‘NO-ONE EVER BECAME AN ECONOMIST THROUGH AN uncontrollable impulse,’ Robert Boothby declared at the London School of Economics in 1933. ‘No-one, looking at an economist, ever said: “There but for the grace of God stand I.”’ Keynes began studying economics as a diversion from philosophy, with its thorny investigations of ethics, aesthetics and logic, but had only eight weeks’ training in the subject. He was taught by his father’s early mentor, Alfred Marshall, whom he had known from boyhood, and to whose wife Mary he felt lifelong devotion. Marshall urged that if booms and slumps were to be understood, monetary economics must be treated as a distinct speciality, and convinced him to specialize in money and banking. ‘I find Economics increasingly satisfactory, and I think I am rather good at it,’ Keynes told Lytton Strachey in 1905. ‘I want to manage a railway or organise a Trust or at least swindle the investing public. It is so easy and fascinating to master the principles of these things.’ He never sat an examination in economics: his knowledge came from pondering problems and discussing them as much as from book-learning. During his years at the India Office, his Treatise on Probability rather than economics provided his intellectual avocation. It was to escape from the Whitehall rut, and to recover the liveliness of the King’s clerisy, that he became a lecturer in economics at Cambridge in 1910. The subject was subordinate to the location. The lectures themselves (covering credit, prices, the theory of money, the Stock Exchange, money markets, foreign exchanges and Indian finance) were popular because of their reliance on recent newspaper reports and their downplaying of abstractions.1

The technical intricacies and formidable explications in Keynes’s major economic works – his Tract on Monetary Reform (1923), his Treatise on Money (1930) and his General Theory of Employment, Interest and Money (1936) – affright and beat the endurance of experts as well as of ordinary readers. Even Sir John Clapham, who held the chair of economic history at Cambridge from 1928, who was elected Vice-Provost of King’s in 1933, who edited the Cambridge Economic History of Europe and who was President of the British Academy, never read General Theory because he concluded from talks with Keynes that he would never understand it. Keynes likened the attempt to explain monetary policy to intelligent non-specialists to that of describing the beauty of a painting to the colour-blind or of a sonata to the tone-deaf. This book is not an intellectual history of Keynes as an economist, and does not duplicate the compendious accounts of the development of his theories given by Peter Clarke, Donald Moggridge, Robert Skidelsky and other scholars. Instead, this chapter delineates Keynes’s frame of mind as an economist: his disposition, his reactions to events, his partisan loyalties, his second thoughts and the inducements that he offered as he tried to educate opinion and alter policy. He trained as an economist under Alfred Marshall, broke free from classical economics after Marshall’s death in 1924, proposed policies of ‘Demand Management’ whereby governments would substitute pragmatic short-term adjustments and policy wobbles for the rigid austerities of the classical cycle, and created a mentality which believed that states should intervene to reduce the instabilities, inefficiencies and waste of capitalism without stifling individual desires, interests, efforts and rewards. Keynes is often presented as having wrought a revolution in economic ideas or even as a revolutionary. It is true that he challenged taboos and prohibitions, and made people rethink what was permissible, but he was the antithesis of an insurgent, and his intentions were the reverse of seditious. He did not become an economist by uncontrollable impulse, in Boothby’s phrase, but in response to the opportunities offered to him. Economics was paramount in making his reputation, but it was integrated in all his seven lives.

This chapter, too, explores Keynes’s activities as a great persuader. He taught economics to undergraduates at Cambridge, and ran seminars with research fellows and more senior economists there. He edited the leading English journal in his discipline. He compiled European economic supplements for the Manchester Guardian. He was chairman of companies that published the foremost Liberal weekly magazine of the 1920s and the most influential progressive magazine of the 1930s. He was a profuse contributor to periodicals for most of the inter-war period. His Cambridge grounding made him impatient of the false fronts shown by many party politicians: ‘As for Milner and Lyttelton,’ he said in 1906 of two political hard-men, one Liberal and the other Conservative, ‘they are merely effete, & I can hardly believe that any human being can be taken in by them.’ Yet, despite his boredom with the ding-dong tussling of partisanship, Keynes was strenuous in both platform speeches and backroom work for the Liberal party until 1929. Prime Ministers and Chancellors of the Exchequer solicited his opinions, and took his advice – even when he was thought unsound in many quarters. He testified to government committees and Royal Commissions. He served on them, too. The fecundity of his second thoughts was such that an admirer joked in 1931, ‘where six economists are joined together there are seven opinions, two of them Keynes’s’. He was an inveterate diner-out, who developed extensive contacts at high altitudes of finance and government. In sum, he was a public man, who achieved influence and renown by his originality, by his eloquence and also by his social vitality.2

