Mrs. Ricardo is expecting Mrs. Malthus to accompany her on Friday next
to Knyvett's concert, and will, I am sure, be very much disappointed at
the information which I am to give her that she will not be able to
accompany you to town. I will not however quite give up all hopes of
seeing her.
You must positively not think of leaving us before Tuesday. I have
engaged several of your friends to meet you at dinner on Monday, and I
not only advance my own claims but those of Mr. Wishaw[29], Mr.
Sharp[30], Mr. Tennant[31], and Mr. Dumont[32].
I have been making enquiries concerning a bullion merchant. I find that
the trade is mostly carried on by a class of people not particularly
scrupulous in their modes of getting money, and I am told that they
would not be very communicative, particularly on the subject of their
_exports_. There are however some well-informed merchants who know a
great deal of the trade without themselves being actively engaged in it,
to whom I hope I shall be able to introduce you.
I do not admit that if you were to double the medium of exchange it
would fall to half its former value, not even if you were also to double
the quantity of metal which was the standard of such medium. The
consumption would increase in consequence of its diminished value, and
the fall of its value would be regulated precisely by the same law as
the fall in the value of indigo, sugar, or coffee.
Mr. Mushet will dine with us on Sunday. What do you think of Mr.
Vansittart's financial talents?
Yours very truly,
DAVID RICARDO.
NOTE.--Speaking in the House of Commons on Agricultural Distress,
on May 7, 1822, Ricardo gives an illustration which bears on some
points in the foregoing and following letters: 'Suppose my own case.
I am possessed of a considerable quantity of land, the whole
unburthened with a single debt. Now according to the honourable
member (Mr. Attwood) I and the tenants on that land would have only
been injured to the amount of the increase which the change in the
value of money has made in the burthen of taxation; but we are in
point of fact injured much more.' 'The superabundant supply' has
caused a sinking in the value of corn greater than in proportion to
the additional quantity itself. To understand why, take the case of
a commodity introduced for the first time, say a particular kind of
superfine cloth: 'If 10,000 yards of this cloth were imported,
under such circumstances, many persons would be desirous of
purchasing it, and the price consequently would be enormously high.
Suppose this quantity of cloth to be doubled; the aggregate value of
the 20,000 yards would be much more considerable than the aggregate
value of the 10,000 yards, for the article would still be scarce and
therefore in great demand. If the quantity of cloth were to be again
doubled, the effect would still be the same, for, although each
particular yard of the 40,000 would fall in price, the value of the
whole would be greater than that of the 20,000. But, if they went on
in this way increasing the quantity of the cloth until it came
within the reach of the purchase [_sic_] of every class in the
country, from that time any addition to its quantity would diminish
the aggregate value. This argument would apply to corn. Corn is an
article which is necessarily limited in its consumption, and, if you
went on increasing it in quantity, its aggregate value would be
diminished beyond that of a smaller quantity. I make an exception in
favour of money. If there were only L100,000 in this country, it
would answer all the purposes of a more extended circulation; but,
if the quantity were increased, the value of commodities would alter
only in proportion to the increase, because there is no necessary
limitation of the quantity of money [wanted].' (Cf. Letter III, p.
3.) So on June 12th he says: 'Quantity regulates the value of
everything,' though it is also true (he says in a speech of May 9,
1822) 'that the price of every commodity is constituted by the wages
of labour and the produce [_sic_] of stock.'