60.: ricardo to malthus1[Reply to 59.—Answered by 62] - 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 malthus
[Reply to 59.—Answered by 62]
Gatcomb Park 16 Sepr. 1814
My dear Sir
I am obliged to you for the information which you have given me concerning your chair. I believe as the season is so far advanced I shall defer building one till next spring.
I agree with you that when capital is scanty compared with the means of employing it, from whatever cause arising, profits will be high. Whether temporarily or permanently must of course depend upon whether the cause be temporary or permanent. It is however very important to ascertain what the causes are which make capital scanty compared with the means of employing it,—and how far when ascertained they may be considered temporary or permanent.
It is in this enquiry that I am led to believe that the state of the cultivation of the land is almost the only great permanent cause. There are other circumstances which are attended with temporary effects of more or less duration, and frequently operate partially on particular trades. The state of production from the land compared with the means necessary to make it produce operates on all, and is alone lasting in its effects.—
We agree too that effectual demand consists of two elements, the power and the will to purchase, but I think the will is very seldom wanting where the power exists,—for the desire of accumulation will occasion demand just as effectually as a desire to consume, it will only change the objects on which the demand will exercise itself. If you think that with an increase of capital men will become indifferent both to consumption and accumulation, then you are correct in opposing Mr. Mill’s idea, that in reference to a nation, supply can never exceed demand,—but does not an increase of capital beget an increased inclination for luxuries of all description, and tho’ it appears natural that the desire of accumulation should decrease with an increase of capital, and diminished profits, it appears equally probable that consumption will increase in the same ratio. Exchanges will be as active as ever the objects only will be altered. If demand appears more active, where capital is scarce, it is only because the power to purchase is comparatively greater. Wherever capital is scanty the necessaries of life are cheap, if the country is commonly fertile;—and as capital and population increase the necessaries of life rise in price, and thus is the power of purchasing, though really greater, comparatively less. In a country with little comparative capital the value of the yearly produce may very rapidly increase, and if it be said to be in consequence of the greatness of demand, I should contend that in such country the demand would not be limited, in the same degree, by a want of power,—as in a country abounding in capital; and merely because provisions would not rise in the same proportion in the two countries. —If half as much corn again as usual were produced next year, a great part of it would undoubtedly be wasted, and the same might be said of any commodities which we might be ingenious enough to name,—but the real question is this; If money should retain the same value next year, would any man (if he had it) want the will to spend half as much again as he now does,—and if he did want the will, would he feel no inclination to add the increase of his revenue to his capital, and employ it as such. In short I consider the wants and tastes of mankind as unlimited. We all wish to add to our enjoyments or to our power. Consumption adds to our enjoyments,—accumulation to our power, and they equally promote demand.
Mrs. Ricardo and I are going this morning to Cheltenham, which is 18 miles distant from us,—we shall return tomorrow. Mr. Smith whom I met at your house lives about 9 miles from here. He and Mrs. Smith have been very kind and attentive to us. I suspect that I am much indebted to him for the notice which has been taken of us by our neighbours. Mr. Tennant was at his house for a short time and did me the favor to call, but I was unfortunately from home, and being obliged to go to London I did not pay my visit to Mr. Smith till he was gone.
I hope you recollect that we are not quite 28 miles from Bath. You and Mrs. Malthus might I think give us the pleasure of your company for a few days during your Christmas vacation and might at the same time visit your friends. But as you have seen them so lately you would give us great pleasure if you would give us the whole of your time. Mrs. Ricardo who is standing by me has made me express myself in a more than usually bungling manner. She unites with me in kind regards to Mrs. Malthus
Yrs. very sincerely