524.: ricardo to mcculloch2[Answered by 526] - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 9 Letters 1821-1823 
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.
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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
[Answered by 526]
London 3 May 1823
My Dear Sir
I expected ere this to see you in England; I hope nothing has occurred to prevent you from putting your good intention into execution, as I fully depend on the meeting which I have so long desired.
I presented the petition you sent me, and advocated its prayer with the best reasons I could offer, but neither the House nor the Reporters paid much attention to me. This is now of no importance, as the prayer of this, and of similar petitions, has been granted by Government.
I have read your observations on Mr. Blake’s pamphlet, and think that there are some contradictions which you charge upon him of which he is not guilty. First, with respect to the currency, the only change in Mr. Blake’s opinion, since he wrote his former pamphlet, is that he formerly thought the difference between gold and paper, as it existed during the war, was owing to paper falling, while gold remained fixed, he now thinks gold rose and paper remained fixed. In support of that opinion Mr. Blake is obliged to contend that gold rose in value in this country from which it was exported, and fell in value, or remained fixed, in the countries to which it went. This is the opinion which you attack, and I quite agree with you that Mr. Blake is wrong, but you have not understood Mr. Blake’s argument, and suppose him to support principles which he would be the first to condemn. In this dispute Mr. Blake and you attach a different meaning to the word value. If we measure the value of gold by foreign commodities which are the objects of commerce between 2 countries, it is clear that gold could not in such a measure be exported from a country where it was dear to one where it was cheap. If wine was the measure, gold could never be paid for wine but when wine was dearer in the country which imported it, which is another way of saying that gold was cheaper in that country. But in France where wine is made, wine may fall in value, and at the same time the expences of conveyance may be increased. Under these circumstances England may not import more wine from France, and if France has to pay England a subsidy not having any thing but gold and wine (we will suppose) to export, she is obliged to pay gold. In all the commodities of France which are bulky, and which she cannot export, gold will rise in France, and in England all commodities will rise. The exchange will only deviate from par enough to cover the expences of the transmission of gold, but if we measure the value of gold by the goods of France in France, and by the goods of England in England, gold will come from a country where it rises in value to another where it is falling in value. If under these circumstances France should keep up the same quantity of money as before, by means of a paper circulation, no commodity would fall or rise in France, except gold, which would rise, and the exchanges would deviate more from par than by the amount of the expences of transmitting gold, because the bill would not be paid for in gold, but in paper, which has been prevented from equalizing itself with the value of gold. This is Mr. Blake’s argument and it must be admitted that the case is possible, but I think there is very little probability of its occurring.
There is a great deal of ambiguity in the use which Mr. Blake makes of the word value, he appears to me to have no common standard by which to measure it generally, but has a particular standard for each particular country. I made this objection to him, and also objected to the use which he made of the word depreciation, which induced him to give me the explanation contained in the inclosed paper.
From what I have said you will see that Mr. Blake’s fault is rather that of refining too much, and that he cannot with any justice be said to have become the patron and apologist of theories whose fallacy he has himself demonstrated. His conclusions are the same as ours—he is for adhering inflexibly to a standard, and his book may rather be considered as an enquiry into the causes of the alteration in the value of the standard, than an enquiry into the causes of the alteration in the currency.
I cannot understand what Mr. Blake means by an imaginary currency of invariable value, or why when he speaks of the value of commodities in different countries he measures value by such different standards. In favor of Mr. Blake I should contend against you that it is possible for gold to go from a country where it is increasing in value on account of the peculiar obstacles to the exportation of other things, but though I admit the possibility I agree with you in thinking that Mr. Blake has failed to make out that such was our case during the war, and that all the difference between gold and paper was owing to a rise in the value of gold. Mr. Blake’s arguments respecting the effects of a war expenditure are still more objectionable, I cannot say one word in defence of this theory.
Have you seen Mr. Malthus book on the measure of value? His arguments appear to me fallacious from beginning to end—he would have done much better to rest his defence of the standard he has chosen upon the old arguments in its favor, which I think unsatisfactory, but those which he now uses are delusive and are scarcely to be understood.—
Believe me ever most truly Yrs.