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457.: ricardo to wheatley1 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 9 Letters 1821-1823 [1821]

Edition used:

The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 9 Letters 1821-1823.

Part of: The Works and Correspondence of David Ricardo, 11 vols (Sraffa ed.)

About Liberty Fund:

Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


457.

ricardo to wheatley1

Gatcomb Park Minchinhampton 18 Sept 1821

Sir

I received your letter and the pamphlet which accompanied it yesterday. Although I agree in principle with you, on the evils of a variable currency, and the impolicy of a country’s using measures to raise the price of its corn as compared with its manufactures, yet I do not agree with many of the arguments and conclusions in the pamphlet. My opinions on these subjects are before the public, and therefore I shall only now say that I think it an error to suppose that the price of corn is regulated by supply and demand, only, without reference to the cost of producing it. In manufacturing goods and exporting them for corn, the cost of that corn is the cost of the production of the goods, and if by restricting the importation of corn we, instead of making the goods, raise the corn, at home, the only loss we sustain is the greater cost of producing it. From the tenor of your pamphlet I should think you estimated the loss much higher, and attributed the high price of corn to the diminished quantity and not to the greater difficulty of producing it.

On the question of the currency, your calculations would lead us to infer that the nation had been great losers by restoring it to a fixed and increased value:—now I will agree that in some cases such a measure might be very unjust, but I do not see how it can affect the interests of a country as a whole. You say that the farmers and manufacturers have lost £230,000,000 millions1 a year by the reduction of prices.2 I ask, has no one gained these £230,000,000? and if you say some have, I again ask who have, if they be not farmers and manufacturers? You will not say that the stockholder has gained this immense sum, for the whole of his annual interest amounts only to £29,000,000,—you will not say that the stockholders and public officers together have gained it, for the whole public3 revenue of the country from which they are paid amounts only to £54,000,000—the fact is that some manufacturers, and some farmers, have been gainers, and others losers, as always is the case when the currency is tampered with—the only injury which these classes have sustained, as classes, is the real increase of taxation, which may probably amount to 5 or 6 millions pr. Annm. on the depreciation of 1813.

I perceive that you rather misconceive my opinions on this question—I never should advise a government to restore a currency, which was depreciated 30 pct., to par; I should recommend, as you propose, but not in the same manner, that the currency should be fixed at the depreciated value by [lowerin]g4 the standard, and that no further deviations should [take] place. It was without any legislation that the cu[rrency] from 1813 to5 1819, became of an increased value, and within 5 pct. of the value of gold,—it was in this state of things, and not with a currency depreciated 30 pct., that I advised a recurrence to the old standard. The advice might have been bad, and the measure unwise, but in judging of it, injustice would be done to me, and those who agreed with me, by referring to a state of things which had ceased to exist, for more than 4 years.

I am Sir Your obedt. Servt

David Ricardo

[1 ]Addressed: ‘John Wheatley Esq. / Shrewsbury’. Franked by Ricardo ‘September Eighteen 1821’.

MS in British Museum, Add. 29,764, fol. 44; it is included in a volume of MSS described as ‘Autograph letters, and some other papers, chiefly connected with R. B. Sheridan; 1790–1843’.—Letters to Trower, XLIX.

On the life and writings of John Wheatley (1772–1830) see an article by F. W. Fetter in the Journal of Political Economy, June 1942, pp. 357–76.

Wheatley’s chief work is An Essay on the Theory of Money and Principles of Commerce, 2 vols., 4to.; vol. i published by Cadell and Davies, London, 1807; vol. ii publ. by Cadell, London, 1822, but printed at Shrewsbury; it was first advertised in the Monthly Literary Advertiser of 10 Jan. 1822.

While this letter undoubtedly refers to matters contained in vol. ii of the Essay, it has hitherto been puzzling that Ricardo should refer to a quarto volume as a ‘pamphlet’ and also that he should have received it some four months before publication. Professor Viner has now found (and I am indebted to him for the communication) that a section of vol. ii was separately printed in advance of publication; a copy of this (which appears to be the ‘pamphlet’ commented on in Ricardo’s letter) is in the Yale Library. The title-page is as follows: ‘A Plan to Relieve the Country from its Difficulties. Shrewsbury, 1821. Printed at the Chronicle Office’. The verso of the title-page reads: ‘The following plan, for the relief of the country, is taken from Mr. Wheatley’s Work on the Theory of Money and Principles of Commerce: the Second Volume of which is now in the Press.’

[1 ]The repetition is in MS.

[2 ]Wheatley argues that the restrictions on the importation of corn reduce its price in the home market, owing to the increased production and therefore impoverish the landlords and farmers as well as the manufacturers. See Essay on the Theory of Money, vol. ii, ch. v.

[3 ]‘public’ is ins.

[4 ]MS torn here and below.

[5 ]‘from 1813 to’ replaces ‘in’.