360.: mcculloch to ricardo1[Reply to 359.—Answered by 361] - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 8 Letters 1819-June 1821 [1819]
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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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360.
mcculloch to ricardo
[Reply to 359.—Answered by 361]
Edinburgh 2 April [1820]
My Dear Sir
I have to return you my best thanks for your kind letter of the 29 Ulto; and for the remarks which you have been so good as to make on my article in the last No of the Review—If I could suppose that whatever sums are paid into the Exchequer as taxes would in the hands of Government give employment to the same number of labourers as if they had been allowed to remain in the possession of the contributors, I should have no hesitation about subscribing to your opinion that such taxes would, immediately after their imposition, or at least in a very limited period, fall on the capitalist, and that wages would be proportionably augmented—But I am convinced that a little reflection will satisfy you that any such supposition is altogether out of the question—Suppose that in order to pay a subsidy to the Russians a duty of 6d is laid on every quartern loaf, by what means will the labouring class be able proportionably to raise their wages? Yet such subsidies form a constant and important part of the expenditure of every war—But, admitting that the taxes are totally expended on the maintenance of home soldiers, it is plain, from the incomparably greater waste that must take place in providing for troops, and from the expenditure in the shape of munitions de guerre, that instead of the sums raised by Government setting the same quantity of labour in motion as they would have done had they not been thrown into the Exchequer, we shall be a great deal too liberal if we suppose them to have half that effect—In various years of the late contest the expences on account of the war alone exceeded 70 millions, and on the supposition that the wages of labour amounted to £30 that would have afforded the means of subsistence to above 2 millions of individuals—at least 100 per cent more than have at any period been directly or indirectly employed by government—Although, therefore, in estimating the effects of taxation the additional employment which it enables the government to afford ought not to be lost sight of, yet this is but a very poor and inadequate compensation for the diminished employment afforded by the contributors—Hence when a country, in which the increase of capital and of population had been nearly equal has the misfortune to be involved in hostilities, I can have no doubt that if a sudden check be not given to the principle of population, the condition of its inhabitants must be degraded—This, as it appears to me, is the great evil of excessive and especially of suddenly increasing taxation—Increased exertion might make some amends for the destruction of capital; but when the sentiments of the people are once depressed—when they submit to be sunk in the scale of existence—when, in short, the extortion of government has reduced them to the situation, for example, of the Irish, their capacity of improvement is at an end, and their condition becomes altogether hopeless and desperate—
I perfectly agree in your opinion that if population increases faster than the means of subsistence, a country even though not taxed at all, must ultimately sink into the extreme of misery—But, I think I have stated enough to shew that the increase of population has not been by any means the main cause of the poverty with which the lower classes in the country are now assailed—
For want of throwing in an additional sentence an erroneous impression may be made by what I stated on the subject of the Corn laws—I did not mean to say that the 24½ millions went into the pockets of the landlords—This sum goes partly into their pockets, but by far the largest share, perhaps two thirds must be expended en pure perte on the increased cost of production—
I should consider it as a very great obligation to the many other I am already under to you, if when Mr. Malthus work is published you would have the goodness to favour me (and you may be assured I shall not communicate them to any other individual) with notes of your opinion of his objections to the fundamental principles involved in your theory of political economy—I beg to hear from you at your convenience—And with the greatest respect and esteem
I am My Dear Sir Yours most faithfully
J. R. McCulloch
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