ROBERTSONIAN ECONOMICS By the same author European Monetary Integration (with P. Coffey) Currency Areas: Theory and Practice (with G. E. J. Dennis) ROBERTSONIAN ECONOMICS An Examination of the Work of Sir D. H. Robertson on Industrial Fluctuation John R. Presley, B.A., Ph.D. M © John R. Presley 1978 Softcover reprint of the hardcover 1st edition 1978 978-0-333-21537-1 All rights reserved. No part of this publication may be reproduced or transmitted, in any form or by any means, without permission First published 1979 by THE MACMILLAN PRESS LTD London and Basingstoke Associated companies in Delhi Dublin Hong Kong Johannesburg Lagos Melbourne New York Singapore Tokyo Typeset in Great Britain by SANTYPE LTD, SALISBURY British Library Cataloguing in Publication Data Presley, John Ralph Robertsonian economics I. Robertson, Sir Dennis Holme I. Title 330.1 HBI03.Rj ISBN 978-1-349-03241-9 ISBN 978-1-349-03239-6 (eBook) DOI 10.1007/978-1-349-03239-6 This book is sold subject to the standard conditions of the Net Book Agreement Especially for Barbara, but also for Catherine and Joanne Contents Preface ix Introduction 1 PART I-THE THEORY OF INDUSTRIAL FLUCTUATION Background to a Study of Industrial Fluctuation in 1915 9 2 The Nature of the Industrial Fluctuation and the Robert- sonian Methodological Approach 18 3 The Robertsonian Theory of Industrial Fluctuation -An Outline 23 4 The Causes of the Upturn 32 5 The Theory of Crisis - From Boom to Recession 47 6 Agricultural Forces in the Trade Cycle 52 7 Robertson and the Alternative Theories of Industrial Fluc tuation 59 PART II-SAVING AND INVESTMENT IN THE TRADE CYCLE Introduction 73 2 Background to the Robertson-Keynes Debate 75 3 Saving in the Cycle: The Robertsonian Approach in the Study 92 VII viii Robertsonian Economics 4 Robertson on Saving (1918-40) 97 5 Critical Comment on the Forced Saving Thesis 117 6 Saving in the Cycle 121 7 The Robertsonian Theory of Interest 132 8 Origins of the Robertsonian Approach to the Theory of Interest 148 9 Natural and Market Rates of Interest and the Trade Cycle 152 10 Saving, Investment and the Multiplier (1936 and after) 165 11 Robertson and the Liquidity Preference Theory of Interest 177 12 Loanable Funds Versus Liquidity Preference-The Hicks- Hansen Framework 186 13 Some Observations upon the Similarity of Keynes' and Robertson's Work 216 14 The Value of Money 222 PART III-THEORY AND POLICY-SOME CONCLUSIONS Economic Policy and the Trade Cycle 239 2 Robertson and the Price Level 255 Notes 263 Bibliography of the Writings of Dennis Holme Robertson 310 Index 316 Preface I have such a vast number of acknowledgements to make that I hardly know where to begin. This study has taken five years to complete and has involved my being in contact with a wide variety of economists, not only over the length and breadth of the United Kingdom, but on both sides of the Atlantic. My greatest debt is to Professor S. R. Dennison, who has allowed me access to the private papers and correspondence of Sir Dennis Holme Robertson, and has guided and advised me throughout this period. I have enjoyed immensely my visits to Hull University and am very thankful for the energy he has devoted to my work during a period when his time has been a very precious commodity. The initial encouragement to undertake this work came from three people in particular-Professor R. D. C. Black, Professor D. P. O'Brien and Professor D. Swann. I am very grateful to them. Professor D. P. O'Brien has continued to provide copious and constructive comments upon my drafts throughout. Professor D. Swann has remained my Head of Department and has succeeded in giving me all the assistance possible at Loughborough University. I also wish to thank Dr. T. Weyman-Jones of Loughborough University for his valuable help in giving me a different perspective of certain parts of the work, M. Danes, a fellow student of 'Robertsonian Economics' for freely expressing his views and pro viding much assistance and Professor E. G. Davis of Carleton University for giving me an insight into R. G. Hawtrey's work. My gratitude goes to all those who have talked and corresponded IX X Robertsonian Economics with me on this project, in particular to A. Bevan, Professor A. W. Coats, P. Coffey, A. Dick, Professor M. Friedman, Sir J. R. Hicks, Professor D. Patinkin, Lord Robbins, S. Shenoy, Professor 0. Steinger, Dr. E. Owen Smith, Professor B. Tew, Professor T. Wilson, and Professor J. N. Wolfe. Many people have allowed me to utilise and to quote from correspondence. In this respect I am grateful to Sir J. R. Hicks, Professor D. Patinkin, Professor T. Wilson and Sir Geoffrey Keynes. Extracts from this book were presented at seminars in various places. I particularly benefitted from seminars given at the History of Economic Thought Conference at Durham University in 1975, at the Department of Economics, Lancaster University in March 1977, and from a staff seminar at Loughborough University in March 1977. My thanks go to all the members of these seminars. My undergraduate days were spent at Lancaster University; I was put through my paces by the late Professor P. W. S. Andrews, Professor A. Macbean, J. Taylor, J. Rhodes, D. Pearce, A. Airth and G. McGregor-Reid. I will always remain in their debt for the encouragement they gave me, and the enthusiasm they showed economics. I could not have wished for a better baptism to the subject. I have been fortunate to receive financial assistance during my study of Robertson's work. The Wincott Foundation put me on my feet, and the Social Science Research Council kept me there over the last two years. This enabled me to gain access to a large volume of research material which I would otherwise have been unable to obtain. It also meant that I could travel around the United Kingdom in search of information. Without this help the study would have been substantially weakened, and I therefore thank my benefactors for their generosity. A study of this kind invariably puts many strains upon library staff. It never ceases to amaze me how librarians can remain so patient when faced with a borrower who cannot remember, or does not have, the full reference for a book or an article. I have received great patience and help from a number of libraries; in particular I wish to thank the library staffs of Loughborough University, the Marshall Library and King's College Library, Cam bridge, Newcastle University, Hull University, Sheffield University and the London School of Economics. My special thanks goes to Nottingham University Library which was perhaps burdened more than most by my enquiries. The Department of Economics