92.: malthus to ricardo3[Reply to 91.—Answered by 93] - 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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malthus to ricardo
[Reply to 91.—Answered by 93]
[East India College, 18 April 1815]
My dear Sir
I should have great pleasure in joining your party on wednesday, but of all the days in the week, that is the one, when it is least possible for me to leave College, as it is the first of my two lecture days. I rather believe that I shall be in Town with Mrs. Malthus for two or three days towards the latter end of the next week, when I hope we shall have an opportunity of meeting.
Do you not perceive that the conclusion you have drawn from your calculation depends entirely upon the arbitrary assumption that the next portion of land taken into cultivation will require 8½ men to produce 80 quarters of corn. But as you have distinctly allowed that, on account of the rise of price occasioned by demand, from 4£ to £4. 10s., the profits on the old land will rise from 25 to 32 per cent, surely there is land that may be brought into cultivation at all the intermediate gradations of profit from 32 per cent to 25, and 19.7 and nothing can be so improbable as that if the last land yielded 32 the next taken into cultivation should yield only19.7. I suppose in this case the rise in the price of corn to be occasioned by demand, and to be its market price. What additional quantity of labour will be employed on new land will depend entirely upon circumstances—upon the causes which determine the general rate profits.
I assure you I have been reading over your essay again, and giving it great attention, as I particularly wish to get to the bottom of this subject.
I think your theory simple just and consistent as far as it goes; but I think you wrong in the application of it, that is, you expect similar results when the premises are essentially different. The source of this error, as it appears to me, is, that because a relative rise in the price of corn (or rather perhaps fall in the price of manufactures) always accompanies an accumulation of stock and fall of profits, you assume such rise in the price of corn as the cause, when in fact the whole operation of this rise as far as relates to the land, goes the other way, and tends to raise rather than to lower profits, although of course when the rise is absolutely occasioned by the fall of profits, such fall must overcome the tendency, and all the advantage derived from it will go, as you justly observe to the Landlord.
But there are other causes of a relative rise in the price of corn besides the fall of profits, such as a foreign demand for it, a greater home demand occasioned by restrictions on importation, and a prosperous foreign trade, by which we can at once import a great abundance and a great value of foreign commodities. These are causes (particularly the two former) of a rise in the relative price of corn in no respect necessarily connected with a fall of profits, and under the influence of these causes fresh land may be taken into cultivation, at various profits (to refer to your instance) from 32 to 26 per cent. With regard to manufactures in this case, if they did not rise immediately from increased demand, some of the capital vested in them would go to the land till the level was restored.
Now the error you appear to me to fall into is, that, of applying your neat simple and ingenious table to a state of things not contemplated in it, and to which it does not apply. The high profits of stock which appear in the early periods of your table are owing, not to the low relative price of corn (which in fact has a contrary tendency) but to the small quantity of capital in the country compared with the means of employing it, and particularly to the small quantity of capital employed in manufactures, which unless furnished very sparingly could never bring such high profits as could be obtained from the land. But this state of things cannot surely be brought back by a low price of corn not occasioned by scantiness of capital and high profits, and if it be not preceded by these causes, its effects will be to lower not to raise the profits of agriculture. A large tract of rich land added to the Island, would indeed restore the state contemplated in your table. Before any fall of price had taken place, capital would be removing fast both from the old land and from manufactures. There would be a real want of stock compared with the means of profitably employing it; manufactures would rise considerably in price, from higher profits, and corn not rising, on account of the abundance of rich land, the relative price of corn would become low; but as a consequence (remark) not as a cause of high profits.
The case would be quite different if you begin by a fall in the price of corn, not occasioned by high profits, such as the opening of the ports or the stoppage of a foreign demand for corn. Capital would in this case be expelled from the land slowly by low profits, instead of removing with alacrity for high profits. Manufactures would be overloaded with capital instead of being very scantily furnished with it; and nothing I conceive but the immediate vicinity of such a country could under such circumstances so increase the prices of manufactures as to occasion generally high profits.
In your table, by the by, putting the affair of mining out of the question which it is difficult to estimate, I should say that the regular progress would be a fall in the price of manufactures from lower profits, and a stationary price of corn, rather than a rising price of corn, and a stationary one of manufactures. And this I think accords best with experience, but it is of no great consequence which, except perhaps, as it might serve to distinguish a rise occasioned by demand from a rise by a fall of profits.
You did not tell me how you liked Mr. Torrens. Did you set him right as to the consistency of my bullion opinions.
Ever truly Yours
T R Malthus