51.: malthus to ricardo3[Reply to 50.—Answered by 53] - 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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malthus to ricardo
[Reply to 50.—Answered by 53]
Bangor July 6th 1814.
My dear Sir,
I am in so large and agreeable a family party, and there are so many delightful excursions to be made from Bangor that I do not expect to be very soon tired of the mountains, particularly as we do not absolutely live in the midst of them, but only see them at such a respectful distance, as to make them lose all their terrors, and shew only their beauties. We were some of us going to Conway today, which I have not yet seen, but were prevented by the rain, which has once or twice interrupted us, though upon the whole the weather has been tolerable.
I think as I am at such a distance I will not begin dealing afresh in the loan, and increasing your trouble, but be satisfied with what has been done, which is certainly a very fair per centage, and I am much obliged to you for it. I am rather surprised however that omnium should fall. I can’t help thinking that it must rise before the end of the year.
You have not yet removed my doubts on the effects of Restrictions upon the profits of stock and interest of money, although of their general effect to impoverish a country and to diminish its foreign trade, I feel no doubt. But high profits and interest are more frequently, you will allow, the concomitants of poverty than of abundance. You observe that in the case supposed, there would be less production and less demand with the same capital; but surely there would be much less capital. There would be a smaller quantity both of corn, and of all other commodities, and every monied accumulation would command less labour and less produce. The question then seems to be whether production or demand would decrease the fastest? and as in my opinion the dearness of labour would have more effect in diminishing capital than in diminishing revenue, particularly rents, I do not see why the usual effects of a diminution of capital should not take place.
I can by no means agree with you in thinking that every thing which diminishes produce, tends to diminish the power of paying for the commodities wanted, or as you intimate, to diminish the effective demand. If this were true, why do profits rise at the commencement of a war when stock is destroyed? or why do not profits invariably increase with the increase of capital, as produce unquestionably does. But you must mean that it is the rate of production, not the absolute quantity of produce which determines profits. But even this rate of production, or more definitely speaking, the proportion of production to the consumption necessary to such production, seems to be determined by the quantity of accumulated capital compared with the demand for the products of capital, and not by the mere difficulty and expence of procuring corn. If it [is] necessary to employ a hundred days labour instead of fifty, in order to produce a certain quantity of corn, there seems to be no reason whatever that the person who possesses an accumulation sufficient to make the necessary advances should have a less remuneration for his capital. The effects of a great difficulty in procuring corn would in my opinion be, a diminution of capital, a diminution of produce, and a diminution in the real wages of labour, or their price in corn; but not a diminution of profits; although unquestionably low profits might accompany a great difficulty of procuring corn, if at the same time that this difficulty existed there was a great abundance of capital. In short all will in my opinion depend upon the state of capital compared with the demand for it. This will be the prime mover, and it is this which will determine the profits which a capital employed in agriculture shall yield, whether the land be naturally rich or naturally poor, much worked or little worked.
The demand for capital depends, not upon the abundance of present produce, but upon the demand for the future products of capital, or the power of producing something by means of capital which shall be more in demand than the produce actually employed. And in this question that great element of effective demand,—the desire to consume in those who possess revenue, must always have great influence. I think you overlook it too much.
Kind regards to Mrs. R.
Ever truly Yours
T R Malthus