Note to p. 4 [f]

 

See accompanying letter

Let y 1 , y 2 etc. be rates of interest and Y 1 , Y 2 etc. incomes corresponding to them (Y 1 being derived from y 1 via marginal efficiency of cap. and the multiplier). For each value of Y draw classical supply curves, of which each curve shows amount of saving corresponding to various values of y at a given level of Y. Then according to you it will be found that the value of y at which the curve appropriate to income Y r intersects the demand curve is in fact y r , where y r represents any given rate of interest whatever. 1 The so called supply curve in the passage from your letter which I have quoted is the locus of points on the classical supply curves for that value of y corresponding to the level of income on the assumption of which each was drawn.

  1. 1. All references are to letter 470 , from [jump to page] to [jump to page] .

    2. On Harrod's teaching of Keynes's Treatise on Money see letter 392 , [jump to page] ; on the unusualness of Keynes's definition see Harrod, "Rejoinder to Drs. Haberler and Bode" ( 1935:1 ), p. 82.

    3. In his interpretation of Keynes's General Theory (1936) in "Mr. Keynes and Traditional Theory", Harrod expressed saving as a function of the rate of interest and the level of income, and the multiplier as a function of "the amount of investment (= the amount of saving) and the rate of interest" ( 1937:4 , p. 77).

    4. Keynes, The General Theory, chapter 23.

    5. In a letter to Joan Robinson of 3 September 1935, Keynes summarized Harrod's view of the chapter on Mercantilists "as a tendentious attempt to glorify imbeciles" (in Keynes, Collected Writings, vol. XIII, p. 650).

    6. In two occasions Harrod reported of some claims Keynes made in conversation and a talk in Oxford when he presented a fragment of his new ideas (see letter 459 , [jump to page] and letter 479 , [jump to page] ). Otherwise, the only surviving evidence of Harrod's exposure to Keynes's view (apart from the fragments that went in print in Keynes's press articles) is the October and November 1934 correspondence with Kahn (in particular letters 375 , 382 , 383 , 387 , 389 , 391 , 392 , 402 , 405 ). See D. Besomi, "On the Spread of an Idea: The Strange Case of Mr. Harrod and the Multiplier", History of Political Economy 32:2, 2000, in particular pp. 358-67.

    7. Harrod restated this opinion in "Mr. Keynes and Traditional Theory" ( 1937:4 ), p. 85; he specified, however, that although the liquidity preference equation solved the old problem of explaining how the stock of money is divided between liquid reserves and active circulation it did not really provide "a new piece."

    1. a. ALS, six pages on five leaves, in JMK GTE/1/330-35. Printed in Keynes, Collected Writings, vol. XIII, pp. 553-56.

      b. Ms: «;».

      c. Ms: «them being».

      d. Comma added to facilitate legibility.

      e. This sentence was inserted as an afterthought. The note referred to is printed at the end of the letter, that is, in the position where Harrod wrote it.

      f. Keynes enclosed this note within square brackets--possibly to indicate to his typist the passage he wanted to have transcribed (a transcription of the note was sent back to Harrod and is now found in HP: see source note a to letter 472 ).


1. Keynes marked the passage with a vertical line in the margin, and noted: "the demand curve doesn't intersect it at all. It lies along it throughout its length".


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