A Key to Ricardo by Clair Oswald St.;

Author:Clair, Oswald St.; [St Clair, Oswald]
Language: eng
Format: epub
ISBN: 1474651
Publisher: Taylor & Francis Group

From the whole of this reasoning we may conclude that it is of no manner of consequence, with regard to the domestic happiness of a state, whether money be in a greater or less quantity. The good policy of the magistrate270 consists only in keeping it, if possible, still increasing; because by that means he keeps alive a spirit of industry in the nation, and increases the stock of labour, in which consists all real power and riches.271

It is surprising that Malthus makes no mention of Hume’s essay. Even if he differed from Hume in some particulars, one would have thought that he would see in Hume’s theory a powerful support for his own doctrine that industry flourishes when revenue increases first. Ricardo is equally silent, but his silence is easier to understand. He regarded Hume’s argument as fallacious.272 He agreed with Hume that it is of no consequence ‘whether money be in greater or less quantity’; he makes the same statement himself on page 124(194): ‘No more advantage results from using twenty millions than from using ten millions of currency’; but there is no reason to suppose that Ricardo ever troubled himself very much to consider the condition of things likely to prevail in a country while the quantity of money is increasing from ten millions to twenty millions. Money is only the medium by which the exchange is effected (194/291). If the quantity of money is increased when there is no corresponding increase in the quantity of goods to be circulated, all prices will be higher, including the price of labour, and the quantity of commodities the labourer will get for his money will not be affected (104/164). Nor will the increase of money affect the rate of profit, for ‘if the manufacturer has more to pay for wages, he will receive more for his manufactured goods’ (90/146). In his Notes on Malthus (vol. 2, p. 396) Ricardo wrote: ‘An alteration in the value of money has no effect on the relative value of commodities, for it raises or sinks their price in the same proportion.’ In a letter to Malthus he said: ‘Nothing is to me so little important as the fall and rise of commodities in money’ (vol. 9, p. 83). And a fortnight later: ‘I say again that too much importance is attached to money; facility of production is the great and interesting point’ (vol. 9, p. 100).

Thus we see that, unlike Hume, and unlike Malthus, Ricardo shuts his eyes to the invigorating effect which is felt in every branch of industry when there is a progressive increase in the flow of money from consumers to producers. A letter which Ricardo wrote to Malthus in 1817 throws some light upon his attitude; he said:

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