247R. E. Dick to Harrod, 5 July 1932 [a]

Replies to letter not found, follows on from 239 R. Dick admits that Harrod's comments forced him to re-examine his argument. However, he still thinks that a monetary policy is not enough, while any fall in the rate of interest would scare off borrowers and therefore prove counter-productive. He is glad that Harrod agrees on public policy in the matter of spending, but he considers the importance of government spending as residing not in the fact that it necessitates borrowing, but in the fact that it stimulates enterprise through the process of "secondary employment", which he believes to be more important than some writers have figured it out. He thinks that Harrod's "unsatisfied fringe of borrowers" does not exist, at a time when nobody wishes to borrow. As to Harrod's argument regarding maladjustments between the prices of raw materials, finished goods, wholesale and retails, Dick cannot see how reflation could be a remedy in itself. Moreover, reflation would redistribute income in favour of profits.

  1. a. From 27 Drosselstrasse, Basel, three pages TLS, in HP IV/276-277/2, with envelope addressed to Christ Church but forwarded to Campden Hill Square.

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