610. D. H. Robertson to Harrod , 3 January [1937] [a]

[Replies to 607 ]

Trinity [College, Cambridge]

3 January [1937] [1]

My dear Roy,

I have spent so much time on your book this week that I have had to put your letter aside. (My review should appear in the Canadian Journal of Economics for Feb. [2] I find it better not to fall into discussion of such things till published! If I do you wrong, the Journal will, I'm sure, be delighted to receive a rejoinder from you!).

It is awfully good of you to suggest a week-end. But it is made practically impossible next term by 10.00 Monday lecture. What about you coming here instead? It would be a great pleasure if you would. But preferably in Feb. [3] Do if you can. Failing that we must try to arrange a meeting next vac.

On the points of your letter.

(1) No, I'm not converted. DP does not vanish any more than DF does,--in the limit they both become thick lines. (If my point is wrong, the whole apparatus is a nonsense one,--discussion of "output as a whole" becomes impossible.)

(2) I don't accept the difference between intended and unintended investment as a sufficient way out of the difficulties of the s[tatic]. t[heory]. The Swedish difference between i[ntended]. and u[nintended]. savings is much more to the point. The "normal multiplier" is a snare and a delusion as soon as we begin to analyse change! (But this, I realise, raises large issues, which it's no use trying to carry further by correspondence. I cannot breathe in your claustrophobic world!).

(2b) A large matter, requiring further consideration. But I have a hunch that you are too logical!

(2c) Again a large matter of a different kind. As regards myself, in point of fact most of my published writings have been directed to pointing out deep-seated lacks of harmony in the system. But I expect I have rather a large element of cussedness in me, which makes me always react against the case which I feel to be overstated at the moment. (Looking up my Macmillan Ctee evidence the other day, I was rather amused to find JMK hammering away that the high rate of interest was due to the high demand for loanable funds by foreigners, and myself, in a desperate muddle, trying to instruct him in the elements of the theory of liquidity preference! See qq 4834, 4841. [4] )

As regards the educational problem, (i) I suspect that I differ from you--though not so much as Hubert does!--as to how big a part pure theory, whether static or dynamic, should play in economic education. (ii) No doubt we are all rather parochial about Marshall,--but I do think it's a great advantage, not the reverse, of his treatment that he does bring in growth & doesn't exclude it for the sake of getting a formally water-tight system like the Continentals,--I should be very sorry to go back on that. (iii) In my case your prescription would not meet my difficulty here,--which is precisely that these enormously difficult dynamic problems are being taught about as if they were all settled,--a new orthodoxy is being substituted for the old.

This doesn't mean that I disagree that the pincers of economic thought ought to be trying to make the theory of growth more systematic,--I think we can agree about that,--& I look to you for further big contributions!

(3) No, surely you have misunderstood. ACP does not deny that the a[cceleration]. p[rinciple]. is a true cause of fluctuation,--he simply offers it as an argument against those who hold that fluctuations in the capital industries are larger than in the consumption industries, \ the causal origin of fluctuations is to be sought in the former. His view is \ quite compatible with yours, though of course it doesn't imply yours.

But I withdraw altogether my impertinent query, for which there was no call, & which was prompted by local considerations in which you have no concern.

I enclose 3 scraps; (1) my Harvard sermon, which please return some time, as it's my only copy; [5] (2) a 1933 product, which was so hurried that you may never have seen it, & which will show you that sometimes at least I have "unorthodox" moods! [6] (3) a copy of some notes on JMK's notes on my notes on his book. Sections I & II [b] will not be fully intelligible without what has gone before, but I think III and the add[itional]. Note will. [7] Forgive my bothering you with all this,--but as I don't write books any more, I hope I may be forgiven for taking up a little of my colleagues' time in other ways!



Do come & stay.

  1. 1. Misdated "3.1.36.".

    2. Robertson, "The Trade Cycle. By R. F. Harrod", (1937).

    3. Harrod visited Robertson in Cambridge from 12 to 15 February: see letter 625 and note 1 to letter 630 .

    4. Committee on Finance and Industry, Minutes of Evidence, vol. 1, London: H.M. Stationery Office, 1931, pp. 334-35. Robertson referred to his replies in "Alternative Theories of the Rate of Interest" (Economic Journal, September 1937, p. 433n) and later quoted the relevant passage in his Essays in Monetary Theory (New York and Toronto: Staples Press; London: King, 1940), p. 24n:

    • ...(Witness) What it comes to is this, that a large part of what appears to be the rate of interest on long-dated securities is now really a premium for risk, or [for] believed risk, and the long rate of interest remains high compared with Bank rate because it contains a large element of what are really profits, the reward for real or imaginary risk. (Mr. Keynes) I should have thought the reason why the bond rate was high in London was that there were rows and rows of foreigners who were very willing to pay extremely high rates for the money ... [cited from Q. 4841].

    5. D. H. Robertson, "The State and Economic Fluctuations", in Authority and the Individual, Cambridge: Harvard University Press, 1937, pp. 37-47, reprinted in Essays in Monetary Theory as "The Snake and the Worm"; this was not found among Harrod's papers.

    6. The attachment was not found among Harrod's papers. Reference, however, is to Robertson's untitled contribution to Der Stand und die nächstre Zukunft der Konjuncturforschung. Festschrift für Arthur Spiethoff, München: Duncker & Humblot, 1933, pp. 238-42 (reprinted as "The Future of Trade-Cycle Theory" in Robertson, Essays in Monetary Theory, London: Staples Press, 1940).

    7. Refers to Keynes's letter to Robertson of 13 December 1936, published in Keynes's Collected Writings, vol. XIV, pp. 89-95, and to Robertson's additional note (ibid., pp. 99-100).

    1. a. ALI, two pages on one leaf, in HP IV-990-1069d/47.

      b. Continued in the margin and at the top of page 1.

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