302. D. H. Robertson to Harrod , 5 April 1933 [a]



[The exchange continues at 307 ]

Trinity [College, Cambridge]

5 April 1933

My dear Roy,

I should like to know--if you have a moment--whether you can swallow the JMK "foreign balance" doctrine in the extreme arithmetical form now presented (today's Times, and the last chapter of Mult[iplier] pamphlet [1] ). I am hopeful that your Free Trade bug will put you in revolt against it, as mine does me! Surely prima facie, and unless all sorts of unstated assumptions are fulfilled, the purchase of £1m worth of Jamaican securities imprisons as much purchasing power, which might otherwise be "creating employment", as the purchase of £1m worth of Jamaican bananas? [2] (Naturally I choose as non-comparative a thing as I can think of, for nothing is said about the character of the imports). If an adverse balance is covered by (takes the form of) [b] an accumulation of English bank deposits in the hands of foreigners, that, I agree, is a deflationary process: but the proposition is not, I understand, confined to such "hothouse" short borrowing, but extends to every increase of the favourable or diminution of the unfavourable balance on current account.

Surely in this form if must be both? Or am I still wallowing in 19 th century darkness? Perhaps if I had read your original ch VI I should know! [3] Perhaps, having read the revised version, I ought to know!



P.S. Thanks for your last. But the <+> passages stand! [c]

  1. 1. J. M. Keynes, "The Means to Prosperity. Mr. Keynes's Reply to Criticism. Work and Spending", The Times, 5 April 1933, pp. 15-16, in Collected Writings, vol. XXI, in particular p. 179; J. M. Keynes, The Means to Prosperity (1933), in Collected Writings (1971-89), vol. IX, pp. 364-66.

    2. On 1 April, Robertson expressed the same doubts in a letter to Keynes, reproduced in Collected Writings, vol. XXIX, p. 17.

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

    1. a. ALI, one page, with envelope addressed to 51 Campden Hill Square, in KHLM 215.

      b. Ms: «(takes the form of)» is written on the same line as text, while «is corrected by» is written above the bracketed sentence; this suggests that brackets and «is covered by» were added as an afterthought.

      c. Written on the back of the envelope; the envelope is broken in correspondence of the illegible word.

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