Virginia Woolf noted a talk with Keynes in 1919 after his resignation from the Treasury, but before his return to university life. He was disillusioned, and no longer trusted in the survival of his echelons. ‘Eton is doomed; the governing classes, perhaps Cambridge too,’ in Woolf’s précis of his remarks. ‘These conclusions were forced on him by the dismal degrading spectacle of the Peace Congress, where men played shamelessly, not for Europe, or even England, but for their own return to Parliament at the next election. They were not wholly vicious; they had spasms of well meaning; but a fate seemed to possess the business from the first, driving it all in the most fatal direction & soon no one had the strength to resist.’ After his crisis in Paris, Keynes’s economic thinking had these ends: to shore up the governing order, to preserve King’s, Eton and all they represented, to repair the misfiring industrial economies, and thus to limit social instability. ‘He detested the inefficiency of unregulated capitalism only less than he dreaded the waste and suffering of a proletarian revolution,’ wrote Kingsley Martin, who edited the New Statesman when Keynes was chairman of its publishing company: ‘he therefore made it his life’s work to save capitalism by altering its nature.’ King’s and Eton were paramount in the explanatory narrative that he devised for his life. The images with which he imagined his past, ordered his present and planned his future came from them.³

It was impossible for Keynes, though he desired social justice, to be a socialist. ‘The class war will find me on the side of the educated bourgeoisie,’ he told the Liberal Summer School at Cambridge in 1925. In the Labour party, ‘too much will always be decided by those who do not know at all what they are talking about’ – and who were complacent about their ignorance. ‘The Labour Party will always be flanked by the Party of Catastrophe – Jacobins, Communists, Bolshevists … This is the party which hates or despises existing institutions and believes that great good will result merely from overthrowing them – or at least to overthrow them is the necessary preliminary to any great good.’ Three Guineas (1938) was the book of Virginia Woolf’s that Keynes liked least. He dismissed as silly its thesis that war could be averted by empowering women; and he was angered by its illustrations intended to depict the absurd pomposity of men. Apart from a jolly, bemedalled general in a plumed bearskin hat, Woolf chose photographs showing ceremonial processions: heralds in their tabards, Stanley Baldwin sumptuously garbed as Chancellor of Cambridge University, gaunt Archbishop Cosmo Lang in episcopal robes, chubby Lord Chief Justice Hewart processing out of a judges’ service. Keynes had shed the Edwardian radicalism and Apostolic fervour that thirty years earlier had made him wish for the abolition of the House of Lords. In middle age he resented Woolf’s derision of institutions that, regardless of individuals, merited respect because they represented centuries of English history and the acme of a certain culture.4

Keynes, who disliked egalitarian notions as much as he did envy, had no ethical dispute with capitalism. His objection was to capitalists who were too muddle-headed to distinguish new measures for safeguarding capitalism from Bolshevism. His criticisms of obsolete or wishful thinking made him unpopular. ‘I am now told by a good many friends that I have become a sort of disreputable figure in some quarters because I do not agree with the maxims of City pundits,’ he told a banker friend in 1924. ‘I ought not to be so considered really! I seek to improve the machinery of Society, not to overturn it.’ Truisms bored him, and conceptual imprecision annoyed him. Experiment and reason, tempered by intuition, were to him preferable to stolid plodding in the well-trodden paths of experience. ‘The City editors, all bloody and blindfolded, still piteously bow down’ before the false gods of the free market, he complained a year later. He never doubted that good ideas would ultimately prove stronger than vested interests; believed, too, that good ideas never start stampedes, and that the pace of a society’s economic transformation should not be forced. Gaspard Farrer, a banking partner in Baring Brothers, felt ‘dazzled by the brilliance and lucidity’ of Keynes’s writing, he said in 1925. ‘The more I see of him, the more I am impressed by his ability and intellect, but as to his wisdom and judgment, well, that is another matter.’ It did no good to hurry such men.5

Keynes had the greatness to say that economics is a matter of time and temper. A generation is usually reckoned as spanning a quarter of a century, but he saw that half that time turned a school-child into an adult with attitudes, choices and responses that could not be foretold. It took only a dozen years for new states of mind to arouse new quandaries, expectations and pressures of which political leaders must take account. He was an economist who thought more of generations than of immutable rules. ‘What very odd, and sometimes terrible, things are strict principles!’ he exclaimed. ‘Why can an age only be great if it believes, or at least is bred up in believing, what is preposterous?’ Keynes used the past to think ahead. His sense of history, of the crippling inhibitions laid by the previous generation’s strict principles on free thinking about current needs and future prospects, is basic to his schemes of economic management. He was the first economist to stress how fast change came in the twentieth century. Hence the adaptive improvisation of his schemes, and the flexibility with which he used his historical sense to settle current and future tactics.⁶

