762. Harrod to Joan Robinson , 14 March 1938 [a]

[Replies to 761 ]

Christ Church, Oxford #

14 March 1938

My dear Joan

I think you come out fairly unscathed from such strictures as I had to offer. [1] I agree that, shall I call it, the Oxford view about interest is fatal to the classical theory. But it is also inimical to placing too much hope on manipulation of the interest rate.

I was toying with the idea--previously to recent disasters [b] --of writing to the Times in favour of the old-fashioned remedy at the present juncture of credit expansion. I understand that the rate of interest confronting many kinds of investment is now almost infinite in the sense that it has been impossible for months to float new issues. Is not the right remedy for this to inject money into the long-term market? If the B of E bought say £20 of long term securities and the Treasury put £60 on new Treasury bills into the market, the Banks might put £120 new money into investments, which should unfreeze the long term capital market. [2] Do you think this a good idea?



  1. 1. References are to Joan Robinson, Introduction to the Theory of Employment, London: Macmillan, 1937, and to Harrod's review of the book ( 1938:5 ).

    2. Harrod had already suggested that this is the proper method of inflating in a letter to Cannan of 12 December 1933: see letter 334 , [jump to page] . Harrod later wrote to The Economist and The Times along the suggested lines: see "Banking and Trade Recession" ( 1938:9 , here reproduced as press item 20 ) and "Meeting a Trade Recession" ( 1938:11 , here reproduced as press item 22 ).

    1. a. ALS, two pages on one leaf, in JVR vii/191/39-40.

      b. Ms: «desasters».

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