MEMORANDUM

with interesting colleagues, die Kieler as Schumpeter referred to them, Berlin had greater
attraction. 141
In Schumpeter’s last letter to Leontief before he left USA for Japan, he was less
hopeful than Leontief: “I do not believe that there are much chances in the
Konjunkturinstitut. Nor do I think that the research fellowship at the National Bureau of
Economic Research will be easy to conquer as I know of a great many candidates. … Of
course, this would mean leaving Germany for good. Your best chance seems to me to be
Colonel Ayres.” 142 But Schumpeter was wrong on both counts: Colonel Ayres had nothing
to offer, while NBER welcomed Leontief as it would turn out. Schumpeter had heard
nothing from England.
In December 1930 Ragnar Frisch wrote to Schumpeter about the Versuch treatise.
Frisch had been at Yale since the beginning of 1930 and had heard about Leontief’s paper
Charles Roos whose offprint he borrowed and studied thoroughly. Frisch was very critical
of the statistical procedures in Leontief’s treatise: “I hate to be too critical of other people's
work, but it seems to me that Leontief also has been fooling himself.” 143 He continued
with setting out an interesting line of thought inspired by Leontief’s problem but not
addressing it directly:
“I got a little excited ever these, as I see it, misleading methods, so I looked up my
own not yet finished notes on the subject and gave some new thought to the matter.
It seems quite surprising to me that the problem has not yet stated been stated in the
following simple and rather natural form.
Let x 1 ,x 2 ,...x n be a set of economic magnitudes (price, quantities consumed,
produced etc.) for which we have a certain static theory, in the sense that we
postulate for a priori reasons a number of structural relations:
F 1 (x 1 ,...x n ; a 11 , a 12 ...) = 0
F 2 (x 1 ,...x n ; a 21 , a 22 ...) = 0
. . . . .
F n (x 1 ,x 2 ,...x n ; a n1 , a n2 …) = 0
The relation F 1 = 0 may represent a certain demand relation, F 2 = 0 a certain
supply relation, etc. Each of the functions F 1 , F 2 ... contain a number of constant
parameters a ij that characterize the shape of the function. The problem of
determining such a set of parameters for actual data is an interesting example of an
econometric problem.
141 Schumpeter referred to Leontief’s colleagues as «die Kieler» when he asked Leontief what they
were up to.
142 Schumpeter to Leontief, 27 December 1930.
143 Frisch to Schumpeter, 13 Dec. 1930.
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