Like many people Keynes cherished an imaginary past that was central to his ideas, reactions and behaviour. Recalling the pleasures of the past renewed them. ‘The high comedy, the charm and security of the Edwardian age’, as he remembered them, Eton and Cambridge before the deluge, framed his thoughts. He was the most nostalgic of modernizers. ‘The Edwardian age is near enough for us quickly … to be reminded of what it was like,’ he said in 1936. ‘We need only … a few old photographs to bring back the taste of the biscuits we ate, and the inner feeling in the whole body of what it was like to be alive in the reign of King Edward and Queen Alexandra.’7

Generations diverged in their self-appraisals and reputations, in their exercise of power and in their expectations of prosperity, Keynes wrote in 1934. Victorian financiers and industrialists ‘were tremendous boys at the height of their glory; and in due course they became tremendous old boys, with vision dimmed but tenacity and will-power untamed’. Successor generations seemed stunted saplings when compared with the old oaks. ‘The capitalist has lost the source of his inner strength – his self-assurance, his self-confidence, his untameable will, his belief in his own beauty and unquestionable value to society.’ Since the death of King Edward they had all gone to oblivion: ‘the private bankers, the ship-owning families, the merchant princes, the world-embracing contractors, the self-made barons of Birmingham, Manchester, Liverpool, and Glasgow – where are they now?’ They had vanished, and instead ‘their office-boys (on salaries) rule in their mausoleums’. The rift between management and ownership made a great difference, Keynes understood. By the 1920s industrial combines were owned by numerous small shareholders, with holdings on average of £300 or £400, but run by salaried managers who risked little of their own money in their enterprises. ‘These small investors who own these businesses have no power whatever of controlling them and no knowledge whatever of their real position. How remote that is from the old … owners staking their fortunes on their judgements, and the most judicious surviving.’⁸

‘The spirit of the age is not optimistic as it used to be,’ Keynes said in a speech to the London Liberal Candidates Association in 1927. Disappointment was the Zeitgeist. ‘We used to think that private ambition and compound interest would between them carry us to paradise. Our material conditions seemed to be steadily on the up-grade.’ The Victorians and Edwardian gave thanks for a system promising a continuing crescendo of successes. But as the post-war system faltered and lurched, the neo-Georgians lost, said Keynes, ‘sufficient confidence in the future to be satisfied with the present’.9

The state was mired in borrowings. The national debt rose from £650 million in 1914 to £7,832 in the financial year 1919–20. It cost £277 million to service the national debt in 1930 compared with £16 million in 1911. In 1914 Britain had been the world’s largest trading economy, the world’s third largest manufacturing economy, and the largest supplier of world investment and credit. After 1918, British trade did not regain its pre-war levels; British investors preferred opportunities within the British Empire, and skirted those elsewhere; increasingly money from Wall Street spurred the world’s economic growth; domestic consumption mattered more to British economic growth, and exports counted for less. American, German and Japanese competition trounced some British producers. There was recession in 1920–1, stagnation in 1922–6 and boom in 1927–9. Cotton-mills, shipyards, iron foundries, steel-works and coal-mines went into decline, which sent unemployment soaring in northern regions. Products such as motor-cars and radiograms satisfied new consumer demands. Woollen and cotton clothes lost sales to those made from viscose or acetate.

With the onset of the Slump, trade in the United Kingdom was halved between 1929 and 1932, while output by heavy manufacturing fell by one-third. Registered unemployment peaked at 3.2 million in 1932, with millions more working short-time. The Slump drove the emergency coalition government to adopt in 1932 the Imperial Preference scheme, which guaranteed British markets to Empire producers of food and raw materials, and guaranteed export markets to Britain. Britain suffered less than other industrial economies at this time: the rise in living standards continued for those with jobs. After 1932, the economy revived slowly. House-building and rearmament generated prosperity, reduced regional unemployment, and raided the national debt. All this wastage, distress and instability provided the context for Keynes’s activities as public man and innovating economist.

Group discussions were Keynes’s preferred means of thinking and teaching: tutorial sessions with individual pupils dissipated his time. In 1909 he started a Cambridge economics discussion group called the Political Economy Club. It reflected the design of the Apostles and other college discussion societies: even the impecunious new college Selwyn had its Logarithms Society. Membership was by Keynes’s invitation, and was limited to male economics undergraduates. The club met on Monday evenings in term-time in his rooms in King’s. A paper was read; all those present would comment in an order determined by drawing lots; a masterly summary by Keynes would close the discussion. Some of the undergraduates who joined the Political Economy Club became future collaborators: Hubert Henderson (appointed a lecturer in economics at Cambridge in 1919), Dennis Robertson (elected to a fellowship at Trinity in 1914), Dominick Spring Rice (pre-war assistant City editor of the Morning Post, and a writer on finance and unemployment insurance), and Dudley Ward (pre-war assistant editor of the Economist, who went to the Treasury as a temporary official in 1914 and accompanied Keynes to Paris in 1919). Later recruits included the philosophers Richard Braithwaite and Frank Ramsey (who were both elected with Keynes’s support as Fellows of King’s in 1924), and the economist Austin Robinson. The Keynes Club, as it was called from the 1920s, continued until its founder’s illness in 1937 kept him from King’s for eighteen months.

