothing but money was redundant. If indeed sugar were exported by some other merchant the debt for corn would be paid without the exportation of money and I should say that sugar was the redundant commodity;1 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 expences attending the exportation of bulky commodities,—but in all these discussions we must suppose these expences 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 expences 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 endeavor to learn every particular concerning it and hope to be able on saturday next to pay you a visit in Hertfordshire when we will further discuss these seeming difficulties.

I am Dear Sir with great respect, Y^r. obed^t. Serv^t.

David Ricardo

Throgmorton Street 18^th. June 1811.

[1 ]Addressed: ‘The Revd. T. R Malthus/East India College/Hertford.’

MS at Albury (as printed in the text); also a draft, dated in pencil ‘June 17’ and apparently written before receiving Malthus’s letter of 16 June, in R.P. (the main variants are given in footnotes).— Letters to Malthus, VI.

[1 ]In place of this paragraph the draft reads: ‘As we are so nearly agreed on the principles which regulate the value of money in the countries which have constant commercial intercourse with each other, I am desirous that we should endeavor, by amicable discussion in private, to remove the few objections which prevent us from being precisely of the same opinion.’

[2 ]Draft reads ‘money (or bullion)’.

[3 ]Draft does not contain ‘and a medium of exchange;’.

[4 ]In the review (by Malthus) of Ricardo and others on bullion, Edinburgh Review, Feb. 1811, p. 352.

[1 ]Draft reads: ‘The nature of corn was not changed, nor the laws which regulated its export and import by the discovery that spirituous liquors could be obtained from it by fermentation and distillation’.

[2 ]Draft ‘might possibly be’ in place of ‘would’.

[3 ]The draft has here a full stop and does not contain the remainder of the paragraph.

[4 ]Draft ‘to express my impression of the fact’.

[5 ]Edinburgh Review, Feb. 1811, pp. 342–3.

[1 ]Draft, in place of the last five sentences (from ‘Now I’, etc.), reads: ‘Now my opinion is that it is the relative redundancy of currency which is the only cause; —this relative redundancy may be produced by some alteration either here or abroad in the absolute quantity of goods which may make the amount of money which before circulated those goods relatively redundant,—or it may be produced by the actual increase of money in one country, or the diminution of it in another. I do not deny that temporary fluctuations do occur in the value of the precious metals, on the contrary I maintain that their value never ceases fluctuating but I attribute it to one or other of the causes just mentioned, and as not at all arising in ordinary times from the debts which one country has contracted to another. Your observation is just concerning the extra expences attending the exportation of bulky commodities,—but in all these discussions we must suppose these expences 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 expences of every sort.’

[1 ]From here, where it has a full stop, the draft reads: ‘But it may be said “money was relatively redundant in England because the merchant importing the corn was willing to export it”;—true; but the exportation of sugar the more redundant commodity raises the value of money by diminishing the amount of commodities, [‘And if the value of sugar in the importing country is as much higher, as the value of corn exceeds’ is del. here] and the exportation of money does not take place because it is cheaper than one commodity only in the foreign country, but because it is cheaper than all [replaces ‘it is the cheapest exportable commodity’].’ This ends the sheet of the draft; the remainder is wanting.