Abstract
The career of Ralph George Hawtrey spanned the first three-quarters of this century. He came to public attention in 1897 when his article in the Fortnightly Review attacked British naval procedures and brought his father the congratulations of Gladstone.1 He remained active on the public scene through 1970 when a final letter to The Times criticised the conduct of monetary policy and reiterated arguments from his last book, Incomes and Money, published but three years before. During the many years between, Hawtrey combined the career of a senior civil servant in the Treasury with that of an important theorist in monetary economics.2
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Notes
R. D. C. Black, ‘Ralph George Hawtrey, 1879–1975’, Proceedings of the British Academy, LXIII (1977) 363–97, at p. 364.
R. F. Harrod, The Life of John Maynard Keynes (London: Macmillan, 1963) pp. 120–1.
A. W. Coats, ‘Political Economy and The Tariff Reform Campaign of 1903’, Journal of Law and Economics, XI (1968) 181–229, at p. 181.
See Hawtrey’s own account of the events of 1904–8: R. G. Hawtrey, A Century of Bank Rate (London: Longmans, 1938) [hereafter cited as CBR], pp. 115–18.
In his memoirs Sir Frederick Leith-Ross recalled that the first book he encountered when he joined the Treasury in 1909 was entitled Conversion and Redemption. He assumed it was of religious significance (and apparently it had been sold as such by some booksellers) but in reality it dealt with Gladstone’s successful conversion of 3 per cent consols. F. Leith-Ross, Money Talks: Fifty Years of International Finance (London: Hutchinson, 1968) p. 22.
Historically, there were precedents for this opinion and Hawtrey atternpted to present his ideas as the continuation of earlier views. His purpose in CBR was to discuss the origins of Bank Rate tradition. He demonstrated that the early protagonists looked to Bank Rate to exercise its effect mainly by modifying domestic activity. To what extent they can be said to have endorsed his transmission mechanism with its emphasis on changes in the desired holdings of inventories is a debatable point. Cramp has provided a careful and critical examination of Hawtrey’s analysis of the early years of Bank Rate policy. He found confirmation for the thesis that Bank Rate increases checked the accumulation of stocks of commodities. However, he felt this was not due to Hawtrey’s explanation (that the merchants lower their demand for credit), but because merchants expected, based on previous experience, that the supply of credit was likely to be curtailed, i.e. that there was a liquidity rather than an incentive effect to changes in Bank Rate. See A. B. Cramp, Opinion on Bank Rate, 1822–60 (London: Bell, 1962) pp. 98–9.
D. E. Moggridge and S. Howson, ‘Keynes on Monetary Policy, 1910–1946’, Oxford Economic Papers, XXVI (1974) 226–47, at p. 232.
J. A. Schumpeter, ‘John Maynard Keynes 1883–1946’, American Economic Review [hereafter cited as AER], XXXVI (1946) 495–518, at p. 509.
J. R. Hicks, ‘Mr. Hawtrey on Bank Rate and the Long-Term Rate of Interest’, Manchester School, X (1939) 21–37, at p. 21.
G. Haberler’s classic summary Prosperity and Depression (Geneva: League of Nations, 1937) still provides the best introduction to this body of knowledge.
E. Eshag, From Marshall to Keynes: An Essay on the Monetary Theory of the Cambridge School (Oxford: Blackwell, 1963) [hereafter cited as Eshag], p. 97.
R. G. Hawtrey, The Art of Central Banking (London: Longmans, 1932) [hereafter cited as ACB], p. 161.
J. R. Hicks, ‘Automatists, Hawtreyans and Keynesians’, Journal of Money, Credit and Banking, I (1969) 307–17, at pp. 307–8.
Contemporary comment on his economics ceased at the end of the 1930s with the writings of Hicks (see note 21 above), Kaldor and Saulnier. See N. Kaldor, ‘Mr. Hawtrey on Short and Long Term Investment’, Economica, n.s., V (1938) 461–7;
R. J. Saulnier, Contemporary Monetary Theory (New York: Columbia University Press, 1938). However, Hawtrey has recently been subject to re-examination. See Black (see note 1); Brown (see note 28); E. G. Davis, The Correspondence between R. G. Hawtrey and J. M. Keynes on the Treatise: The Genesis of Output Adjustment Models’, mimeo 1978;
S. Howson, ‘Monetary Theory and Policy in the 20th Century: The Career of R. G. Hawtrey’, Proceedings of the Greater International Economic History Congress (Edinburgh: Edinburgh University Press, 1977); and F. J. Spreng The Macroeconomics of Sir Ralph Hawtrey: A Mirror Image of British Economic Doctrine’, Ph.D. thesis, University of Pittsburgh (1976).
