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313.: ricardo to trower2 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 8 Letters 1819-June 1821 
The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 8 Letters 1819-1821.
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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 trower2
London June 1—1819
My dear Trower
I write to you without delay to give you my opinion respecting an investment of money in Bank Stock at the present price. The fall has been great,3 but I think not so great as the facts with which we are now acquainted warrant and justify. I calculated on the Bank having a much greater surplus Capital than the reports of the Committees inform us they have. That Capital is stated to be 5 millions, I thought it more than double and so it would have been if the Directors had managed the concern intrusted to them with the ability and economy that they ought to have done.
Let us try if we cannot ascertain what under a good system of management should now be the profits of the Bank, and then let us make a due allowance for the management which the affairs of the Bank will receive under the present Directors—
If the Bank should have a circulation of 23 millions and manage their affairs well they may continue to pay a dividend of 10 pc. till 1833 when their charter will expire, and a deduction must be made in consequence of the price they must be obliged to pay for a renewal of their priveleges—if they are renewed—and if they are not they may probably divide 130—or 140 for every £100 Stock.—But will they be able to keep 23,000,000 in circulation—certainly not if specie payments are to be restored—that circumstance may probably sink the amount to 15 millions in which case they could not pay more than 8 pct. divd..1
After examining these statements you will be able [to ju]dge whether it would be expedient to [buy] Bank Stock.—I have thought it right to sell [out]2 mine, not much indeed (£2500) being firmly persuaded that it is much too high, and that after a little sober examination the price will fall.3
Your brother called on me this morning when I communicated to him my sentiments on this subject.
In great haste I am My dear Trower Yrs truly
[2 ]Addressed: ‘Hutches Trower Esqr / Unsted Wood / Godalming’.
[3 ]Bank of England Stock had fallen from 272 in Jan. 1819 to 210 in May.
[1 ]The circulation fell to 17 millions at the end of May 1822, after the resumption of specie payments, and the dividend was reduced from 10 to 8 per cent.
[2 ]MS torn here and above; Bonar and Hollander’s conjecture is ‘some of’.
[3 ]The price moved only within narrow limits during the next few years.