514. Harrod to J. E. Meade , 16 January 1936 [a]
[Replies to 513 , answered by 515 ]
Christ Church, Oxford #
16 January 1936
My dear James
I entirely agree with the point which you make by reference to your cases.
The trouble is that after a slump though there may be some surplus capital capacity there will not be as much as there is surplus labour. For whereas in the slump years the population continues to grow and possibly also methods improve in accordance with the secular trend, capital equipment does not do so [b] . Therefore in the nature of the case there will be more surplus labour than surplus capital when the revival begins. I suspect that it is difficult to get a good revival going until in most industries surplus capital is fairly well reduced by obsolescence etc. so that a substantial advance will necessitate new equipment.
I probably ought to go rather more carefully into the conditions of surplus capital at the revival.
I sent the sections of Ch 3 which I have so far written from London. 
- a. ALS, two pages on one leaf, in MP 2/4(28); photocopy in HP (NC).
b. Ms: «not to do so».
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