645. H. Neisser to Harrod , 18 March 1937 [a]
227 Kenyon Av., Swartmore, Pa.
18 March 1937
Dear Mr. Harrod,
I just finished your interesting and stimulating book on the "Trade cycle" [b] .  I would reserve my opinion about the general theoretical framework for a later opportunity. To-day, I would only draw your attention to some writings of mine, which contain similar ideas or, at least, a similar approach: an article on "General overproduction" in the Jl. of pol. Econ. 1934  and the theoretical part of a little book "Some international aspects of the business cycle", published 1936  by the University of Pennsylvania press; my former German writings in the Weltwirtsch. Archiv 1932  and in the Essays in honour of G. Cassel  are more loosely connected with the problems concerned. Dr. Marschak has copies of all.
In monetary respects [c] , I use there the classical or Robertsonian concept of income (a flow of money, earned yesterday) and not the Keynesian (equal to the value of the current output). In substance, there is no difference, however, in my opinion. In order to allow the entrepreneur receipts in excess of his costs (= disbursements to factors), i.e. a separate entrepreneurial income (or "profits"), Keynes makes him take out and expend purchasing power from banks (at the beginning of an income period) equal to the income he expects from himself, while Rob[ertson]. treats only that part of the sum in question as income which corresponds to his yesterday profits and treats the rest as credit expansion resp. contraction (or "hoarding") [d] . Thus, while [e] for Keynes savings always equals investments (or better investment = factor savings minus factors dissavings plus entrepreneurs' unspent income minus entrepreneurs uncovered losses), for Robertson there may be a discrepancy.
I have some difficulties in ascertaining the implications of your statement that banks cannot lend more to the public than the public lends them back. Juridically, that is true, but what does it mean economically that the owner of a banknote or of a demand deposit "lends" to the bank? Certainly, by holding a transaction-balance for the usual time he does not do any saving or "lacking"; it is not free decision, but custom which induces him to use bank obligations as medium of purchasing power, and any bank that possesses the customary amount of cash as reserve can expand credit correspondingly and impose "relending" on the public.
But, as I said, these [f] are minor points. I hope to find time to elaborate on the basic ideas of your book. 
Yours very sincerely
2. H. Neisser, "General Overproduction. A Study of Say's Law of Markets", Journal of Political Economy 42:4, August 1934, pp. 433-65. Harrod seems to have commented upon this article in January 1935: see letter 425 .
3. H. Neisser, Some International Aspects of the Business Cycle, Philadelphia: University of Pennsylvania Press, 1936.
4. H. Neisser, "Lohnhöhe und Beschäftigungsgrad in Marktgleichgewicht" in Weltwirtschaftliches Archiv 36, 1932(II), pp. 415-55.
5. H. Neisser, "Oeffentliche Kapitalanlagen in ihrer Wirkung auf den Beschäftigunggrad", in Economic Essays in Honour of Gustav Cassel, London: Allen & Unwin, 1933, pp. 459-70.
6. Neisser wrote a review article on The Trade Cycle: "Investment Fluctuations as Cause of the Business Cycle", Social Research 4:4, November 1937, pp. 440-60.
- a. TLS with autograph corrections, two pages on one leaf, in HP IV-778-779. Spaces after punctuation have been normalized throughout without further warning.
b. Ts: inverted commas not closed.
c. Ts: «respect».
d. Ts: «(or "hoarding)».
e. Ts: «While, thus».
f. Ts: «that».
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