The manuscripts submitted for publication in the Economic Journal, of which Keynes was a sedulous editor from 1911, set him thinking in diverse directions. His prompt responses to potential contributors, with his considered endorsements and criticisms, honed his mind. Editorial work on other people’s sometimes diffuse efforts emphasized the importance of stripping arguments of non-essentials and irrelevancies, and leaving no loopholes for doubt. He learnt from his reactions as he worked: he sharpened his powers of persuasion, too, as he talked with other men of acumen.

Perhaps at the prompting of Edwin Montagu, Keynes joined the Eighty Club. This was an organization for Liberal supporters which, unlike the National Liberal Club, had associate women members and cultivated links with universities. Together with the Apostle and King’s economist Gerald Shove, he enlisted in a fact-finding and speechifying tour made in Ireland by the Eighty Club in 1911, but defected from the group and explored Ireland alone for some days. ‘A point came when I could support crowd life no longer and when I felt as if I should go mad if I heard another speech,’ he explained to Duncan Grant. ‘You haven’t, I suppose, ever mixed with politicians at close quarters. They’re awful … dregs.’ Among the Eighty, in Ireland, he discovered, ‘what previously I didn’t believe possible, that politicians behave in private life and say exactly the same things as they do in public. Their stupidity is inhuman.’ Just as five years earlier Keynes had deplored the false fronts of Milner and Lyttelton, so again he found the emotional inauthenticity of political operators intolerable, because it suppressed all that made humanity original or interesting. A journalist from the Morning Post and ‘a charming old peer called Lord Saye and Sele’ were the most frank and unaffected of his fellow travellers. ‘There were one or two others, whose characters were not particularly sympathetic to me, but were really all right. The rest of them had minds and opinions as deplorable as their characters.’ Keynes excepted from his condemnation ‘a young Jewish barrister, who seemed such a cad that I spent most of my time cutting him, [yet who] confided … on the last evening that he thought buggery and bestiality ought to be permitted, due regard being had to the prevention of cruelty to children and animals’. Keynes also found an affinity with Mrs Max Muspratt, wife of Liverpool’s leading alkali manufacturer, ‘a middle aged lady with the character of a barmaid, whom I found very sympathetic and who thoroughly agreed with me over the rest of the company’.10

In 1912 Keynes was elected to the Political Economy Club, a London discussion-group cum dining-club for economists with a fine lineage dating back to 1821 (not to be confused with the Cambridge discussion group of the same name informally known as the Keynes Club). It was uncontaminated by partisanship or bores talking in public voices. For some years he journeyed to London for its Wednesday-evening dinners, and handled Economic Journal matters on Thursdays. Keynes learnt most when he was striving to prevail in argument by cool, relentless reason.

Most important of all to Keynes was the Tuesday Club, which he helped the stockbroker Oswald (‘Foxy’) Falk to start in 1917. The Tuesday was a dining-club of officials, City men and financial journalists which met to discuss monetary economics and business in a private room at the Café Royal once a month. Keynes became the most eloquent of the Tuesday Club men. He exerted his arts on fellow diners including Reginald McKenna of the Midland Bank, Sir Charles Addis of the Hongkong & Shanghai Bank, ‘Bob’ Brand of Lazards and the financier Sir Henry Strakosch. The Treasury knights included Sir George Barstow, Sir Basil Blackett, Sir Otto Niemeyer, Sir Richard Hopkins and Sir Frederick Leith-Ross. The Inland Revenue was represented by its chairman, Sir John Anderson, later a Cabinet minister, and by the statistician Josiah Stamp, who collected industrial and railway directorships after 1919 and joined the Court of the Bank of England in 1928. Other Tuesday attenders included the Keynes Club regulars Dennis Robertson and Dudley Ward. The Tuesday Club’s purpose was ‘to educate the Civil Servants about the needs of practical finance and to give the City men some off-the-record tips about Government policy’, said Leith-Ross, who found dinner discussions too taxing after a long day at the Treasury and ceased attendance.11

