David RICARDO (1772–1823). Letter from London, February 24, - Lot 92

David RICARDO (1772–1823). Letter from London, February 24, 1823, to Francis Finch in West Bromwich near Birmingham; 1½ pages, in-4 format, with address (address page doubled); in English. A very interesting letter on the establishment of factories abroad, its impact on capital, and on free trade. He addresses the question of establishing factories abroad, which, in his view, cannot be detrimental to England. Every mechanical innovation is a benefit to all, not just a few. If we can produce cheap cotton using machines, this allows foreigners, with their silk, wine, and lace, to obtain a greater quantity of inexpensive goods in exchange for their commodities, in exactly the same way that it allows the Englishman, with his wheat or cloth, to obtain a greater quantity in exchange. “The establishment of manufactories abroad cannot, I think, be injurious to us. Every discovery in machinery is a general and not a partial benefit. If we can produce cotton goods cheaply with the aid of machinery, it enables the foreigner—with his silk, wine, and lace—to obtain a greater quantity of these cheap goods in exchange for his commodities, exactly in the same way that it enables an Englishman—with his wheat or cloth—to obtain a greater quantity in exchange for his.” If, however, the factories are established with English capital, Great Britain will suffer a loss. Fewer workers will be employed in England, income will be lower in that country, and taxation will weigh more heavily on the capital that remains at home. The best way to prevent capitalists from investing their money in other countries is to remove all barriers to trade, keep taxes low, and offer the most secure protection of property. He regrets that the government restricts the export of machinery and believes that this would be one of the best branches of their trade. “If, however, manufacturing plants abroad are to be established with British capital, Britain will suffer harm: Fewer workers will be employed in England, less revenue will be spent in that country, and taxation will bear more heavily on the capital that remains at home. Although I believe these are the consequences of a loss of capital, it would be unwise—and, even if it were wise, impossible—to prevent capitalists from taking their capital to other countries whenever they choose. The only way to prevent this is to remove all restrictions on trade, to keep taxes low, and to provide the most secure protection for property. I deeply regret our government’s misguided policy of imposing even the slightest restriction on the export of machinery; I believe that if it were permitted, it would become one of our best branches of trade”…