127.: ricardo to malthus1[Reply to 126.—Answered by 128] - 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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ricardo to malthus
[Reply to 126.—Answered by 128]
7th. Octr. 1815
My dear Sir
By facility of production I do not mean to consider the productiveness of the soil only, but the skill, machinery, and labour joined to the natural fertility of the earth. It does not therefore follow that because Othaeite has an abundance of fertile land that profits should be there at the highest rate, because the skill, and the means of abridging labour may in Europe more than compensate this natural advantage of Othaeite. The question is this, If part of the skill and capital of England were employed in Othaeite to produce 100,000 quarters of corn, would not the persons employing that capital obtain greater profits in Othaeite than they would if they employed the same capital for the same purpose here, and would not rent be lower there than here? You must at any rate allow that the quantity of corn produced with a given quantity of capital, supposing the same skill to be employed, must be greater there than here, or there is no meaning in fertility of soil. You must allow too that in proportion to the fertility of Othaeite and to its extent compared with the population will be the lowness of rent, notwithstanding its abundant rate of produce. I can easily conceive that with the imperfect tillage the people of Othaeite now give their land, the population may be just sufficiently numerous to require that the whole of their lands should be in cultivation, and consequently that they should bear a rent,—but let 100 Europeans only join them with our improved machinery, and perfectly skilled in husbandry, and the immediate consequence would be that ¾ of their lands would for a time become perfectly useless to them as the ¼ might produce them more food than all the inhabitants could possibly consume. Now I ask whether it be possible that ¾ of the land of a country can be suffered to pass from a state of tillage to a state of nature without occasioning a fall in rents? If land is less in demand must not the rent of it fall? If you say no, there is no truth in the proposition that value depends upon the proportion between supply and demand.
Now Suppose England in the state in which I have been fancying Othaeite, and she is actually in that state, all or most of her land being in cultivation; and suppose further that there is another country totally unknown to us whose skill and machinery in husbandry as far surpasses ours, as ours do that of the Othaeitians. If 100 of these persons were to come amongst us with their capital, skill &ca.,—would not the same consequences follow as I have just stated? Now every improvement in machinery is precisely, on a small scale, what I have been here supposing on a large scale, and I am quite astonished that you should yet maintain that “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 pct. and the wages of labour both nominally and really low.” Land like every thing else rises or falls in proportion to the demand for it; every improvement which shall enable you to raise the same quantity of produce on a less quantity of land, or which is the same thing, a larger quantity of produce on the same quantity of land can not increase the demand for land, and therefore can not raise rents.
I do not clearly see the distinction which you think important between productiveness of industry and productiveness of capital. Every machine which abridges labour adds to the productiveness of industry, but it adds also to the productiveness of capital. England with machinery and with a given capital will obtain a greater real net produce, than Othaeite with the same capital, without machinery, whether it be in manufactures or in the produce of the soil. It will do so because it employs much fewer hands to obtain the same produce. Industry is more productive, so is Capital. It appears to me that one is a necessary consequence of the other and that the opinion which I have advanced and which you are combating is that in the progress of society, independently of all improvements in skill and machinery, the produce of industry constantly diminishes as far as the land is concerned, and consequently capital becomes less productive. That this diminution of produce is beneficial to all owners of land, but that it is so at the expence of manufacturers, amongst which I include farmers, first by rendering the commodities which they manufacture of less exchangeable value than they before were for corn, and secondly by raising the cost of production by raising the price of labour.
I shall put this letter in the Post office in London where I am going to morrow for a few days. I have been writing in my unconnected and confined stile my opinions on the profits of the Bank, and on the advantages of a paper and nothing but a paper currency. I am too little pleased with it to think of publishing. The whole is too little for a pamphlet. Mr. Grenfell is I think anxious that something should be said about the Bank before the meeting of Parliament, and I too wish some able hand would undertake it.
I am always glad to hear that you are preparing for the press, for though I do not always agree in opinion with you I am sure that your writings will contribute towards the progress of a science in which I take great interest. I should be more pleased that we did not so materially differ. If I am too theoretical which I really believe is the case,—you I think are too practical. There are so many combinations,— so many operating causes in Political Economy, that there is great danger in appealing to experience in favor of a particular doctrine, unless we are sure that all the causes of variation are seen and their effects duly estimated.
Mr. Whishaw and Mr. Warburton have been at Mr. Smith’s for some time.—I have been absent from home unfortunately, and have seen but little of them. I yesterday dined with Mr. Whishaw, he talked of leaving Mr. Smith immediately.
Mrs. Ricardo joins in kind compliments to Mrs. Malthus.
I thank you for noticing Clerk.