280. J. M. Keynes to Harrod , 16 February 1933 [a]

[Replies to a letter not found; follows on from 278 ]

46, Gordon Square, Bloomsbury #

16 February 1933

Dear Roy,

You have met my criticisms in the enclosed as much as I could possibly expect. [1] I have only three points left to mention, and take no notice of them unless you are inclined.

1. It seems to me you leave out one contingency in which foreign lending may increase inconveniently, and perhaps a contingency which is one of the commonest in practice,--I mean what I call a decrease in liquidity preference, or, as one might express it, a greater willingness to invest deposit balances. This will operate unfavourably on the international equilibrium whether the greater willingness to lock up funds takes the form of increased home investment not corresponding to increased saving, or the form of increased foreign lending. It is a thing which may occur somewhat suddenly and on a very large scale. [2]

2. I think the reader might suppose that income in your sense depends on output and cost of production. I wonder whether he would readily see that the mere fact of increased home investment increases income. But this is getting rather off your proper terrain.

3. Page 22 seems to me very complicated. You are, I think, really saying no more than that income must be equal to consumption plus home investment plus the foreign balance; and on the other hand equal to consumption plus unconsumed income. [3]

The book is so difficult for the series, [4] that I hope you will take every opportunity you can of lightening the atmosphere down to that of a manual in all passages which are not necessarily of intrinsic difficulty. I would advise that you now send off the whole manuscript to the printer. I had a word with Dennis the other day. He is rather anxious not to have to read your manuscript again at the present stage, since he is fearfully full up with various things. He and I are prepared to authorise Mr. Christian putting it straight into print. [5] Will you tell him this and send the manuscript to him?

Yours ever,

J M Keynes

R. F. Harrod Esq., Christ Church, [b] Oxford.

  1. 1. A revised version of Harrod's International Economics ( 1933:10 ), chapter VI. The manuscript, as all other drafts, was not found.

    2. In his book Harrod sometimes referred the process of hoarding (see, for instance, pp. 147, 153 and 171). However, while Keynes's was concerned with the relative preference of capital-owners for liquid assets, Harrod referred instead to balances lying idle, or, in other words, to the velocity of circulation of money (see note 2 to letter 301 R).

    3. Harrod, International Economics ( 1933:10 ), p. 123.

    4. The Cambridge Economic Handbooks.

    5. Dennis Robertson was the assistant editor of the series, while Bertram Christian was the director of Nisbet & Co., one of the publishers.

    1. a. TLS with autograph corrections, two pages on two leaves, in HP II-29. Reproduced by kind permission of the Provost and Scholars, King's College, Cambridge.

      b. Ts: «Christ Church College».


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