525. Harrod to H. D. Henderson , 21 February 1936 [a]

[Replies to 524 , continues at 526 ]

Christ Church, Oxford #

21 February 1936

My dear Henderson

I am most grateful to you for your lengthy [b] comments which I shall have to consider carefully. I have not yet studied them in detail but a glance at them has already suggested changes of emphasis which might be expedient.

There is one point I should like to put. You say that you read to the end of ch. 2 but I notice that your comments dont go beyond pt. III of that chapter. Now the quintessence of the book is contained in pts. IV and V of ch. 2. The rest is mere preliminary and definition. I say this because I should not like you to break off at Pt. III now and imagine that you had got the drift of my main argument.

You say in one point that you like the Relation and dont like the Multiplier. [1] But I regard both the Relation and the Multiplier as vieux jeu. My original contribution consists in examining the relation between the Relation & the Multiplier. This to the best of my knowledge has never been done before. [2] I hold that if we look at this relation viz. that between the Relation and the Multiplier we have an intellectually convincing explanation of the trade cycle on a much higher level of coherence than has ever before been given. This sounds rather boastful! But I want to draw attention in the strongest manner I can to Pts IV and V of ch. 2. [3]

The parts about elasticity of demand [4] merely attempt to provide the static background in terms of most up-to-date theory. I do not deny that this theory is deficient. I should say that it [c] was much better than any other ready-made theory to hand. But of course we may hope to get much nearer to the truth by examining our manufacturing friends [5] and learning sufficiently about their crotchets and rules of thumb to be able to take them into account in some coherent manner. The static theory could be modified and brought up to date--tho clearly I cant do that now, since it would imply new thought about new facts well digested--without affecting the nerve of my argument in the dynamic part.

Of course if you do not accept the doctrine of the multiplier, cadit questio. Personally I do not see how it is possible to reject some form of it, though it is possible that the detailed way in which Maynard treats it in relation to the capital market may <+> [d] .

See you at lunch to-morrow.


Roy Harrod

  1. 1. Letter 524 , [jump to page] .

    2. Harrod's priority was recognized by P. A. Samuelson, "A Synthesis of the Principle of Acceleration and the Multiplier", Journal of Political Economy 47, 1939, p. 787.

    3. Harrod, The Trade Cycle ( 1936:8 ), pp. 88-106.

    4. Harrod, The Trade Cycle ( 1936:8 ), pp. 75-88; letter 524 , [jump to page] .

    5. Refers to the Oxford Economists' Research Group's interviews to businessmen (see note 10 to letter 433 for references on the OERG's early activities).

    1. a. ALS, four pages on two leaves, in HHP 22A/6. Photocopy in HPBL Add. 72764/49-52.

      b. Ms: «length».

      c. Ms: «it it».

      d. Ms: three illegible words, on the paper fold.

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