511. Harrod to J. E. Meade , 13 January 1936 [a]

[Replies to 510 , continues at 512 , answered by 513 ]

51, Campden Hill Square, W.8. #

13 January 1936

My dear James

A thousand thanks for your notes. It is very good of you to have taken all this trouble.

I have the impression that both your two points are correct and I propose with your leave to embody them. There will be a suitable prefatory expression of indebtedness. [1]

To get to the first point I think all I need is to insert a third proviso on p. 84 together with a reference toward to p. 107 where I have argued that the prices of machines are subject to greater variation than other prices. [2] I am interested that you say that you regard this as one of the big stabilizing influences. [3] It may well be. I confess I had not thought out this point in the clear way you put it. My inclination is to regard it as not perhaps quite so important as you suggest owing to my scepticism about how far productive methods do change in response to cyclical influences. If your point is an important one, does it not make still greater nonsense of the Hayekian view that the process becomes unduly capitalistic in the boom? (By the bye how very mathematical you have become!)

The second point will give me more trouble. I confess that I had an uneasy feeling of guilt, when I was writing about the relation of marginal to average cost, and a sense that I had not paused long enough to consider what I was saying. I shall have to ponder this at length. The text will clearly have to be altered in several places. I want to achieve correctitude without going too elaborately into cost theory, which would be inappropriate in an essay on the trade cycle with such a broad scope as this. I thought of referring the readers in a footnote to works on imperfect competition.

Well, I am most grateful to you for these points. They are just the kind of points which I was relying on you to pull me up on. I find that when one imagines one is breaking new ground the mind gets into a state of suppressed excitement (anyhow mine does!) in which there is a danger of the critical faculties being a little blunted.

I have now written the best part of ch. 3. It is all rather negative. I have explained in my opening words that this is partly because the subjects have been well looked after by other writers and I am concerned to point out the limitations of those doctrines. [4] I hope what I have said wont strike you as excessively irreverent, being as you are a special patron of the rate of interest! [5] If there is still another loop in your coil of charity that I can draw on, I will send you what I have done, when it is typed out, rather expecting and fearing your mild displeasure. But dont bother with it, if the activities of term are already claiming you.

I should like to dine with you next Monday. (By the way there is a Trade Cycle meeting on the afternoon of that day. [6] ) I am just back from Copenhagen [7] where I was treated in the most princely manner.



I return to Oxford on Thursday morning.

  1. 1. Harrod, The Trade Cycle ( 1936:8 ), p. ix.

    2. Harrod, The Trade Cycle ( 1936:8 ), p. 59 top and p. 77 end of full paragraph, respectively. Reference is to letter 510 , [jump to page] .

    3. Letter 510 , [jump to page] .

    4. In The Trade Cycle, the remark on the subject having been "well looked after by other writers" does not appear.

    5. Reference is to Meade, The Rate of Interest in a Progressive State (1933).

    6. Harrod sometimes denoted the Oxford Economists' Research Group as "Trade Cycle Group" (see note 1 to essay 17 ). No evidence survives of the 20 January meeting (nor of any other meeting previous to the end of January, when the actual inquiry began). References on the formation and activities of the OERG are given in note 10 to letter 433 .

    7. Harrod lectured on 10 January on "The Choice of a Currency Policy" before the British Import Union in Copenhagen. The lecture is reproduced here as essay 16 (see in particular note 1 for context).

    1. a. ALS, four pages on two leaves, in MP 2/4(24-25); photocopy in HP (NC).

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