A second dining-club provided crucial linkages for his inter-war life as a Public Man. In 1927 Keynes was elected to the Other Club, which since 1911 had dined at the Savoy Hotel on alternate Thursdays when parliament was in session. Winston Churchill was the genius loci who dominated the Other. Smuts, the South African statesman whom Keynes had trusted during the Paris peace conference, was a member. So too were two devout Apostles, Eddie Marsh and Desmond MacCarthy; Robert Vansittart of the Foreign Office; Liberal politicians, including Lloyd George and Lord Reading; Churchill protégés, including Robert Boothby and Frederick Lindemann; Conservative frontbenchers, including Sir Arthur Steel-Maitland; the painters Sir John Lavery, Sir Alfred Munnings and Sir William Orpen; the architect Sir Edwin Lutyens; authors as varied as Arnold Bennett, P. G. Wodehouse and H. G. Wells; Rothschilds, newspaper tycoons and trade union leaders. Sir Oswald Mosley, the photogenic Labour minister charged with reducing unemployment, was proposed for membership by Churchill in 1930 (two years before his egotistical rowdiness veered into fascism). ‘Very agreeable and rather brilliant’, was Arnold Bennett’s view of Keynes as a dinner companion at the Other Club, although the economist’s murmured propaganda there failed to convert the novelist to tariff protection as a means of improving employment levels. It is notable that Steel-Maitland was the foremost advocate in Baldwin’s Cabinet in 1928–9 of road-building and public-works programmes to revive business confidence, to create jobs and thus to resist socialism: perhaps Keynes murmured to him at the Other Club more effectively.12

In the biographical essay that he wrote after Marshall’s death, Keynes presented economics as ‘a very easy subject compared with the higher branches of philosophy and pure science’. Why then, he asked, if it did not require specialist abilities of an exacting kind, did so few economists excel? The explanation, he suggested, was that:

the master-economist must possess a rare combination of gifts. He must reach a high standard in several different directions and must combine talents not often found together. He must be mathematician, historian, statesman, philosopher – in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought. He must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician.

These were Keynes’s own aspirations. There were introspective analogies, too, when later he wrote of Isaac Newton.¹³

In 1936 the family of Lord Portsmouth, descended from Isaac Newton’s niece and coping with the heir’s expensive divorce and remarriage, sent for auction the contents of Newton’s wooden chest, which had been packed when he left Cambridge in 1696. Keynes attended the sale at Sotheby’s, bought about forty lots, and added to his cache by purchases from other successful bidders. He also bought Newton’s death-mask. During months of convalescence in 1937–8, he studied Newton’s manuscripts. He found that while Newton was writing the Principia and laying the foundations of modern science, he was giving equal time and mental powers to medieval hocus-pocus, astrology, alchemy, chronological prophecy based on the measurements of Babylonian buildings, transmutation, the philosopher’s stone and the elixir of life. His delving into Newton’s papers led him to deliver a thrilling talk to the Royal Society in 1942 from which one extract can be quoted: ‘He was the last of the magicians, the last of the Babylonians and Sumerians, the last great mind which looked out on the visible and intellectual world with the same eyes as those who began to build our intellectual inheritance rather less than 10,000 years ago. Isaac Newton, a posthumous child born with no father on Christmas Day, 1642, was the last wonder-child to whom the Magi could do sincere and appropriate homage.’ This pioneer of the Enlightenment was sunk in occult and esoteric ideas, said Keynes, and thus simultaneously the first of the scientists and the last of the magicians.14

There is an element of self-description in this summary. Keynes, who became the first proponent of the managed economy and is sometimes hailed as a revolutionary influence, adhered to Marshall’s classical economics until middle age. As a young lecturer, he upheld the quantity theory of money. This stated that the price level was determined by the quantity of money: that is, the greater the supply of money, the lower its value; as the quantity of money circulating in the economy rose, so would prices. A currency would thus be devalued if its supply was increased. This view precluded the possibility that increases or decreases in the quantity of money could stimulate or depress the demand for goods and services, and thus raise or lower production and employment. Keynes’s Tract on Monetary Reform, published in 1923, was described by his coadjutor Richard Kahn as ‘curiously conventional for a genius aged 40’. In it he shifted from classical orthodoxy by denying the short-term efficacy of the quantity theory of money, while accepting its truth ‘in the long run in which we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.’15

Marshall’s death in 1924 loosened Keynes’s loyalties to the old seer: he began to prepare for a Newtonian shift from his intellectual inheritance. ‘Half the copybook wisdom of our statesmen is based on assumptions which were at one time true, or partly true, but are now less and less true by the day,’ he told fellow Liberals in 1925. ‘We have to invent new wisdom for a new age. And in the meantime we must, if we are to do any good, appear unorthodox, troublesome, dangerous, disobedient to them that begat us.’ Although economic undergraduates knew that Thomas Carlyle called their subject ‘the dismal science’, few had the extra information that the Enlightenment economist Anne-Robert Turgot called political economy la science du bonheur public. The science of public happiness was how Keynes saw his work as an economist – which he undertook with the assumptions of an Apostle.¹⁶

