234. D. H. Robertson to Harrod , 14 April 1932 [a]

[Follows on from 231 , continues at 236 ]

5 Crompton Road, Winchester

14 April 1932

My dear Roy,

I ought to have answered your No 1 more promptly,--now comes No 2, on which I capitulate! [1] --I should like to think again about the natural rate of interest,--I find myself in an increasing fog as to what that concept means!

I shan't now be back till late on Tues. 19 th ,--so I fear I shall miss you.

Now for the main point,--yes, I do think the book will ultimately be suitable for the series. [2] To be quite frank, I was a little uncertain about this at first, because it did seem a little uncompromising in its intellectuality. But I think if the apparently-mathematical stuff can be lightened (I agree that your fundamental equation [3] is fundamental, & must be kept) it will be all right. Perhaps you could consider too whether, without introducing any formal descriptive sections, you could make some concessions to the handbook-reader's thirst for actuality in the way of giving illustrations. Granted it's no use making the book topical, because it would then rapidly go out of date, it might perhaps be possible to illustrate its propositions a little more from the events of the last 12 months,--which are likely, after all, to be of fairly abiding interest. I mean that in its present form it does rather bear the marks of having, as you say, been mainly written last summer. If you could, in re-writing, get a little more concreteness and juice into it somewhere, I believe it would be helpful to its marketability.

I am so sorry you have been unfit,--I don't believe you ever give yourself proper holidays. Also that I shall miss you on Monday. It is very good of you to have taken my comments so kindly,--I expect others beside the one on A and B restriction will prove to be mare's nest. [4]

Yours ever


P. S. I thought there was perhaps a little unnecessary repetition in the first exposition of comp[arative] costs,--but it's a fault on the right side!

P. S. My first reaction about the natural rate of interest passage [5] is as follows:--

We have the usual ambiguity about whether the long period trend of increase of production is due to increase of population or productivity per head or both.

If the former only. Then if population and capital are growing more slowly in A than elsewhere there will be less tendency for prices to sag in A than elsewhere, and A can do her bit for price stability without letting the rate of interest fall below the domestic natural level, or the level elsewhere.

If the growth in output is partly or wholly due to increasing output per head, it is unlikely to be proceeding faster in A (where ex hyp[othesis]. capital is growing more slowly) than elsewhere: so again, for A to do her whack, there's no need for her to have exceptionally low rates of interest.

But I think we're only on the threshold of getting any apparatus which can deal with these dynamic changes.

  1. 1. The first of these may be letter 232 (see note 1 to that letter); the second item was not found.

    2. The Cambridge Economic Handbooks. Harrod also discussed the matter with Keynes: see letter 273 , [jump to page] .

    3. Probably refers to the formula representing what became to be known as the foreign trade multiplier: International Economics (Harrod 1933:10 ), pp. 106 and 119.

    4. See letters 232 and 233 .

    5. Possibly refers to International Economics, pp. 131-32.

    6. Elsewhere in his book, Harrod assumed both an increasing population and an increase in the potential output per head: International Economics, p. 161.

    1. a. ALS, two pages on one leaf, in HP IV-990-1069/9.

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