421. K. F. Bode to Harrod , 15 January 1935 [a]

[Follows on from 415 , replies to 414 , the exchange continues at 422 ]

32 III. me <Canaline>, Geneva

15 January 1935

Dear Mr. Harrod,

We have now discussed the paper and the subject in two long afternoons: Prof. Haberler, Mr. Kaldor and I. [1] The amendments and revisions will now have to be See Ms: «now to have been». formulated and typed, and we then shall send you immediately a copy of all that. Unfortunately, Haberler had already given the M.S. to Robbins, who wants it to be printed in the next Economica. But we shall introduce the corrections into the proofs.

The question of the velocity of circulation [2] is now put in such a way that there is no ambiguity as regards your assumption of it being constant. In the representation of Mr. Kaldor's view you are mislead. Kaldor himself declared to be in complete agreement with Haberler and me on this point. You will see all this in the copies, amongst which is also a long letter of Mr. Kaldor. [3]

As regards saving, Haberler and I are now thinking over your statement that you regard your thesis as being valid independently of the "curious" definition. Haberler, who too was very sorry that you have got the feeling of being misrepresented, told me that he will write to you himself in the next days. [4]

As regards your minor points, you will find that we have crossed out the words "and even demands", and that in the other places, we have altered the text in such a way that there now is no ambiguity.

The subject is awfully difficult, indeed. Our long discussions yesterday and to-day have shown that to me once more in a most impressive See Ms: «impressing». manner. And Robertson and my friend Stonier (you know him [5] ), to whom I had sent [d] a copy of the note, feel likewise. Thus, both Haberler and I are so sorry that we cannot have a discussion with you in the same room, as we have had now with Mr. Kaldor in the office of the League.

Many thanks for your kind letter.

Yours very sincerely:

Karl Bode.

  1. 1. K. Bode and G. Haberler, "Monetary Equilibrium and the Price Level in a Progressive Economy: A Comment" (1935). Other contributions to the debate are Harrod, "The Expansion of Credit in an Advancing Community" ( 1934:8 ), "Banking Policy and Stable Prices" ( 1934:9 and 1934:10 , press items 8 and 9 ), and Kaldor's and Haberler's letters published under the title "Banking Policy and Stable Prices" (1934), pp. 7-8.

    2. See note 4 to letter 396 .

    3. Kaldor to Haberler, 22 December 1934, from Taormina, CC of a TS transcription of original letter, three pages in HP IV-395-422. Bode refers to the following passage:

    • Note, under the assumption that the current rate of interest is not affected by the act of saving, keeping Q constant implies keeping k constant, if k is interpreted as a proportion of the plan of anticipated real income over a future period, rather than the rate of real income at the present moment. It is the former definition of k which I tacitly implied in my letter; while you seem to argue on the basis of the latter definition (But this is not clear to me). In so far as individuals act on a comparison of capital assets rather than income flows (which is more plausible, since a decision of a given moment should be related to values existing at that moment) it is the former definition which is relevant (if k is a relevant concept at all). In this case keeping k constant always implies an increase in money-hoards corresponding to an act of saving--if the effect on future prices is not taken into consideration.

    By Q Kaldor meant the "percentage of [an individual's] total capital assets (expressed in terms of money) he will want to hold in the form of money."

    4. See letter 422 .

    5. A. W. Stonier corresponded with Harrod during February 1930: see letter 173 R.

    1. a. ALS, six pages on three leaves, in HP IV-114-115.

      b. Ms: «now to have been».

      c. Ms: «impressing».

      d. Ms: «send»


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