ABSTRACT
The subject of the first article by Ricardo, a stockbroker familiar with the affairs of the stock and financial markets, was the currency problem of the time. He was inspired to write this article by the rise in the price of bullion vis-a-vis banknotes over-issued in an inconvertible regime and the phenomenon of adverse quotations of foreign exchange. Ricardo explained the rise in the price of gold bullion by the rise in the issue of Bank of England notes caused by the suspension of convertibility, hence with the fall in its value. Ricardo's theory of currency was further developed in Proposals for an Economical and Secure Currency; With Observations on the Profits of the Bank of England, as they regard the Public and the Proprietors of Bank Stock, 1816. Ricardo divided commodities into two large classes: those which cannot be increased in disposable quantity, and those which can be increased or decreased in quantity by human effort.
