... I cannot partake of your doubts respecting the effects of
restrictions on the importation of corn in tending to lower the rate of
interest. The rise of the price or rather the value of corn without any
augmentation of capital must necessarily diminish the demand for other
things even if the prices of those commodities did not rise with the
price of corn, which they would (tho' slowly) certainly do. With the
same capital there would be less production and less demand. Demand has
no other limits but the want of power of paying for the commodities
demanded. Everything which tends to diminish production tends to
diminish this power. The rate of profits and of interest must depend on
the proportion of production to the consumption necessary to such
production,--this again essentially depends upon the cheapness of
provisions, which is after all, whatever intervals we may be willing to
allow, the great regulator of the wages of labour. Nothing can tend more
effectually to diminish the demand abroad for our manufactures than to
refuse to import corn and other commodities which we [had] usually taken
in exchange for such manufactures. If we rigorously refused to import
any [foreign] commodity whatever, I firmly believe that we should soon
cease to export any commodity, even if we made gold an exception to the
general rule. Our money would stand at a higher level than in other
countries, but there are limits beyond which it could not go. All trade
is at last a trade of barter, and no nation will long buy unless it can
also sell,--nor will it long sell if it will not also buy. If by
adopting such policy [_sic_] a country were to enhance the value of the
raw materials which it consumed, of which corn is the principal, it
would thereby lower the rate of interest. If otherwise, it might be
deprived of many luxuries and many comforts, or might enjoy them in less
abundance, but the rate of interest would not fall. This is a
repetition, you will say, of the old story, and I might have spared you
the trouble of reading at 200 miles distance what I had so often stated
to you as my opinion before; but you have set me off, and must now abide
the consequences. I never was more convinced of any proposition in
Political Economy than that restrictions on importation of corn in an
importing country have a tendency to lower profits. Remember me kindly
to Mrs. Malthus.
Yours very truly,
DAVID RICARDO.