Keynes indicted the utilitarian philosopher Jeremy Bentham as ‘the origin of evil’ for measuring human happiness by materialist criteria. He praised his Cambridge contemporaries who followed George Moore as ‘amongst the first of our generation, perhaps alone amongst our generation, to escape from the Benthamite tradition’. He regarded that tradition ‘as the worm which has been gnawing at the insides of modern civilisation and is responsible for its present moral decay. We used to regard the Christians as the enemy, because they appeared as the representatives of tradition, convention and hocus-pocus. In truth, it was the Benthamite calculus, based on an over-valuation of the economic criterion, which was destroying the quality of the popular Ideal.’ The rejection of Bentham by his generation of Apostles protected them (as well as the Bloomsbury group) ‘from the final reductio ad absurdum of Benthamism known as Marxism’.17

In pursuing the science of public happiness, Keynes scorned the nineteenth-century insistence on testing by its profitability the advisability of any course of action sponsored by private initiative or by collective action. ‘The whole conduct of life was made into a sort of parody of an accountant’s nightmare,’ Keynes wrote in 1933. ‘Instead of using their vastly increased material and technical resources to build a wonder-city, they built slums; and they thought it right and advisable to build slums because slums, on the test of private enterprise, “paid”, whereas the wonder-city would, they thought, have been an act of foolish extravagance, which would, in the imbecile idiom of the financial fashion, have “mortgaged the future”; though how the construction to-day of great and glorious works can impoverish the future, no man can see until his mind is beset by false analogies from an irrelevant accountancy.’ From about 1924 he urged, at first in vain, but with increasing success, that the nation would be enriched if unemployed men and machines were used in house-building and public-works programmes. He combated those ‘bogus calculations’ which led to the sanctimonious prudence of people who prefer hovels to palaces.¹⁸

Once, at the Apostles, when there was a joking discussion about the phrase ‘have your cake and eat it’, McTaggart said gravely, ‘With a proper cake the more you eat the bigger it gets.’ His pleasantry was adapted by Keynes to depict Victorian middle-class rentiers. In all their gradations ‘the new rich of the nineteenth century’, whether merchants, shopkeepers, factory-owners, office-workers, preferred the power which investment gave them to the pleasures of large expenditure. In his family, both his grandfather the nurseryman, and his father the university administrator, opted beyond a certain stage to save rather than spend. ‘The Capitalist System’, Keynes explained,

depended for its growth on a double bluff or deception. On the one hand the labouring classes accepted from ignorance or powerlessness, or were compelled, persuaded or cajoled by custom, convention, authority and the well-established order of Society into accepting, a situation in which they could call their own very little of the cake, that they and Nature and the capitalists were co-operating to produce. And on the other hand the capitalist classes were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion.19

Keynes’s observation about portions of cake dated from 1919. After the onset of the Slump ten years later, he became the most audible voice attributing national woes to the fact that people were withholding from consumption – not spending their money – a larger part of income than was being invested in constructive enterprises. This idea derived from the social theorist J. A. Hobson’s collaboration in writing The Physiology of Industry (1889) with the Dover tanner Albert Mummery. Hobson and Mummery rejected the classical doctrine, known as Say’s law, that money that is not spent on consumer goods is invested, for it would be irrational to hoard money – that is, to hold idle balances from which no income accrued. The flow of savings and the flow of investment – the supply of and the demand for loanable funds – are brought into balance by changes in interest rates. Mummery and Hobson however indicted the rich for ‘over-saving’, which produced ‘under-consumption’ of capital goods, production gluts, trade depression, and unemployment. The solution of these recurrent crises of capitalism lay either in encouraging the prosperous to consume more or in developing new forms of national expenditure.

Similar thinking had been instilled by the merchant and industrialist Lord Cable, with whom Keynes spent a week in Devon in 1913 talking economics. Cable was preoccupied by the gulf between savings and investment in India. In the Edwardian period he estimated that £11 million was hoarded yearly, which represented ‘an enormous amount of wealth lying fallow’. There was a pressing need, said Cable, to induce ‘the shy Indian capitalist to bring out his rupees’, instead of secreting his gold and silver: ‘our railways are being starved for want of capital, and industrial enterprise is being hampered’.20

In 1923–4 Keynes led a syndicate that bought control of the Liberal weekly magazine Nation. He became chairman of the publishing company, and installed as editor his former pupil Hubert Henderson, who had just published a monograph entitled Supply and Demand which challenged the influence of price on the total supply of factors of production. Virginia Woolf, meeting Henderson in 1923, found him ‘a small, testy, unheroic man, vaguely on the look-out for offence, & suspecting I think our superior vitality, & longing for a compliment, which being honest for the moment, I could not give him. He ought to have stuck to Cambridge.’ Perhaps it is not surprising that Henderson detested the Bloomsbury group. At Virginia Woolf’s prompting, Keynes offered the literary editorship of the Nation to T. S. Eliot, fresh from writing The Waste Land and in the thrall of marital distress: Eliot havered before declining the offer in a neurotic letter. Instead, Leonard Woolf served as literary editor from 1923 until 1930.²¹

