189.: ricardo to mill1[Answered by 195] - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 7 Letters 1816-1818 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 7 Letters 1816-1818.
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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 mill
[Answered by 195]
Widcombe House, Bath 20th. Novr. 1816
My dear Sir
On my return here from Gatcomb yesterday, where I had been to pay a visit of one evening to my bairns, I found the parcel which you had sent me. As the letter you promise will probably be directed to Gatcomb it will be some days before I shall receive it here. I must wait therefore patiently for the further instructions which I am prepared to follow.
You would not at this moment have been again troubled with a letter from me, if I had not been anxious to correct an error in the papers which you now have.
I had great difficulty to reconcile to my mind, what appeared to me true in argument, that a tax on the profits of stock, either by sinking the money rent of the landlord, leaving the prices of commodities as before; or by raising the prices of commodities, leaving money rent as before; would really affect the landlord. During a very restless night I discovered that I had overlooked an important fact.
I have argued as if the tax on profits would be a proportional tax on the gross produce of the land, and not on the net produce of the farmer. You will observe that in one place I observe that if an equal land tax were laid on every species of land in cultivation, it would be unequal in its operation, as it would be a bounty to the landlord of the best land. It would raise the price of corn equal to the burden borne by the farmer of the worst land, but this additional price being obtained for the greater quantity of produce yielded by the better land, farmers of such land would be benefited during their leases, and after that the advantage would go to the landlord.
The cultivators of No. 1, 2, and 3 get the very same profits, the only difference is in the rent. If their land yields respectively 180, 170, and 160 quarters, and the value of 2 quarters be paid by each farmer for the tax, and the price of corn and every thing else continues unaltered after the tax, there will be no alteration in money or in corn rent, for 2 deducted from the above sums leaves 178, 168, and 158. The difference between land No.3 and No.1 continues 20 qrs. and that between 3 and 2—10 qrs.. If the price be also unaltered say £4,—the rent would continue to be on No.1 £80 on No.2 £40.–.–.– and as by the supposition the price of no commodity would be raised the landlord would be untaxed. But suppose the price of corn and of every other commodity raised, and raised in the same proportion by the tax; rent also would be raised in that proportion for if corn be raised 10 pct. or from £4– to £4.8.–, rent will be raised 10 pct. and the land No. 1 will give £88 and No. 2 £44.– for 20 qrs. at £4. 8 comes to £88, and 10 qrs. to £44.–. If raised 25 pct. or to £5.–rent will also rise 25 pct. or to £50.–, so that in every case the land[lord] will be unaffected by such a tax. In short a tax on the profits of stock always leaves corn rent unaltered; a tax on raw produce, tithes, &ca., never leaves corn rent unaltered, but generally leaves money rent unaltered.
This subject is now very clear to my mind, but I fear I have not succeeded in making it clear to yours for I have used a strange jumble of words. I have no doubt however but that your own reflections will lead you to the same conclusions without any explanations of mine. When I insert my amended opinion in its proper place I hope I shall be more lucid.
Mrs. Clutterbuck continues well. She and Mrs. Ricardo unite in kind regards to you.
I shall certainly remain here till tuesday next on which day I must go to London. I shall not be there for more than two nights and I do not yet know whether I shall return here or go to Gatcomb.
Ever truly Yours