[Notes on the OERG Research] [b]

When [c] this application for a grant in aid of Trade Cycle studies was made, [3] it was not possible to formulate a complete programme. Indeed it may safely be said that a complete [d] programme could only have been formulated had the secret of the Trade Cycle been already known! The work had to develope and expand by reference to the clues which were obtained in its early stages. It is not surprising that the grant is exhausted and the work still unfinished. A strenuous effort will, however, be made to bring certain sections of the investigation to an end by mid-1940.

While all the work is to some extent inter-related and gives deeper insight into the nature of the Trade Cycle as a whole it may be well to specify the following principal branches of investigation.

1. Questions to entrepreneurs. Entrepreneurs have been questioned over a wide range of topics that have this in common, that they relate to their reactions to the successive states of affairs which eventuate in the trade cycle pattern. The group has interviewed a number of entrepreneurs in turn in plenary session, somewhat in the manner of a Royal Commission. [4] The method has had the advantage that by supplementary questions the group could assure itself that the entrepreneur was in no doubt of the precise significance of the question and the group is in no doubt of the precise significance of his answer. Using the experience gained from a number of such interviews, individual members of the research group have gone out and interviewed a wider <sample>. The dossiers of between 50 and 60 such interviews are now extant. [5]

A preliminary survey of replies on the effect of changes in the rate of interest has already been published in Oxford Economic Papers, no 1. [6] The result seems sufficiently interesting to justify the expansion of the method of question by the issue of a written questionnaire to a thousand entrepreneurs. [7] This is now being done; and it is proposed to publish the results. [8] This will involve staff assistance, since there are six possible answers to each of three questions.

It is proposed to publish in the next issue of Oxford Economic Papers a preliminary finding on the price policy of entrepreneurs having regard to the elasticity of demand and the problem of overhead costs. [9] In this matter too it is proposed to issue a written questionnaire to about a thousand entrepreneurs. [10]

These two topics by no means exhaust the scope of the enquiries that have been made. There is much interesting matter regarding the fluctuation of stocks, the policy of extensions and repairs, the treatment of reserves etc.

The working up of these results into publishable form is not simply a matter of staff work. Prolonged and mature reflexion on the materials may be required in order to gain insight into their true significance. But if a member of the group feels that he has a valuable clue, the dossiers are at once so massive and so concentrated, that he may be unable to extract and tabulate the relevant data without assistance.

It is not surprising therefore that we shall have much work in this connexion in reserve for assistants employed at the Institute.

2. Public Works. It is proposed that in the course of this year Mr. Bretherton's sub-committee will publish a survey of what has actually been done by the central government, local authorities and other bodies in the way of public works; and that this compendium of information will be of national importance. The work is well in hand, but completion cannot be hoped for until later in the year. [11]

3. Balance Sheets. Mr. Andrews has analysed the balance sheets and profit and loss account of 3000 firms into 152 industries and compiled figures for profits, reserves, cash and other items. [12] This work surpasses in exhaustiveness anything that has been done in this country and it is hoped that the results when completed and published will be illuminating. It is also contemplated that on the groundwork of this fundamental research it may be possible to put in operation a service for publishing continuous indices of the relevant magnitudes through the medium of a periodical.

4. Factors affecting British recovery since 1932. Mr. Phelps Brown with the assistance of Mr. Shackle has published papers relating to the velocity of circulation in the London and Cambridge Economic Service and Oxford Economic Papers, no 1. [13] He is still at work on other aspects of this problem.

5. Mobility of Labour. Advantage has been taken of the information available at the local labour exchange by Dr. Marschak and his collaborators to study the mobility of labour. A first instalment of his work has been published in Oxford Economic Papers, no 1, and a further instalment is forthcoming. [14]

It is true to say in respect of all these branches of work that the group is now in mid-stream and that in the opinion of those who have planned and supervised the work it would be a great misfortune if it were suddenly cut short for lack of funds.

  1. 1. The note was promised on the previous day, as a result of a conversation Harrod had with N. F. Hall, the director of the National Institute for Economic and Social Research (Harrod to Veale, 15 January 1939, in SSRC, OUA UR6/MS/3/2). The suggestion that funds were requested to the National Institute was advanced by Kittredge: see letter 881 R.