‘Hubert is nervous of anything that might disturb him at all out of his fixed comfortable habits,’ Keynes believed; but Henderson made bold editorial forays. Under Keynes’s supervision and his editorship, the Nation supported the repeal of the McKenna duties on imported motor-cars in 1924, opposed the return to the gold standard in 1925, highlighted in 1926 the prosperity of the expanding industries of south-east England and the depressed northern manufacturing sectors, receded from laissez-faire Liberalism after 1927, and (reflecting the evolution of Keynes’s views) in 1930 editorialized against the free traders’ wish to rescind the reimposed McKenna duties.22

In two contributions to the Nation published in 1924, Keynes first advanced his notion of a programme of public works to reduce unemployment (which then stood at 770,000 men: women were discounted) and to avert wage reductions. Both articles were responses to a previous piece by Lloyd George about poor productivity. ‘There is no place or time here for laissez-faire,’ Keynes told his Liberal readers. ‘We have stuck in a rut. We need an impulse, a jolt, an acceleration.’ The country needed to give primacy ‘to the principle that prosperity is cumulative’. Chancellors of the Exchequer should devote their sinking-fund and surplus resources to replacing unproductive debt by productive debt rather than to redeeming old debt and thus driving national savings to find a foreign outlet. Keynes enjoined the Treasury to promote expenditure up to £100,000,000 a year by capital works that enlisted ‘the aid of private genius, temperament and skill’. He instanced the scheme of Lord Montagu of Beaulieu to build a motorway from London to Liverpool, passing near Birmingham, with the promoters providing one-third of costs, and the Ministry of Transport and local authorities the rest.²³

Keynes in 1924 called for state intervention and abandoned laissez-faire, ‘not from contempt of that good old doctrine, but because, whether we like it or not, the conditions for its success have disappeared’. The pre-war free-market system had entrusted prosperity ‘to private enterprise unchecked and unaided’; but circumstances were irretrievably changed by the manufacturing mobilization and state controls that had entangled businesses with government in 1914–18. Private enterprise remained under regulation in many ways. ‘There is no going back on this,’ said Keynes in 1924, ‘and if private enterprise is not unchecked, we cannot leave it unaided.’ He challenged Labour and Conservatives leaders as well as Liberals: ‘A drastic reduction of wages in certain industries, and a successful stand-up fight with the more powerful trade unions, might reduce unemployment in the long-run. If any party stands for this solution, let them say so.’24

What was Keynes’s position in the 1920s as a renegade Treasury official dispensing provocative advice? ‘The present age has no great faith in anything; but it still tries hard to believe in experts,’ wrote F. L. (‘Peter’) Lucas, a literary critic and Fellow of King’s, who revived the dormant Apostles after 1918, dedicated his superb scholarly edition of the plays of John Webster to Keynes, and based one of the characters in his novel The River Flows (1926) on his cherished friend. ‘Not even the War, nor histories of the War, can quite cure it of that. And certainly the world grows in complexity so fast that we lie increasingly at their mercy.’ The traditional governing classes – both political and official – had been convinced by their wartime experiences of their need of outsider technicians to help in managing public life. Business leaders, engineers, accountants, lawyers, financial experts, civil contractors, shipowners, educationalists were recruited to ministries, to advisory boards, to official inquiries, to supervisory committees. It was less than forty years since the Crown had interdicted anyone serving on a company board of directors from receiving a peerage; but by 1920 many pages of Burke’s Peerage, the Directory of Directors and the Stock Exchange Gazette overlapped.²⁵

Despite official displeasure, and Lloyd George’s wrath, at publication of Economic Consequences, Keynes was at Edwin Montagu’s behest appointed in 1921 to serve on the Royal Commission on Indian Tariffs. In fact, he resigned from the Commission after only six months, almost certainly in order to avoid a long absence in India early in his exciting love affair with his future wife Lydia Lopokova, although officially he pleaded that he must concentrate on editing a series of Manchester Guardian supplements on European finance and reconstruction. Keynes devilled hard at producing these supplements, forsaking Cambridge except at weekends, and recruiting a formidable range of contributors. The Germans, for example, included his friend Melchior, Hjalmar Schacht (President of the Reichsbank), Wilhelm Cuno (Chancellor of Germany in 1922–3), Rudolf Hilferding (then Minister of Finance, destined to die under Gestapo torture) and Walter Rathenau, the electrical manufacturing millionaire and Foreign Minister, who was assassinated before he could deliver his copy. English contributors included friends and ex-pupils (Falk, Lowes Dickinson, Dennis Robertson, Russell-Cooke, Dudley Ward); Blackett of the Treasury; and public men such as Asquith, Robert Cecil, Ramsay MacDonald, Philip Snowden and Sidney Webb.

