361.: ricardo to mcculloch1[Reply to 360—Answered by 366] - 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 mcculloch
[Reply to 360—Answered by 366]
London 8 April 1820
My dear Sir
I write immediately after the receipt of your letter, because the subject is now fresh in my mind, and I am desirous that we should clearly understand what our difference really is. You appear to me to misapprehend it. I do not deny that war is attended with waste and extravagance, and that its evils, even as far as regards taxation, are by no means limited to the mere transferring of disposable labour from the employment of individuals to that of the state; on the contrary I fully agree that its usual effects are to destroy or to prevent the accumulation of capital. But I contend that the poor suffer from this dissipation of capital, not on account of the peculiar taxes which are imposed upon them, but on account of the disturbance which it gives to the usual demand for labour. It matters not, I say, whether the taxes be laid on wine, silks and velvets, the luxuries of the rich, or on the corn and clothing consumed by the laboring class, the specific evil is in both cases, not the tax, but the annihilation of capital to which the tax gives rise. Destroy that capital by a loan of 30 millions in the year, with only taxes to pay its interest; or raise the thirty millions within the year by taxes on luxuries, or on the necessaries of the poor, and the effect will be the same—the poor will suffer because 30 millions of capital is withdrawn from active employment.
I understood you to advance a very different doctrine in the passage of the article in the Review in page 160 beginning “The labourer is, in this respect, placed in a much more disadvantageous &ca., &ca.” —I acknowledge that the labourer may be made wretched under adverse circumstances of taxation &ca., but it is only because capital is reduced and the demand for labour lessened. If a loan was raised for a subsidy to Russia, or if the amount of the subsidy were supplied by a tax of 6d. on every quartern loaf, or a tax of 100£ on every pipe of wine; provided, in every case, the sum raised was equal in amount, it would be a matter of comparative indifference to the labouring class by which means it should be raised; the great evil is in the amount of the sum raised, and not in the mode of raising it.—
When I have read Mr. Malthus book I will make known to you my opinion on the passages which will be found in it in opposition to our theory. I am flattered by the request. I shall as freely comment on those passages to Mr. Malthus himself. Since we have known each other, we have always freely discussed each other’s opinions, and it is a subject of wonder to our friends that after the innumerable contests we have had together, there should still be such serious difference between us.
The merchants of London have prepared a petition to the House of Commons on the subject of free trade, which you will be pleased to see. I send you a copy of it but I must request you to say nothing of it in print till after it is presented. When its presentation has taken place, I know it would be agreeable to the leading parties in it, if you expressed your approbation of their petition, should it, as I think it will, appear to you to be entitled to it.
Believe me Truly Yours