Ricardo, David (DNB00)

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RICARDO, DAVID (1772–1823), economist, born on 19 April 1772, was third child of a ‘numerous family.’ His father was a Jew, born in Holland, who settled in England early in life, where he became a member of the stock exchange, made money, and was respected for ability and integrity. David was educated partly in England, and during his twelfth and thirteenth years of age at an uncle's in Holland. He had no classical training, and was employed in his father's business at the age of fourteen. Two years later he was entrusted to take two of his brothers to Holland. He married, on 20 Dec. 1793, soon after attaining his majority, Priscilla Anne, daughter of Edward Wilkinson, esq. The elder Ricardo was a strict adherent to the faith of his ancestors, and it seems that some discord arose when David, about this period, abandoned his early creed, although it is added that the son always retained the ‘sincerest affection and respect for his father.’ He had, however, to set up in business for himself, and the chief members of the stock exchange, we are told, showed their respect for him by voluntarily offering their support. Ricardo was eminently well qualified for success in business. His coolness of head, his powers of calculation, and his sound judgment enabled him to turn to account the opportunities offered in a time of unprecedented financial disturbances. He not only made a fortune, but acquired a higher reputation than had ever been gained by a man in a similar position.

Ricardo, though his literary education had been neglected, was a man of too much intellectual activity to be absorbed in the details of business. He was interested in the scientific movements which were attracting general attention at the end of the century. He fitted up a laboratory, formed a collection of minerals, and was one of the original members of the Geological Society (founded in 1807).

In 1799, while staying at Bath for his wife's health, he first met with Adam Smith's ‘Wealth of Nations,’ and became interested in the scientific treatment of economical questions. The result of his inquiries first appeared in 1809, when the state of the currency was causing general alarm. Ricardo was induced by James Perry [q. v.] to publish some letters upon the subject in the ‘Morning Chronicle,’ of which Perry was then editor. The first of them appeared on 6 Sept. 1809, and they were collected in a pamphlet which went through four editions. The famous bullion committee, appointed in 1810, made a report which was in almost complete agreement with Ricardo's principles. It attributed the depreciation of the currency to the excessive issues of the Bank of England, and recommended a resumption of cash payments in two years. The report was much criticised, and especially by Charles Bosanquet [q. v.], in a pamphlet of ‘Practical Observations.’ To this Ricardo published a reply in 1811, which was completely victorious, and Bosanquet's errors, according to Copleston (Letter to Sir R. Peel, 1819), only served to show the abilities of his opponent. Ricardo's growing reputation as an authority on economics led to warm friendships with Malthus and with James Mill.

In 1815 Ricardo published a pamphlet upon the influence of a low price of corn upon profits. Malthus and West had recently put forward the theory of rent which is generally named after Ricardo. Malthus was in favour of some degree of protection for agriculture, and Ricardo argues that this is inconsistent with Malthus's own theory of rent. Ricardo aims at carrying out the application more logically than its originator. In 1816 Ricardo, in another pamphlet, proposed his well-known scheme for maintaining the value of banknotes by making them exchangeable not for gold coins, but for standard bars of gold bullion. The scheme was adopted in 1819 in Peel's act for the resumption of cash payments, but was abandoned on account of the temptation to forgery given by the substitution of one-pound notes for sovereigns.

Ricardo had now become a leading authority upon economical questions. His pamphlets showed both his practical knowledge and his logical acuteness. They prove that he had worked out his general principles, though only dealing with their application to particular problems. His friends, and especially James Mill, entreated him to give a more systematic exposition of his theories, and the result was the publication, in 1817, of his main work, ‘Principles of Political Economy and Taxation.’ The theories of previous economists had, as he says in his preface, been vacillating and inconclusive from their ignorance of the true theory of rent. By showing the relation of this theory to their inquiries, he would be able to exhibit systematically the relation between rent, profit, and wages, and to trace the incidence of taxes. Ricardo was fully sensible of his own literary defects, and the book is often hard to follow. It assumes a knowledge of Adam Smith, and introduces, without adequate notice, special meanings of terms differently used by others. But whatever its faults of style, the book was well received, and made an era in economic inquiries. James Mill and McCulloch, his ‘two and only genuine disciples,’ as Mill says in a letter after his death (Bain, James Mill, p. 211), did their best to propagate his teaching, and the treatise was accepted as the orthodox manifesto of the so-called ‘classical’ political economy.

