637. J. M. Keynes to Harrod , 21 February 1937 [a]
[Replies to 634 ]
46 Gordon Square, Bloomsbury #
21 February 1937
The argument you provide against prices falling in proportion with rising efficiency is worth attending to. But, of course, it assumes that the depreciation allowance set aside by entrepreneurs is based on the first cost and not on the replacement cost. Since the user cost would depend rather on the replacement cost from time to time, the above assumes a rather artificial accounting practice by the business world. Probably in practice they would be half way between first cost and replacement cost. But it is only if they aim, so to speak, at keeping their money capital intact rather than their plant intact that their behaviour will be on the lines you are assuming.
May I consult you in your capacity as Honorary Secretary <+> of the R.E.S.? Pigou has been reluctant to accept nomination as President on the ground that he will seldom or never come to Council Meetings and that nervousness about a heart attack would prevent him from delivering his addresses. I have urged him, as against this, that the office is more titular and honorific than practising, and that, if he would write two annual addresses, they could be delivered by proxy and then printed in the Journal. He is, I think, prepared to accept on these lines, but wants to be assured before he does so that leading people on the Council really do want to have him on these conditions.  May I give him such assurance?
J M Keynes
R.F. Harrod Esq., Christ Church, Oxford.
- a. TLS with autograph additions and corrections, two pages on two leaves, in HP II-68, with envelope addressed to Christ Church. CcI, not corrected nor completed, in JMK GTE/2/2/79-80. Reproduced by kind permission of the Provost and Scholars, King's College, Cambridge.
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