364.: ricardo to sinclair1 - 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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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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364.
ricardo to sinclair
Sir,
I agree with you on the benefits resulting from a paper, instead of a coin circulation, and I never wish to see any other established in this country; but we differ on the means of regulating its value and amount. That I think is to be done best, by making it exchangeable for bullion, at a fixed rate. I do not deny that the public has suffered much pressure from the limitation of circulation, but Parliament is not responsible for more than about 5 or 6 per cent. of that pressure, the limitation having taken place, and the currency having risen in value, to within 5 or 6 per cent. of the mint value, before the Bank Committee was appointed. An increase of currency now, would undoubtedly lower its value, raise all prices, and very much lighten taxation; but no measure could, I think, be more impolitic.
It would be unjust to all creditors, and proportionally advantageous to debtors. If the payment of the interest of the national debt is a greater burden than we can bear, which I think it is not, and cannot well be, the fair way would be, to compound with the public creditor, and not make him only a pretended payment.
Respecting the paying off the national debt, we do not materially differ. I would pay it off entirely, and never allow any new debt, on any pretence whatever, to be contracted. You would only pay off a part, and would not object to contract a fresh debt, on any pressing emergence. You would not exempt foreigners from the necessary contribution. I would. You calculate that we consume as much corn, and other things, when prices rise from a scarcity, as when they are cheap from abundance. This I think impossible. If there were an equal consumption, there could be no scarcity, and consequently no rise of price. You would give the home grower of corn the monopoly of the home market, while the operation of paying the debt is going on. I would, when it was completed, take off all restrictions on importation. I would leave the law as it is during the paying off, and would gradually take off all restrictions afterwards. To induce capital, by a monopoly, to go into agriculture, and then remove it afterwards, would be attended with ruin to the agriculturists. The restrictions, I think, should not be increased with a view, finally, to get rid of them.
I fear that no plan for paying off the debt will receive any countenance from Parliament. Men do not like to make an immediate sacrifice for a future good; and they please themselves with imaginary riches, from which they really derive no advantage. Are not those imaginary riches, from the possession of which we only derive a revenue, which we are immediately obliged to pay to the tax-gatherer? I remain, Sir, your faithful servant,
David Ricardo.
Sir John Sinclair, Bart.
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