338R. E. Cannan to Harrod, [January 1934] [a] , [1]

This note updates Cannan's article on "Bank Deposits": [2] "This curious doctrine of McKenna [3] was revived by Harrod in Cole's What everybody wants to know about Money, 1933, p. 132." [4] It continues: "That the bank's gold holding is at any moment the difference between the amount of gold it has received from all quarters and the amount it has paid out to all quarters is an arithmetical truism, and McKenna and Harrod must have meant something more than that. [...] Harrod, I think, has been misled by lumping all the bank customers together and consequently supposing that paying out gold to X, Y & Z (borrowers) `kills the claim' of A B & C (lenders)".

  1. 1. The date is indicated on the copy found in Cannan's Papers: see source note a to this letter.

    2. E. Cannan, "The Meaning of Bank Deposits", Economica 1, January 1921, pp. 24-36. The note is glued on the cover of the offprint held by Harrod, and was probably sent by Cannan as a follow-up of their correspondence in November and December 1933 (letters 330 , 333 , 334 and 335 ).

    3. Refers to a paragraph on p. 35 of Cannan's "Bank Deposits": "the strange assumption that the amount of cash held by banks shows how much of their total deposits is accounted for by payments in of currency."

    4. Harrod, "Currency and Central Banking" ( 1933:13 ).

    1. a. Two pages Ts note with autograph corrections, glued on the cover of an offprint of Cannan's "Bank Deposits", in HCN offprints; draft (with autograph corrections and addition) and engrossed copy in CP 1033/222-23 and 1033/224-25 respectively. The copy in CP indicates at the top: "Harrod Jan 1934".

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