126.: malthus to ricardo5[Reply to 116.—Answered by 127] - 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 116.—Answered by 127]
Octr 1st 
My dear Sir
I dare say you have been enjoying greatly the late fine season, and have found but little time for study. I felt myself in the same predicament at Claverton in the summer, and in consequence did nothing. I am now thinking about a new edition of the Essay which Murray wishes to have finished before anything else is done. I am now casting the chapters about the agricultural and commercial systems, and making them apply more directly to the main subject; but am greatly puzzled about what to do with the chapter on the bounty, the greatest part of which I still think quite correct, and am unwilling therefore to throw out, lest it should give rise to charges of a change of opinion which I do not feel. My real change of opinion is very partial indeed.
I hope you have begun to do something now the weather has altered. I quite agree with you in thinking that the Government ought to participate more largely in the profits of a paper circulation, but from the experience of the last 5 or 6 years I own I feel great doubts of the practicability of keeping a very large paper circulation on a level with the precious metals, without great and distressing variations in the whole quantity of currency. What has happened clearly proves that there may be a great demand for the precious metals in times of war and convulsion, on account of their superior convenience; and such a demand operating upon a country possessing a small quantity of them, must occasion either a great rise of price, or an extraordinary and most inconvenient diminution of currency. To keep a paper currency on a level with the precious metals without great fluctuations in the value of the currency, I fear we must have hoards, and a partial metallic circulation.
The more I consider our old subject, the less I find I can agree with you in the new view which you have taken of capital as depending with respect to profits, on facility of production rather than as was formerly supposed on quantity and competition. Because of small quantity of capital compared with the means of employing it is always accompanied with facility of production, you attribute the high profits which are yielded in this case, to the latter cause instead of the former; although it is quite certain that great facility of production, accompanied by abundant capital compared with the demand, could only shew itself in increased rents and wages, and could not possibly appear in the shape of profits. In Otaheite where perhaps the facility of production is the greatest of any country we know, there is scarcely any capital wanted, and almost the whole of the produce goes to rent and wages. Universally where land is limited in quantity, the facility of production upon it, will go mainly to rent; and the soil of a country might be of such fertility as to yield 60 fold instead of 8 or 10, and yet the profits of stock be only 6 per cent, and the wages of labour both nominally and really low;—only just sufficient, in short, to support a stationary population.
You appear to me to overlook a most important distinction between productiveness of industry and productiveness of capital. They are in fact very different, and do not necessarily go together except perhaps in the last capital that can be employed on the land, where the productiveness of industry finally limits the productiveness of capital. In manufactures they have very little indeed to do with each other; and in land except in the case above mentioned, they seldom increase and decrease in the same proportion. I have no doubt, it frequently happens that with regard to the last capital employed upon the land in two countries, the soil of one may be such as to yield ten fold, and the soil of the other only eight fold, and yet the capital on the latter, from the greater demand for corn, and the greater relative price, may yield a higher per centage profit.
When you speak of difficulty or facility of production, do you mean to refer to industry or capital. If you refer to capital, of course difficulty or facility of production must be synonimous with low, or high profits, and our difference is merely verbal. If you refer to industry or labour, the difference is real, and I am not I fear likely to see the subject in the same light with you. Pray give me a definition of productiveness in your next.
Your doctrine that high profits depend upon the low money price of corn appears to me still more objectionable and still more uniformly contradicted by experience, than the dependance of profits upon facility of production. Facility of production on land does not always necessarily occasion a cheap money price, the high profits often counterbalancing such facility; and in a similar manner low profits will often counterbalance in price, difficulty of production. For a hundred and fifty years after the reign of Edward the third, corn continued to fall, and so it did from 1640 to 1750—profits falling at the same time.
By the by surely we have been both wrong in thinking that in the progressive cultivation of poor land, the price of corn compared with manufactures would very greatly rise. I much question whether the natural and necessary rise of the raw material will not in general be nearly in proportion to the additional labour employed on the land. In wool, leather, and flax, I have little doubt that this is the case. Is it possible that a difficulty in the production of corn, should, without the operation of any other peculiar cause, make the precious metals abundant and cheap in a country, and greatly raise the price of labour compared with other states. Surely with regard to money prices, we have attributed too much to difficulty of production.
We have had young Clarke to tea who seems a nice lad, and I believe is doing very well. Mrs. M desires to be kindly remembered to Mrs. Ricardo.
Believe me most truly Yours
T R Malthus.