371. Harrod to J. E. Meade , 4 October 1934 [a]

[Replies to a letter not found]

51, Campden Hill Square, W.8. #

4 October 1934

My dear James

I cant tell you how guilty I feel in not having replied to your letter of July 30 before. It came to me at a time when I was very busy and also rather worried and I put it on a pile of papers that required too much thought to be dealt with in the way of ordinary correspondence. Then I put off and put off looking at the pile in the way one has and entirely forgot that there were things in your covering letter requiring an immediate answer and that you wanted your document back. I hope you have not been inconvenienced by not having it.

I think your idea about Keynes is an excellent one. [1]

As for the meeting with Henderson, well, it is too late now! We shall all be meeting soon.

I think your memo would form an excellent basis for discussing pertinent matters for investigation. [2] Most of the matters you want to know about are of general interest to all theorists. Some of them e.g. national income have already been much worked on and it is important that we should know all that has already been done.

I feel that we must form a committee to develope this. Its object would be to enumerate and classify the quantitative enquiries the results of which would be of interest to theorists. [3] I suspect that many of us would want to know much the same things. It should be emphasized that our object is not to discover some subject for investigation that could be appropriately undertaken by a university, but to discover what subjects of investigation would yield results actually required by working theorists. (Clark cannot get out of his head the idea that we want to make a sort of Merseyside survey for its own sake. [4] )

I feel that the weakness of the committee would be--I hope I am not doing an injustice to my colleagues--ignorance about available sources and work already achieved. I wish Colin Clark were among us! [5] (Talking of Colin Clark and your short period elasticity of the demand for labour he suggested to me the other day that the Co-op. Wholesale Soc. factories would provide cost figures, which would amply reward a research worker, throwing light on the labour productivity function. Most of their work is straightforward, jam, books etc and problems of joint cost would largely be eliminated).

Your document presupposes an immense amount of work and is therefore good if we are figuring out a big scheme. I hope you will preserve it for future reference.

The two subjects in theory which are interesting me particularly at the moment and on which statistic theory could throw light are

(i) the question of increasing returns in imperfect competition, which is first cousin to your short period elasticity of the demand for labour, and

(ii) to put it dramatically, whether the equilibrium rate of interest is at present zero, or, more generally, the actual relation of the rate of saving to the rate of investment in a society which has reached our stage of development.

But I confess that my ideas of how to enquire into this are at present amorphous in the extreme.

Do you think the time has come when we can get down to business, pooling our ideas and our needs? If so we must boldly organize the committee, notifying the professors and inviting them to meetings, but proceeding about our business in our own way.

I have the feeling that it ought to be organized on the basis, that we as theorists are seeking to organize our needs and our existing resources, and not as a committee to formulate plans for the R[ockefeller]. foundation. [6] I think the question of an impending benefaction might be a distracting thought. The result of our proceedings is bound to indicate a need of money. But I dont think that should be its purpose.

I am perfectly willing to do any donkey work required of the secretary, unless you can think of some one else. [7] The only disadvantage of that arrangement that occurs to me is the danger that it might be thought that I was trying to set the pace or forcing people's hands on becoming a sort of dictator of research! If there is any danger of that, quite frankly, it had better be some one else. It isnt a matter on which I can form a judgement myself!

I think this document would be most admirable for a first meeting agenda.

I do apologize once again for the delay

Yours

Roy.

  1. 1. No other documents in the Meade Papers helped clarifying what the idea about Keynes was.

    2. J. E. Meade, "Short Period Demand for Labour. Plan of Statistical Work", Ts, 4 pages, in MP file 2/4(15-18).

    Before listing in detail the different kinds of statistics he thought necessary to obtain (banking statistics, national income, industrial statistics, balance of payments, public finance, certain fundamental elasticities), Meade explained as follows the need for such an inquiry:

    • I am working on the short-period elasticity of demand for labour. The work at present is in a mathematical form [reference is to Meade's note on "The Elasticity of Substitution and the Elasticity of Demand for one Factor of Production", The Review of Economic Studies I:2, 1933-34, pp. 152-53] and to give content to the theory actual measurement of the quantities involved is required. All the expressions which I am employing are in the nature of things capable of statistical measurement, though it may prove impossible in fact to obtain figures in certain cases. I hope at a later date to develope the analysis into an analysis of the causes of fluctuations in employment and for this reason I should like the statistical information to take the form of time series, rather than of information about one point of time. Wherever [b] possible I should like to have monthly figures.

      The statistics to which reference is made below are the figures, which I cannot obtain without help; the list does not include everything which I want. In the first instance I should want the English figures, but I should like later to collect the relevant information for all the main industrial countries.

    The memorandum was also sent to Marschak and to the economics fellows at Oxford: see Young and Lee, Oxford Economics and Oxford Economists (1993), pp. 121-22 for an account of Marschak's reaction.

    No evidence seems to have survived indicating whether or not Meade's research on the short period demand for labour was actually carried out.

    3. Harrod's proposal follows on from the discussions between himself, Meade and Henderson originating from Harrod's suggestion to inquire on what specific problems would be susceptible of factual inquiry: see letter 358 , [jump to page] . It should be noted that while Harrod's original proposal regarded "two or three of us", here he writes of a "committee". This eventuated in the constitution of the Oxford Economists' Research Group. Meanwhile, this proposal was taken up in a memorandum, drafted by Harrod and subscribed by the economics tutors in Oxford, concerned with the development of social studies in Oxford (see note 6 to this letter): see the "Memo. On Economic Studies in Oxford", here as essay 15 , [jump to page] .

    4. Reference is to D. Caradog Jones (ed.), The Social Survey of Merseyside, three volumes, London: Hodder and Stoughton and University Press of Liverpool 1934.

    5. Colin Clark was one of the names under consideration for the appointment as a reader in Statistics at All Souls, at the time when the Oxford Institute of Statistic was being set up. Marschak was elected instead, and eventually became the Director of the Institute (see note 7 to essay 15 ).

    6. Since May 1934, concrete plans were prepared for the development of social studies and for the foundation of an Institute of Statistics in Oxford, in view of a possible financial support from the Rockefeller Foundation. Harrod was a member of the committee appointed by the Hebdomadal Council to advise on the matter. For a discussion of the formation of the Oxford Institute of Statistics, see notes 2 and 7 to essay 15 ; N. Chester, Economics, Politics and Social Studies in Oxford, 1900-85, London: Macmillan, 1986, chapter 5; and Young and Lee, Oxford Economics and Oxford Economists (1993), chapter 5, and for this episode in particular pp. 120-21.

    7. One of the outcomes of the process of reorganization of social studies in Oxford (see note 6 to this letter) was the formation of the Oxford Economists' Research Group (see note 1 to letter 430 ). In the early stages of the OERG's inquiry, before a secretary was hired, Harrod actually undertook the minuting of some interviews and the drafting and re-drafting of a number of reports, in particular those relating to the first two visits, by H. F. Scott-Stokes and Kenneth Lee on 31 January and 21 February 1936, respectively (various drafts of these reports are filed in HCN 5.1 and 5.14 respectively; a further copy of the latter is in ABP 46).

    1. a. ALS, five pages (numbered from the 3rd) on three leaves, in MP 2/4(12-14); photocopy in HP (NC).

      b. Ts: «whereever».


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