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]

29.

ricardo to tierney 1
[Answered by 30]

New Grove Mile end 11 ^th. Dec^r. 1811.

Sir

I am encouraged by my friend Mr. Sharp, to submit to your consideration some remarks on the means which might be advantageously adopted, first, to2 arrest the progress of the depreciation of our currency, and secondly to restore it to its standard value.

The first of these objects appears to me, in the circumstances in which we are placed, to be the most pressing and perhaps the most important. Depreciation cannot be effectually checked by any other means than by depriving the Bank of the power which they at present possess of adding indefinitely to the amount of their notes. This might be done in a direct manner, by limiting the amount beyond which their paper should not be issued; but it has been plausibly urged against such a measure that occasions may arise in which sound policy may require a temporary augmentation of bank paper, and to deprive the Bank of the power of increasing their notes at such periods might3 be the cause of considerable distress and difficulty to the mercantile classes.

This argument does not appear to me to have as much weight as those who advance it imagine. The objection however may be obviated by the measure which I beg leave to recommend; it is simply to oblige the Bank to sell gold bullion to any purchaser of not less than 50, 100, or 200 ounces at a fixed price somewhere about the present market price,—such regulation to continue for six months.

This would secure the public against any further depreciation of Bank notes, as the Bank would be obliged for their own safety to keep the amount of their circulation within the present limits whilst commerce and credit continued in its present state, to prevent such a rise in the price of bullion as would make it profitable to individuals to purchase it of them for exportation;—and if a greater circulation were required from the operation either of increased commerce, or of embarrassed credit, the bank might augment their issues without producing any effect whatever on the price of bullion, and consequently without exposing the Bank to any inconvenience, or depriving the merchants of that increased accomodation, which might be essential to their operations.

If no further measures were taken to approximate the currency to our ancient standard, the adoption of the one here recommended would alone give complete security as to the future:—the depreciation of our currency would be effectually checked, and the bank deprived of the alarming power which they at present possess, of diminishing, at their pleasure, the value of the monied property of every man in the kingdom. It would afford leisure too for the consideration of such further measures as might be necessary, without pledging Parliament to any particular course of proceeding. And if it should be thought expedient to make bank notes a legal tender, the knowledge which the public would have that though already depreciated more than 20 pc^t., the depreciation of Bank notes would go no further, and that their value would no longer depend on the caprice or false theory of Bank Directors, would deprive that measure of all the alarm which without such security it is so much calculated to produce.

To accomplish the second object, namely, to restore the currency gradually to its mint value, I should recommend that at the expiration of six months, the bank should be obliged to sell gold bullion at 6^d. or 9^d. p^r. oz less than the price now to be fixed, this regulation to continue for one month only. At the end of that period they should again lower the price 6^d. or 9^d. p^r. oz for the next month, and so on for every succeeding month till the price was reduced to £3. 17. 10½. This reduction would be as gradual as the most timid would think necessary, as if the price of bullion were to fall 6^d. p^r. month, nearly 4 years would elapse before the currency would be raised to its standard value; and if it were to fall 9^d. p^r. month it would not be effected in less than 3 years. When this desireable object should be attained it would be of little comparative importance to the public, whether the Bank were allowed to continue to supply the whole circulation, as they now do, with their notes, or whether they should be compelled to pay in specie. It is not money but money’s worth that the holders of notes require, and it can be of little consequence to any reasonable man whether he goes to market with 20 guineas or £21 in notes, provided he can purchase precisely as much with one as with the other. If the public were secured against depreciation by possessing the power of exchanging their notes for bullion at the mint value of gold, I should prefer a circulation, such as ours, consisting wholly of paper, to any other, even as a permanent measure, as being more economical and possessing other obvious advantages.

It need not be observed that the whole of the above plan proceeds on the supposition that the Bank have uncontrouled power of regulating the rise or fall in the price of gold bullion, a point which was most satisfactorily proved during the late discussion on the report of the Bullion Committee.

Before I conclude I think it right to mention that I took the liberty of recommending to the Chancellor of the Exchequer the measure which I have stated in the first part of this letter, as one which might be advantageously adopted to prevent alarm if Bank notes were to be made a legal tender. He politely declined to follow my suggestions.1 I have now only to apologize for having so long intruded on your attention and have the honour to be

Sir Your obed^t and very humble Ser^t

David Ricardo

Right Honb^le. George Tierney.

[The following is written on another sheet.]

In my letter to Mr. Tierney it was my intention to have added the following passage, but on consideration there appeared to be some objections to this part of the plan, the consideration of which would have led me to a longer discussion than was consistent with the object which I had in view.

There is yet a part of the plan to be mentioned, which though by no means essential to it, might possibly be adopted with advantage. It cannot be supposed that the Bank would willingly do any thing which might be hurtful either to public or to private credit. Whatever my opinion of their mistakes may be no one can be more persuaded than I am of the general integrity of their motives. If however from a mistaken view of the subject they should diminish the circulation too rapidly they might raise its value in a ratio which might involve individuals in much perplexity and distress. As well therefore as possessing a security against an undue increase of Bank notes for particular periods, it would be desirable that the Public should also be secured against a too rapid diminution of their amount. This object might be most fully attained by enacting that the Bank should be obliged to buy gold bullion (not less than a fixed quantity) during the whole period of the reduction of their notes, at a price not less than 2/p^r. oz under the price at which they were then selling. When they sold gold bullion at £4. 17. p^r. oz, they should be obliged to buy at £4.. 15. -. When they sold at £4. 15- they should buy at £4. 13. Thus would complete security be obtained for a reduction of the currency without any danger of the reduction being made but by means just as gradual as Parliament should think expedient.

[1 ]MS (a copy in Ricardo’s handwriting) in R.P.

George Tierney (1761–1830), the Whig leader, who had been a member of the Bullion Committee.

Both plans outlined by Ricardo in this letter were adopted by Parliament in 1819; see above, V, 364 ff.

[2 ]‘remedy’ is del. here.

[3 ]‘occasion’ is del. here.

[1 ]See letters 18 and 19.