I am obliged to you for the interest you have taken about my boat.... I
am glad that Mrs. Malthus and Miss Eckersall were pleased with their
excursion to Easton Grey and Gatcomb. They and you would have better
satisfied me that your visit was agreeable if you had not been in so
great a hurry to put an end to it. Our friends at Easton Grey have been
staying a few days with us, accompanied by Mr. Binda. We expected Mr.
Warburton to join them here, but he wrote to delay his journey for a
couple of days.... He appears pleased with the idea of his journey to
Italy, though Mrs. Austin, who is returned, did not fail to represent in
the strongest colours the disagreeables which she encountered. He I
daresay is a very good traveller, and my daughter I have always thought
the very worst I ever met with.
The Smiths leave Easton Grey on Monday for London. I suppose you have
heard that they are going with Mr. Whishaw to the Netherlands and
Holland. They will I am sure be very much delighted with their
excursion. They always go a journey, as indeed I think they travel
through life, with a disposition to be pleased. They view everything
through a favourable medium, and are not eager to spy out the defects of
every object they encounter.
I have no difficulty in agreeing with you 'that the rate of profits of
stock depends mainly on the demand and supply of stock compared with the
demand and supply of labour,' if by those words you mean the rise or
fall of wages. That is my identical proposition. Now, if labour rises,
no matter from what cause, profits will fall; but there are two causes
which raise the wages of labour,--one the demand for labourers being
great in proportion to the supply,--the other that the food and
necessaries of the labourer are difficult of production or require a
great deal of labour to produce them. The more I reflect on the subject
the more I am convinced that the latter cause has an incessant
operation. It is very seldom that the whole additional produce obtained
with the same quantity of labour falls to the lot of the labourers who
produce it; but, if it should, I should yet contend that the rate of
profits would fall because the price of corn would fall with such an
increased facility of production; capital would be withdrawn from the
land, rents would fall, and profits rise. The causes you mention may
operate in Poland and America; I have never denied it. The proportion
between labour and capital will undoubtedly affect profits, because it
will affect wages; but it is not the only element in the consideration
of the subject of profits; there are other causes which also affect
wages. Whether that demand can be general which increases price must, I
apprehend, depend on whether the precious metals can be furnished as
rapidly as other commodities. If the savings or acquisitions of labour
are exchanged for all commodities in the same proportion, and the demand
should increase in that proportion also, I can see no reason why any
commodity should rise; but, if the demand for cloth or gold be either
greater or less than the supply, they may rise or fall in their
exchangeable value. That is to say, their market value might rise or
fall; but their natural value would probably undergo little variation,
and therefore after a time they would exchange at their usual rates. A
new value thrown in the market always supposes a certain quantity of
sales as well as purchases; if no part of that value consists of the
precious metals, I do not see how all commodities could rise. I should
expect some to rise and some to fall, but the general tendency would
rather be to the latter.
Ever truly yours,
DAVID RICARDO.
....