Ralph George Hawtrey (1879-1975)

Patrick Deutscher

Introduction

Ralph Hawtrey published his first work in economics, Good and Bad Trade: An Enquiry into the Causes of Trade Fluctuations, in 1913, and his last, Incomes and Money, in 1967. His contributions to monetary economics and to the analysis of economic fluctuations made him an early leading light of what was to become macroeconomics, particularly in the interwar period up to the publication of Keynes’s General Theory.

After graduating from Cambridge and preparing for civil service entry examinations, Hawtrey entered the service and worked throughout most of his career in the British Treasury. He spent one academic year in Cambridge, Massachusetts, as a visiting professor at Harvard’s economics department. He retired from the Treasury in 1947 after 45 years in the public service to become Price Professor of International Economics at the Royal Institute of International Affairs. He continued to contribute to discussions in economics and economic policy through the subsequent decades into the 1970s.

It may be asked whether Hawtrey should be considered a Cambridge economist. He studied mathematics, rather than economics, at Cambridge. He graduated before the Economics Tripos was established but, unlike Keynes, another mathematics graduate, he had not taken any economics courses before

P. Deutscher (H)

Adjunct Professor, School of Policy Studies, Queen’s University, Canada e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it

R.A. Cord (ed.), The Palgrave Companion to Cambridge Economics,

DOI 10.1057/978-1-137-41233-1_21

being tutored by the economic historian, John Clapham, for his civil service exams. Moreover, he disavowed any influence from Marshall or the Marshallian tradition more broadly on his own analysis. His analysis went back to Bagheot rather than Marshall and drew on the practical wisdom of the City.

Arthur Pigou reviewed Good and Bad Trade in 1913. He discerned an approach to the analysis of money and its workings that was consistent with Marshall’s analysis, an analysis which was, however, limited to an oral tradition. Pigou applauded Hawtrey’s analysis of the value of money, writing that ‘The way of stating the matter which Mr. Hawtrey has adopted is, of course, familiar to pupils of Dr. Marshall; but it has not, so far as I am aware, hitherto found its way into ordinary books’ (Pigou 1913: 580). However, Hawtrey’s conclusion that he had uncovered the source of the cycle in monetary dynamics was, according to Pigou, mistaken. The chain of cause and effect that Hawtrey skilfully traced in a deductive exercise from a monetary shock might look like a business cycle, but it was incorrect to conclude that the source of fluctuations had been discovered in those monetary shocks. As Pigou further noted, ‘Such a point of view is exceedingly superficial’ (ibid.: 582).

Whether or not Hawtrey can properly be considered a Cambridge economist, he was certainly a Cambridge scholar. He was admitted to the Apostles in 1900 and reportedly attended every annual dinner until prevented by illness in 1954. He was devoted to G.E. Moore, corresponded with Bertrand Russell on the foundations of mathematics and maintained a lifelong interest in ethics and moral philosophy. His 1946 Presidential Address to the Royal Economic Society concerned The Need for Faith. Economists needed justified confidence and that required ‘right ends’. Economists needed to proceed from a ‘common ground’ that ‘must in ultimate analysis be a common standard of what is good or bad. Only what is good or bad is important, and important in proportion as it is either good or bad, whether as end or as means’ (Hawtrey 1946a).^[1]

His membership of the Apostles may well have aided Hawtrey’s entry into the Treasury. Lubenow (1998: 163) writes how Apostle recruited Apostle into the Treasury’. Robert Trevelyan writing to his father (both Apostles) compared Hawtrey with Theodore Llewelyn Davies, another Apostle in the

Treasury: ‘Hawtrey is a man quite of Theodore’s type of mind, with less of his power of influencing and directing others no doubt, but with the same fine common sense and intellectual power, and the same good political tradition—being, like Theodore, a Home Ruler as well as a liberal’ (Trevelyan quoted in ibid.: 165).

Hawtrey’s first civil service post in 1903 was with the Admiralty. In 1904, the Treasury was allotted an additional position, and after a round of promotions of incumbents, Hawtrey was brought in from the Admiralty as a Second Class Clerk. While working as an acting First Class Clerk in 1910, he served as Principal Private Secretary to the Chancellor of the Exchequer, Lloyd George. In 1911, ‘he became an established First Class Clerk’ (Black 1977: 367). However, he was seen as a poor administrator, and after his last promotion in 1919, he served as the Director of Financial Enquiries, essentially a one-man operation. In that role he provided advice on economic and financial policy and the implications of global developments for the British economy and public finances. In 1936, Warren Fisher, the Permanent Secretary of the Treasury, told parliament’s Public Accounts Committee that Hawtrey ‘works away on metaphysics and writes learned books’ (Grigg 1948: 81-82), words that would send a chill down the spine of a twenty-first-century civil servant!

Hawtrey’s position in the civil service was not a barrier to writing and publishing an impressive number of books and articles, often on the very topics on which he was providing advice to the government of the day. There is little evidence that his superiors interfered with or gave direction to his work, a forbearance that might not have been forthcoming had his views been at odds with the culture and policy of the British Treasury. He also was able to carry out extensive correspondence with other leading economists on questions of economic theory and policy.

[1] The Economic Problem published in 1926 differed from most of Hawtrey’s other writings and displayedhis deep interest in applying moral philosophy to economics. Aspects of his criticism of the abstractionsof economic theory and the assumption of rational economic behaviour anticipate in some respect therise of behavioural economics. The discussions of the distribution of income and of the ‘false ends’ thatcan lead to harmful spending decisions show that Hawtrey’s economics would clash with the positiveeconomics of Lionel Robbins.