I am writing to you from Gatcomb, where I arrived with S---- as my
companion yesterday afternoon. To enable me to quit London at the time I
did I was obliged to bestow an unusual degree of attention to business
of all sorts, and, though I had written a letter to you in answer to
your last before I left Brook Street, I was so dissatisfied with it that
I could not resolve to send it. I shall, I fear, succeed no better now,
but you shall have it whatever it may be, as, if I defer writing any
longer, you may have quitted Bangor before my letter arrives there[61].
It appears to me that you have changed the proposition on which we first
appeared to differ. The proposition advanced by you, if I recollect
right, was that restrictions on the importation of corn would not lower
the rate of profits and interest, but now you add--or rather your
argument leads to that conclusion,--'if the consequence of such
restriction be a great reduction of capital.' So amended I should not
object to the proposition,--but I think it material that causes should
be kept distinct, and their due effects ascribed to each. Restrictions
on the trade of corn, if capital suffers no diminution, will occasion a
fall in the rate of profits and interest. A reduction of capital
independently of restrictions on importation of corn will have a
tendency to raise profits and interest,--but there is no necessary
connection between these two operating causes, as they may at the same
time be acting together or entirely in opposite directions. Effective
demand, it appears to me, cannot augment or long continue stationary
with a diminishing capital; and your question why if this were true
profits rise at the commencement of a war? does not, I think, bear any
connection with the argument, because profits will augment under a
diminution of capital and produce, if demand though diminished does not
diminish so rapidly as capital and produce. For the opposite reason
profits will diminish when capital and produce increase. This is totally
independent of the rate of production, and often, I think, may
counteract the effects which usually follow, and in the long run will
almost always follow, from increasing or diminishing capital. You say
that 'the proportion of production to the consumption necessary to such
production seems to be determined by the quantity of accumulated capital
compared with the demand for the products of capital, and not by the
mere difficulty and expense of procuring corn.' It appears to me that
the difficulty and expense[62] of procuring corn will necessarily
regulate the demand for the products of capital, for the demand must
essentially depend on the price at which they can be afforded, and the
prices of all commodities must increase if the price of corn be
increased. The capitalist 'who may find it necessary to employ a hundred
days' labour instead of fifty in order to produce a certain quantity of
corn' cannot retain the same share for himself unless the labourers who
are employed for a hundred days will be satisfied with the same quantity
of corn for their subsistence that the labourers employed for fifty had
before. If you suppose the price of corn doubled, the capital to be
employed, estimated in money, will probably be also nearly doubled,--or
at any rate will be greatly augmented; and, if his monied income is to
arise from the sale of the corn which remains to him after defraying the
charges of production, how is it possible to conceive that the rate of
his profits will not be diminished? I hope you continue to enjoy
yourself amidst the wild scenery with which you are encompassed.--The
weather here is delightful, and I am as happy as I can be, separated
from the whole family (except S----) and surrounded by upholsterers,
carpenters, etc....
Yours very truly,
DAVID RICARDO.
I believe that in this sweet place I shall not sigh after the Stock
Exchange and its enjoyments.