Letters of David Ricardo to Thomas Robert Malthus, 1810-1823. David Ricardo
5 per cent., to Russia 6 per cent., and to the East Indies 8 per cent., the currency of England may exceed its natural level as compared with those countries by 3, 5, 6, and 8 per cent. respectively, and consequently the exchange may permanently continue depressed in th[ose pr]oportions. If an excess of currency once occurs, [the unfa]vourable exchange must continue till some alterati[on in] the relative amount of currency. The circumstances which [may] occasion such an alteration are numerous, and are fully detailed in the papers which I left with you. To the precise agreement between the effects of an augmented currency and the effects of a subsidy I most particularly request your attention, as on such agreement depends the whole success of the argument which I am advancing in favour of my opinion that an unfavourable exchange has no tendency to correct itself. It may be urged that the relative state of high prices at home occasioned by an augmentation of currency is the natural effect of such a cause, but that this is not the case in a subsidy; that the exportation of commodities in payment of a subsidy is forced, and that it will produce a glut in the foreign market, but that after the subsidy is paid and the necessity for exportation shall cease prices will rise in the foreign market to their former rate. This however will not be true. Commodities may rise in a trifling degree abroad, but cannot regain their former rate unless the exchange should also rise to par, but this it can never do whilst the demand for bills do[es] not exceed the supply. Now, as the prices of foreign commodities in the home market, which could not have been supplied in the usual abundance during the operation of the subsidy when we had a large balance to pay, would fall, and would be in greater demand from the moment that our commodities would be received in exchange, the exportation of our goods would be balanced by the importation of foreign goods, and the sellers of bills would neither exceed nor fall short of the purchasers. These are the substance of the amendments which I wish to make to my paper, which is now so faulty that I shall be glad to have it returned to me. Have the goodness to bring it with you when you come to town.
I am, my dear Sir,
Yours with great esteem,
David Ricardo.
XI[49].
London, 29th, August, 1812.
My dear Sir,
I intend leaving town this evening for Ramsgate, where I think I shall stay about a fortnight, so that I cannot accept your kind invitation for Saturday next; but I hope it will not be long before I bend my steps towards your hospitable roof. If on Saturday the 19th of September you should be quite disengaged and it should be every way convenient to you and Mrs. Malthus, I shall be glad to take tea with you on the evening of that day. I shall be obliged to quit you on the Monday morning. I hope I need not say that I shall be exceedingly sorry if I put you to the least inconvenience and that it will be equally agreeable to me to visit you on any Saturday after the 19th if I am not engaged to go to Ramsgate.
Perhaps you will be so good as to write a few lines directed to the Stock Exchange a few days previously to the 19th as I shall certainly be in town at that time. I am obliged to you for the interest you take in the price of Omnium. It appears to be in a very thriving condition. Mr. Goldsmid[50] informs me that at the period of the improvement in the exchange about Christmas last there were no importations, as far as he knows, of gold from France. A small quantity was imported from Lisbon. I have consulted Wetenhall's list[51], and the following appear to be the variations in the exchange and the price of gold about Christmas last.
| Exchange with Hamburg. | Doubloons, per oz. | Portuguese gold, [per. oz.] | |
|---|---|---|---|
| 1811. | £ s. d. | £ s. d. | |
| Nov. 29 | 24 | 4 15 0 | |
| Dec. 3 | 24·6 | 4 18 6 | |
| " 6 | 24·6 | 4 14 6 | 4 18 6 |
| " 13 | 25 | 4 15 6 | |
| " 20 | 25 | 4 19 0 | |
| " 31 | 27·6 | ||
| 1812. | |||
| Jan. 3 | 27·6 | 4 14 0 | 4 18 6 |
| " 31 | 27·6 | 4 18 6 | |
| Feb. 21 | 28 | 4 17 0 | |
| Mar. 20 | 29 | 4 15 6 | |
| " 31 | 29·4 | 4 14 6 | 4 13 6 |
| April 21 | 29·4 | 4 17 6 | 4 17 6 |
| June 5 | 28·6 | 4 18 6 | |
| July 31 | 28·9 | 4 19 0 | 5 0 0 |
| Aug. 28 | 28·9 | 5 0 0 |
The price of dollars yesterday was 6/3½ per oz., higher by one penny than any price ever yet quoted. I should think that a very trifling rise more will send the tokens out of circulation. We will speak on our old subject when we meet. I am now in great haste and must therefore conclude. Pray make my kind compliments to Mrs. Malthus,
And believe me, my dear Sir,
Yours very truly,
David Ricardo.
[At the end is written in pencil in Malthus's handwriting, 'Was any bullion imported from Hamburg in March?']
XII.
London, 17 Dec., 1812.
My dear Sir,
I have written to Mr. Thornton[52] to request him to meet you at dinner, at my house, on any day most