18.: ricardo to perceval 1[Answered by 19] - 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 perceval
[Answered by 19]
New Grove Mile end 27 th. July 1811
During the late discussions in Parliament on the subject of the Paper currency, you distinctly admitted that a reduction in the amount of Bank notes would increase their value, and would therefore lower the price of bullion, but you thought that such a reduction could not be effected without impairing our resources, cramping our trade, and distressing our commerce. It appears, then, that you acknowledge the truth of the principles advanced by the Bullion Committee but hesitate as to the expediency of the remedy which they have recommended. I will not trouble you, Sir, with my opinions on this subject; they are already before the public; but beg leave to suggest, for your consideration a measure, which, if adopted, I cannot help thinking would greatly tranquilise the public mind respecting the further depreciation of Bank notes. This measure appears to me to be in strict accordance with those principles to the truth of which you have given your sanction. Let the Bank be obliged to sell gold bullion, for their own notes, to any purchaser that shall apply for a quantity not less than 5 ounces, at the rate of £4.. 15 pr. oz for standard bullion, and whatever the bullion so delivered by the Bank may arise from, whether from foreign coin, or from light guineas, let it be freely exportable at the will of the purchaser.
An enactment to this effect would secure the public against any depreciation of the currency beyond that to which it has already reached. The Bank would be at full liberty, at their leisure, and after the most mature consideration, to adopt such other means as might be necessary, when no danger should appear even to the most timid, gradually to reduce the amount of their paper within such limits, as should raise it to the actual value of the standard of the coin. If such a regulation were to take place much of the alarm which at present exists, and which cannot fail to increase, would subside; and though we should have to deplore that the denomination of the coin, had in effect, for a time at least, been raised from £3. 17. 10½ to £4.. 15 yet we should feel confidence as to the future, and should no longer be justly apprehensive that we were about to tread the same ruinous course that had involved the finances of other countries in irretrievable distress and difficulties. Neither could it in any way be considered as a hardship on the Bank, to subject it to such a regulation. Before the restriction they were actually obliged to sell gold to the public at £3. 17. 10½ pr [oz.] , because at that rate they were obliged to furnish gold coin in exchange for their notes, and yet with the controul which their issues had on the price of gold, no practical inconvenience was suffered by them excepting in the year 1797, a period of great alarm, which occasioned a demand for gold for local purposes only, the exchange at the time being greatly in favour of England. Whilst the Bank have the power of limiting their issues of paper, they have the power of counteracting any tendency to a rise in the price of gold, whatever the demand for that article may be, either on the continent of Europe, or in any other part of the world.
If, Sir, you should deem it necessary, at the expiration of the bill which has just received the Royal assent, to make Bank notes a legal tender, a provision to the effect which I have suggested, would I am confident deprive such a measure of almost all its terrors, as it would give the public complete security against the further depreciation of Bank notes; without which they would have too much reason to fear, from their observations on the past, that the paper currency would continue progressively to sink in value. It is not necessary to point out the effects which will follow from such a conviction on all future leases and contracts.
I hope, Sir, you will pardon the liberty I am taking in addressing you on this subject, and I trust you will be assured that if my opinions are erroneous, they are at least the honest convictions of my mind, as I have no other interest in the correction of our present monetary system than that of all the other annuitants and Stock holders in the Kingdom.
I have the honour to be Sir Your obedt. and humble Servt.
The Right Honble. Spencer Perceval