    2. On 18 January Veale sent Harrod a draft of the application, based on Harrod's advice. On 21 January Harrod suggested a few amendments to an application which he otherwise thought to be excellent (both letters in SSRC, OUA UR6/MS/3/2). On 4 April, Kittredge communicated that National Institute in London was prepared to provide half of the sum necessary to support the OERG research for the following year. Accordingly, the OERG was granted £850 over the period from 1 July 1939 to 31 December 1940 (Rockefeller Foundation, Resolution RF 39060) for the continuation of the research program.

    3. The first application for funds to the Rockefeller Foundation was made in November 1936 by Henderson, who at the time was the chairman of the OERG (see note 2 to essay 15 ), and was the subject of numerous exchanges of correspondence between Kittredge of the Rockefeller Foundation and Marschak, Henderson, Phelps Brown and Veale (these documents are filed in RF 1.1, Series 401S, Box 75, fld. 984).

    4. See the description of the method of inquiry formulated by Henderson in his letter 433 to Harrod of 20 February 1935.

    5. A list of 51 interviews to entrepreneurs is preserved in HCN 4.1.1; the document is undated, but the last of the interviews referred to took place in November 1938. Most minutes, reports and correspondence relating to these interviews are filed among Harrod's papers in HCN, boxes 5 and 6.

    6. J. E. Meade and P. W. S. Andrews, "Summary of Replies to Questions on Effects of Interest Rates", Oxford Economic Papers 1, October 1938, pp. 14-31.

    7. The questionnaire was sent to about 1300 entrepreneurs on 22 February 1939: see letter 897 .

    8. P. W. S. Andrews, "A Further Inquiry into the Effects of Rates of Interest", Oxford Economic Papers 3, 1940, pp. 33-73.

    9. R. L. Hall and C. J. Hitch, "Price Theory and Business Behaviour" (1939).

    10. This further inquiry was not carried out.

    11. At the end of May 1938, it was decided to divide the OERG into two sections (Andrews, "Report of Business Meeting held on 31st May, 1938", in ABP 45 and 171 and HCN 4.8.1): one to attend meetings with accountants and the other with officials (central and local government) on public works questions. The first results of this inquiry on public works--in which Bretherton, Marian Bowley (later replaced by Rutherford) and Burchardt were engaged from the summer of 1937--were circulated at the beginning of November 1938. Later on, two additional memoranda were produced. The research was completed by August 1939, and their findings were published in 1941 (Andrews, "[Agenda for the meeting of 5 November 1938]", in HCN 6.35.2; Burchardt and Rutherford, "Abstract of Some Relevant Results of the Public Works Inquiry", in HCN 6.35.3 and ABP 172 and 634; Andrews, "Report of the business meeting held on Friday, 18 November 1938"; OERG, "1. Possibility of extending public works expenditure", in ABP 172, and "Secondary employment", in ABP 172 and 631; Bretherton, Burchardt and Rutherford, Public Investment and the Trade Cycle in Great Britain, Oxford: Clarendon Press, 1941. See Young and Lee, Oxford Economics and Oxford Economists (1993), p. 135).

    12. See, for further details on Andrews's research, Harrod's description in letter 898 .

    13. E. H. Phelps Brown and G. L. S. Shackle, "Statistics of Monetary Circulation in England and Wales, 1919-1937", London and Cambridge Economic Service, Special Memorandum No. 46, May 1938, and "British Economic Fluctuations 1924-1928", Oxford Economic Papers 2, May 1939, pp. 98-134.

    14. H. Makower, J. Marschak, and H. W. Robinson, "Studies in Mobility of Labour: A Tentative Statistical Measure", Oxford Economic Papers 1, October 1938, pp. 83-123; "Studies in Mobility of Labour: Analysis for Great Britain", in two parts: Oxford Economic Papers 2, May 1939, pp. 70-97, and 4, September 1940, pp. 39-62.

    1. a. From Christ Church # , ALS, two pages, in Social Studies Research Committee, OUA UR6/MS/3/2.

      b. AD, two pages, in pen with numerous corrections in pencil, in Social Studies Research Committee, OUA UR6/MS/3/2.

      c. Ms: «When made this ...».

      d. Ms: «completed».


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