9.: ricardo to malthus1[Reply to 8.—Answered by 10] - 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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ricardo to malthus
[Reply to 8.—Answered by 10]
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.
There does not appear to me to be any substantial difference 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 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 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 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 increase, and its price would 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, 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 trade , but on looking over the article in the Review 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. 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; 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, Yr. obedt. Servt.
Throgmorton Street 18th. June 1811.