Ricardo bought the estate of Gatcombe Park in Gloucestershire about the end of 1813. He retired from business in the following year. He served as sheriff in 1818. He became, early in 1819, member for the Irish borough of Portarlington, in which there were about twelve constituents. Ricardo had never been in Ireland, and probably bought the borough. He was re-elected in 1820, and held the seat till his death. An account of his votes and speeches, taken from Hansard, is given by Mr. Cannan in the ‘Economic Journal’ (iv. 249–61, 409–423). Ricardo, though an independent thinker, agreed almost unreservedly with the policy of the radical party of the period. He spoke and voted for parliamentary reform and the ballot. Mr. Cannan points out that the speech upon the ballot printed at the end of his works is erroneously identified by McCulloch with that of 24 April 1823, and, if made, is not reported in ‘Hansard.’ He voted steadily against the ‘Six Acts’ and the Foreign Enlistment and Alien Acts. He denounced vigorously all religious prosecutions, especially that of Richard Carlile [q. v.] His authority was naturally of most weight in financial matters. He wrote to McCulloch that he was so frightened by the sound of his own voice that he should probably think it wisest to give silent votes. He gradually overcame the difficulty, and was received with the respect due to a specialist in his own department. His first conspicuous appearance, according to McCulloch, was on 24 May 1819, when he rose, after being ‘loudly called upon from all sides of the house,’ to support Peel's measure for the resumption of cash payments. He attacked the corn laws, though he admitted that a moderate duty might be required to counteract special burdens upon agriculture. He attacked the usury laws, supported Huskisson's repeal of the Spitalfields Acts, and generally opposed every kind of bounty and restriction. He was added, upon his election, to a select committee upon the poor laws, upon which he appears, from his letters to McCulloch, to have had great influence. In the same year he was a member of a committee appointed by a public meeting (26 June 1819) to examine Owen's schemes [see under Owen, Robert]. Ricardo, however, carefully explained that he did not agree with Owen's socialism and objections to the use of machinery. He supported a scheme, suggested at this time by a Mr. Woodson, for enabling the poor to buy annuities. An elaborate plan for this purpose had been prepared by Bentham in 1797 (Bentham, Works, viii. 409 &c.). Ricardo also supported the utilitarians and Joseph Hume in their demands for retrenchment. He declared, on 3 April 1822, that he had voted for every reduction of taxes that had been proposed during the session. All taxes were bad, and, except to avoid a deficit, he would vote for none, considering that a surplus would be an insuperable temptation to increased expenditure. His most remarkable plan was to pay off the national debt at once by an assessment upon all the property of the country. He finally convinced himself that this operation might be carried out in a year (11 March 1823) (for some characteristic remarks upon this scheme see Cobbett, Political Works, vi. 7, 193, 325). In all these matters Ricardo represented the favourite views of the utilitarians. He was a member of the Political Economy Club, founded in April 1821, of which the nucleus, according to Professor Bain (James Mill, p. 198), was a small knot of economists who had been in the habit of meeting at Ricardo's house. Ricardo was a frequent attendant during the following two years. The only subject which he appears to have introduced was the effect of machinery upon wages (4 Feb. 1822; Minutes of Political Economy Club, privately printed, 1882; cf. art. Tooke, Thomas).

Ricardo wrote a few occasional pieces after the ‘Principles.’ He contributed in 1820 to the supplement of the ‘Encyclopædia Britannica,’ in which Mill was also writing an essay ‘upon the Funding System,’ and in 1882 published a pamphlet upon protection, which McCulloch considers to be his masterpiece in this kind. He also put together some notes upon his differences with Malthus, which McCulloch considered to be of too little interest for publication.

Miss Edgeworth visited the Ricardos at Gatcombe in 1821, and gives an account of his family and ‘delightfully pleasant house.’ She says that he was charming in conversation; perpetually starting new game, and never arguing for victory. He took part in charades, and represented a coxcomb very drolly. Altogether she thought him one of the most agreeable and least formal persons she had ever met (Life and Letters of Maria Edgeworth, ii. 379). In July 1822 he travelled to the continent with a family party, visited Holland, where he saw some of his Dutch relations, including a well-known Dutch poet, T. da Costa (1798–1860), went by the Rhine to Switzerland, where he was warmly received by Dumont at Geneva, and discussed economic questions with Sismondi, and, after visiting the north of Italy, returned through France in November. His letters describing this tour to children in England were privately printed in 1891, and give a very pleasant impression of amiability and good temper. His family held, it appears, that any child ‘could impose upon him.’ At this time he was in apparently good health, and able to take long walks. He had been, he adds, in the habit of taking walks nearly as long, ‘with Mr. Mill.’ In the following autumn he was at Gatcombe, and preparing a pamphlet upon a scheme for establishing a national bank, when a trouble in the ear to which he had been subject took a serious form. He died on 11 Sept. 1823. The news, as Mrs. Grote says, affected James Mill so deeply as to reveal a previously unsuspected tenderness of heart, and she had never seen George Grote ‘so oppressed by any event before’ (Bain, James Mill, p. 211).

