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History of Political Economy 36.1 (2004) 187-193
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"A vested intellectual interest . . . tinged with a dose of pique"?
D. H. Robertson on the National Debt Enquiry
D. E. Moggridge
Dennis Robertson's post-1936 disputes with Keynes over matters of monetary theory and policy have long been a staple of commentators on the work of the two economists. At the heart of many of these disputes was the role of savings and investment in the determination of the rate of interest—encapsulated in the post-1945 period in the phrase "liquidity preference versus loanable funds."1 Commentators have had to work with a limited body of published texts and correspondence, largely from Keynes's papers, and largely dated before 1939.2
Recently another piece of evidence has become available in a collection of the papers of Lionel Robbins lately unearthed by his family, a letter and a note from Robertson to Sir Wilfrid Eady, dated 6 June 1945. This is of interest, not only because of its date, but also because of its subject, the "First Report" of the British government's National Debt Enquiry, the product of an internal committee of officials and economists from the Treasury, the Economic Section of the War Cabinet Offices, and the Inland Revenue. The committee was approved in August 1944 [End Page 187] to examine the goals and techniques of postwar monetary and debt management policy, including cheap money and the measures necessary to sustain it over the long period.3
When it was finally set up in January 1945, the Enquiry's committee was a strong one: its membership included Sir Richard Hopkins, the about-to-retire permanent secretary of the Treasury (chair);4 Keynes, Sir Wilfrid Eady, and Sir Herbert Brittain (the senior Treasury officials responsible for financial policy); James Meade (director designate) and Lionel Robbins (director) from the Economic Section of the War Cabinet Offices; and Sir Cornelius Gregg (chair) of the Inland Revenue and Paul Chambers (his director of statistics and intelligence). The Enquiry met three times to hear lectures by Keynes outlining his General Theory analysis of the relation between savings and investment and interest rates and making his proposals for interest rate policy in the postwar period. After a meeting in which the other economists and Treasury officials aired their views, Keynes, Eady, and Brittain were asked to draw up a summary of Keynes's proposals. At the next meeting the Enquiry discussed the measures and the timing of their introduction, and it was agreed that Sir Richard Hopkins would draft a report. Hopkins's report, for which he read, for the first time, Keynes's General Theory (twice) and Robertson's Essays in Monetary Theory (1940), went to the chancellor of the exchequer in May 1945, while the Enquiry turned its attention to postwar fiscal policy, inflation, and a capital levy.
Robbins (along with James Meade) disagreed with Keynes's view that the authorities should forswear the use of the rate of interest as an instrument of economic policy in the near term.5 However, they failed to [End Page 188] persuade Hopkins to alter his draft report to accommodate their views (Howson and Moggridge 1990, 61, 70; Robbins 1971, 187). The dominance of Keynes's views in the Enquiry's "First Report" would explain Robertson's comment on what he took to be Robbins's views in the letter produced below.
The Enquiry accepted that exchange controls removed the overseas constraint on interest rate policy and that physical controls, rationing, and taxation would be the main instruments of anti-inflationary policy in the immediate postwar period. Their report thus proposed that monetary policy should be used to meet official and social needs while leaving the authorities maximum freedom of action over the longer term. It argued that the authorities should leave long-term interest rates roughly where they were, at 3 percent, but leave open the option for lower rates later by altering the redemption terms for successive new issues to...