235. R. F. Kahn to Harrod , 18 April 1932 [a]
[Replies to a letter not found; follows on from 229 ]
King's College, Cambridge #
18 April 1932
I am terribly sorry that I have not replied earlier to your letter. I think the whole of our difference can now be reduced to one single point. You still refrain from distinguishing between the effects of a reduction of expenditure on goods and the effects of a reduction of expenditure on securities. The common ratio 1 - H of your geometrical progression  would be acceptable to me if H were defined as h g + h l + h s , where h s is the proportion of disbursements going to home securities. The point is that a reduction in disbursements on goods is passed on in the manner you describe,  but a reduction in disbursements on securities is met by an equal reduction in the supply of securities as a result of losses, unemployment, etc., and there are no repercussions.
But on the main point I am in entire agreement with you. Secondary unemployment is a matter of prime importance.
R. F. Kahn
P. S. I am so glad to hear you liked my taxi.
Roy Harrod Esq.,
2. Harrod, International Economics ( 1933:10 ), pp. 110-11.
- a. TLS with autograph corrections and postscript, one page, in HP IV-586-668b.
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