Ricardo seems to have been a man of very kindly and attractive nature. His correspondence with Malthus (see below) shows a warm friendship, which was not interrupted by keen discussions of wide differences of opinion. Another correspondence, with McCulloch, from 1816 to 1823 (see below), shows similar qualities, besides containing some interesting remarks upon his parliamentary career, and the differences between himself and his disciple. Mill speaks of twelve years of ‘most delightful intercourse,’ during which he had been the confidant of all Ricardo's thoughts, both upon public and private affairs.

McCulloch says that Ricardo contributed to almost every London charity, and that he supported an almshouse and two schools in the neighbourhood of Gatcombe. He left a widow and seven children. His eldest son, Osman (1795–1881), inherited the estate of Bromesberrow in Gloucestershire, and was M.P. for Worcester 1847–1865. The second, David (1803–1864), M.P. for Stroud Dec. 1832–May 1833, succeeded to Gatcombe, and the third, Mortimer, a captain in the 2nd lifeguards, died in 1876. Of his four daughters, Henrietta married Thomas Clutterbuck, Priscilla and Fanny married two brothers, respectively Anthony Austin and Edward Austin, both of Wotton-under-Edge, Gloucestershire. An engraving from a portrait by J. Phillips is prefixed to his ‘Works.’

Ricardo was the principal founder of what has been called the classical school of political economy. The main doctrines, expounded by McCulloch and James Mill, were accepted by John Stuart Mill, with considerable modifications, in the most authoritative treatise of the next generation. His theory was expounded by De Quincey (De Quincey's writings upon this topic are collected in his Works, vol. ix. 1890), who answered some criticisms by Malthus and Samuel Bailey [q. v.] Ricardo has been attacked by writers of the historical school for the abstract nature of his writings, while Jevons and others have sharply criticised his theory of value. His letters to McCulloch show that he was himself far from satisfied with his own conclusions. The theory that value is proportional solely to the labour embodied was taken up by Marx and other socialist writers, and applied to consequences which Ricardo would have certainly repudiated. De Quincey, in his ‘Logic of Political Economy,’ has already noticed this application. How far the ‘iron law’ of wages, which is supposed to result from his principles, was regarded by Ricardo himself as a statement of facts, or as a mere postulate for logical purposes, is not clear. Professor Marshall, in his ‘Principles of Economics,’ has discussed Ricardo's views very fully. His ‘rehabilitation’ of Ricardo is discussed by Professor W. J. Ashley in the ‘Economic Journal’ for September 1891. Discussions of Ricardo's theories are contained in all treatises upon the history of the subject.

Ricardo's works are: 1. ‘High Price of Bullion, a proof of the depreciation of Bank Notes,’ 1810. 2. ‘Reply to Mr. Bosanquet's Practical Observations on the Report of the Bullion Committee,’ 1811. 3. ‘Essay on the Influence of a Low Price of Corn on the Profits of Stock,’ 1815. 4. ‘Proposals for an Economical and Secure Currency, with observations on the Profits of the Bank of England,’ 1816. 5. ‘Essay on the Funding System,’ 1820 (in Supplement to ‘Encyclopædia Britannica’). 6. ‘Principles of Political Economy and Taxation,’ 1817, 1819, and 1821. The best edition, with introduction and notes by Professor E. C. K. Gonner, was published in 1891. 7. ‘On Protection to Agriculture,’ 1822. 8. ‘Plan for the Establishment of a National Bank,’ 1824.

Some ‘Observations’ on parliamentary reform were published by McCulloch in the ‘Scotsman’ of 24 April 1824, and are included in the works, as are notes for a speech on the ballot. The collected works, including the above, with a life by McCulloch, first appeared in 1846, and have been reprinted. Letters from Ricardo are included in the ‘Mélanges et Correspondance de J. B. Say,’ 1833. An interesting set of letters to Malthus was edited by Mr. Bonar in 1887. The correspondence with McCulloch has been edited for the American Economical Association by Dr. J. H. Hollander (1896) (see Quarterly Journal of Economics (Boston) of January 1896, and Economic Journal of January 1896). The originals are now in the British Museum (Addit. MS. 34545), where there is also a letter to Bentham of 1811, and some others. A third set of letters (1811–23) to H. Trower, partly in private possession and partly at Univ. Coll., London, was edited by James Bonar and J. H. Hollander (Oxford, 1899, 8vo).

[The chief authorities for Ricardo's life are the Life by McCulloch prefixed to the works, and a Life in the Annual Biography and Obituary for 1824, attributed to a brother. See also Bain's Life of James Mill and Personal Life of G. Grote, pp. 36, 42. Some letters to Maria Edgeworth and others are in possession of Mr. Frank Ricardo of Bromesberrow Place, Ledbury, who has kindly given information. A study of Ricardo's life and work by J. H. Hollander of the Johns Hopkins University is in preparation.]

L. S.