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The concept of crowding out was a major part of the "Treasury View"  
in Interwar British economic policy debates. A good place for an  
overview of this literature (both journal literature and government  
documents), with references, is in Peter Clarke's _Keynesian  
Revolution in the Making_ (1988). Another good source on the debate  
in Britain on crowding out is in Roger Middleton's _Towards the  
Managed Economy: Keynes, the Treasury and the Fiscal Policy Debate  
of the 1930's_.   
 
One interesting part of the crowding out debates in Britain in this period  
is that during the process of the debates the Treasury added a twist to  
their argument; instead of simply arguing that government borrowing  
would lead to higher interest rates and, hence, to lower private  
investment, they introduced expectations as an additional source of  
crowding out. They argued that large scale government borrowing was  
likely to create uncertainty in the minds of private investors and cause  
them to pull back on their own investment plans. Both Middleton and  
Clarke discuss this phenomenon.   
 
Bradley W. Bateman, Fellow 
National Humanities Center 
 
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