I was sorry you could not join our party on Wednesday. Mr. Smyth has
left a pleasing impression on the minds of all those who met him, and I
had every reason to confirm me in the favourable opinion which I had
formed of him at our first meeting. Mr. Torrens is a very gentlemanly
man. He had sent me his book on bullion before he came, and I fear that
too much of the conversation was bestowed on the differences between his
opinion and mine on the subject of paper currency and the exchanges. The
latter he does not appear to me correctly to understand. I insisted on
the consistency of your former and present opinions on the bullion
question, and asked him from whence he had derived his knowledge of your
views on that subject. He said that Dr. Crombie[104] and you had met
purposely to discuss the question, and from him he had understood that
you ascribed the whole effects on the price of bullion to the abundance
of paper. He, as well as Monsieur Say, finds it difficult to support his
opinions and answer objections in conversation--he says all such
discussions should be carried on in writing....
On Saturday I shall meet you at the King of Clubs, to which I am invited
by Mr. Whishaw, and on Sunday I wish you and Mrs. Malthus will oblige
Mrs. Ricardo and me with your company to dinner. If you can I will ask
Mr. Whishaw and Mr. Smyth to meet you. Perhaps too you will breakfast
with me on Saturday or Sunday morning.
It appears to me that my table is applicable to all cases in which the
relative price of corn rises from more labour being required to produce
it, and under no other circumstances can there be a rise, however great
the demand may be, unless commodities fall in value from less labour
being required for their production. It is not probable that the
relative price of corn will fall so low with an abundant capital in the
country as when capital was very limited, but, if it could, the same
effects on profits and on rent would follow, as it would demonstrate
that land only of the best quality was in cultivation. You agree with me
that if a large tract of rich land were added to the Island it would
restore the state contemplated in my table. Though we agree in the
conclusion we differ materially in our opinion of the means by which it
would be brought about. You think that 'before any fall of price had
taken place capital would be removing fast from the old land, _and from
manufactures_,'--I think that capital would go from the old land to
manufactures, because a given quantity of food only being required, that
quantity could be raised on the rich land added to the Island with much
less capital than was employed on the old, and consequently all the
surplus would go to [manu]factures to procure other enjoyments for the
so[ciety[105]], and profits on the land would rise at the expense of the
rent of the landlord, whilst the cheaper price of corn would raise the
profits on all manufacturing capital. I confess it appears to me
impossible that under the circumstances you have supposed the relative
value of corn would fall, not from the facility of procuring it, but
from a rise in the value of manufactures. You suppose that corn would
remain at the same price whilst manufactures rose in price,--I on the
contrary think that the price of manufactures would continue nearly
stationary, whilst the price of corn would fall. Is not this the natural
consequence of more capital being employed on manufactures and less on
agriculture? Have you not too uniformly supported the opinion that a
fall in the price of corn will occasion a fall in the price of
commodities? If they act on each other as you think, but to which I do
not agree, how can manufactures rise in price with a stationary price of
corn? I should have thought that on your principles such an effect would
be deemed impossible.
Ever truly yours,
DAVID RICARDO.