In a letter dated 16 February 1931, Keynes wrote to Hawtrey that he ‘felt enormously honoured by the final version of your opus on me and the trouble you had taken. It is very seldom indeed that an author can expect to get as a criticism anything so tremendously useful to himself (HTRY 11/3). Both Moggridge and Patinkin minimised Hawtrey’s role in their accounts: D. E. Moggridge, ‘From the Treatise to the General Theory: An Exercise in Chronology’, History of Political Economy, V (1973) 72–88, esp. p. 75;
D. Patinkin, Keynes’ Monetary Thought: A Study of Its Development (Durham, NC: Duke University Press, 1976) esp. pp. 54, 57, 65. Recently, each gave Hawtrey slightly more prominence.
See D. Patinkin and J. C. Leith, Keynes, Cambridge and ‘The General Theory’ (Toronto: Toronto University Press, 1978) pp. 6, 66.
S. Howson and D. Winch, The Economic Advisory Council 1930–1939 (Cambridge: Cambridge University Press, 1977) p. 27.
This speech was subsequently published; see R. G. Hawtrey, ‘The Gold Standard’, Economic Journal [hereafter cited as ЕJ], XXIX (1919) 428–42.
EI, XXIX (1919) 440. The notion that an inconvertible currency could be regulated by an index number of prices can be found in earlier writers -see ACB, p. 191. In 1911 Fisher made an explicit proposal to link such a ‘tabular standard’ with the Gold Exchange Standard. See I. Fisher, The Purchasing Power of Money (New York: Macmillan, 1911) pp. 332–46. This book is referenced in G&BT.
Hawtrey had extended discussions with Montagu Norman during the preparations for Genoa. See H. Clay, Lord Norman (London: Macmillan, 1957) pp. 137–8;
and R. S. Sayers, The Bank of England, 1891–1944, vol. I (Cambridge: Cambridge University Press, 1976) p. 156.
There was a project for reviving the Genoa Conference plan before the World Economic Conference of 1933 but it died in committee. See R. G. Hawtrey, ‘Light on Montagu Norman’s Policy’, Bankers’ Magazine, CLXXXIII (1957) 505–9, at p. 509.
R. G. Hawtrey, ‘The Return to Gold in 1925’, Bankers’ Magazine, CCVIII (1969) 61–7, at p. 65.
See D. E. Moggridge, British Monetary Policy 1924–1932: The Norman Conquest of $4.86 (Cambridge: Cambridge University Press, 1972) [hereafter cited as BMP], p. 73.
For Hawtrey’s views of the flows of funds involved, see ACB. Other observers reached similar conclusions. See W. H. Wynne, ‘The French Franc, June, 1928-February, 1937’, Journal of Political Economy, XLV (1937) 484–516, at p. 490.
R. G. Hawtrey, Incomes and Money (London: Longmans, 1967) p. 27.
A. R. Conan, The Problem of Sterling (London: Macmillan, 1966) pp. 41–51.
See also R. J. Ball and T. Burns, ‘The Inflationary Mechanism in the UK Economy’, AER, LXVI (1976) 467–84 (at p. 475), who described the 1949 devaluation as excessive. The undervaluation of the pound plays a significant role in their discussion.
Recently T. W. Hutchison, in Keynes v. the ‘Keynesians’ (London: IEA, 1977) pp. 11–15, 27, 62–3, presented compelling evidence to the effect that Keynes would have considered the British economy over-employed in the post-war period.
D. Laidler in ‘Inflation in Britain: A Monetarist Perspective’, AER, LXVI (1976) 485–500, has expressed the view that the basic error was to neglect the control of the money supply while pursuing an unrealistically low unemployment target (p. 485).
J. A. Schumpeter, ‘Science and Ideology’, AER, XXXIX (1949) 345–82, at p. 349.
R. G. Hawtrey, ‘The Need for Faith’, EJ, LVI (1946) 351–65.
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Davis, E.G. (1981). R. G. Hawtrey, 1879–1975. In: O’Brien, D.P., Presley, J.R. (eds) Pioneers of Modern Economics in Britain. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-06912-5_7
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