In 1923 Bonar Law, recently installed as Conservative Prime Minister, consulted Keynes (who had worked for him in the wartime Treasury) about the Anglo-American debt settlement negotiated in Washington by his Chancellor of the Exchequer, Baldwin. ‘I hope’, replied Keynes, ‘we refuse the American offer, in order to give them time to discover that they are at our mercy, as we are at France’s, France at Germany’s. It is the debtor who has the last word in these cases.’ On 30 January, under Keynes’s influence, Law told his Cabinet, which supported Baldwin’s settlement almost uniformly, or thought it was too late to repudiate it, that he would rather resign as Prime Minister than agree. There was a day’s Cabinet crisis before Law conceded to imploring colleagues that he would withdraw his resignation; but he was so convinced by Keynes of the misjudgement of the American debt agreement that he pacified his conscience by writing an anonymous attack on his own government’s policies for publication in The Times. Law’s receptivity to outside thinking stood in contrast to his successor as Prime Minister, Baldwin, who, although responsive to the electorate’s moods, was immune to ideas and averse to complexity. Lloyd George said: ‘When a thing gets difficult, Baldwin’s attention flags in three minutes.’26

Ingrained anti-intellectualism was an obstacle to Keynes. ‘You seem to sneer at the Economist for trying to consider these questions strictly on their merits and with the scientific object of discovering which solution will most promote the prosperity of the world,’ he protested to his fellow Tuesday Clubber Sir Charles Addis, who had disparaged professional economists in his presidential address to the Institute of Bankers in 1921. ‘You prefer instead “the opposing interests, changing purposes, unruly affections and defective wills of ordinary men”. That is to say, you set up as criterion, not the general advantage, but the conglomeration of self-interest, ignorance, passion and general stupidity, which will in fact prevent a scientific solution from being adopted. And not only so, but you suggest that you are being much more high-minded in doing so.’²⁷

Legislation of 1919 kept the gold standard in suspension until 1 January 1926. Addis’s recommendation in 1924 that Britain should commit forthwith to restore the gold standard by January 1926 drew another friendly rebuke. ‘The proposals you outline do terrify me very considerably,’ Keynes told him. Their subordination of the interests of industry to those of international finance was politically and socially fraught. Everything seemed set for better times if Britain kept off the gold standard. To risk misfortunes ‘merely for the sake of linking up the London and New York money markets, and so facilitating the work of international financiers – for this in my judgment is all it comes to – is going to lay the City and the Bank of England open to popular attacks the violence of which might be very great’. He accepted that London’s profits from international finance were valuable, but was ‘not at all sure that we do not make more money out of the Americans and others in fluctuating conditions than in stable conditions, since they are generally wrong and we are generally right as to the prospective course of events’. It alarmed Keynes to see men ‘in authority attacking the problems of the changed post-war world with … unmodified pre-war views’, he told Addis. ‘To close the mind to the idea of revolutionary improvements in our control of money and credit is to sow the seeds of the downfall of individualistic capitalism.’ He expected that ‘enormous changes will come in the next twenty years, and they will be bad changes, unwisely and even disastrously carried out, if those of us who are aiming at the stability of society cannot agree in putting forward safe and sound reforms’.28

In April 1925 Keynes, McKenna and three Treasury officials of unrepentant pre-war outlook, Bradbury, Niemeyer and P. J. Grigg, were invited to a ‘Brains Trust’ dinner by Churchill, the Chancellor of the Exchequer, to discuss the restoration of the gold standard. Keynes and McKenna counselled that sterling would be overvalued by 10 per cent if the pre-war parity was restored. They reiterated that the restoration of the gold standard would subordinate the interests of export industries to those of bankers concerned to preserve London’s position as a centre of international banking and exchange. They predicted rises in the prices at which British exports sold abroad, followed by increased unemployment and conflict with trade unions when employers cut wages in order to bolster profits. Bradbury’s counter-arguments stressed that the gold standard was ‘knave-proof’, Grigg recalled. ‘It could not be rigged for political or even more unworthy reasons. It would prevent our living in a fool’s paradise of false prosperity, and would ensure our keeping on a competitive basis in our export business.’ The symposium lasted until after midnight. Later that month Churchill made a sacrifice in homage to the Bradbury generation’s shibboleths by announcing the gold standard’s restoration for international dealings, although no gold currency was put into domestic circulation.29

As Keynes insisted in articles that The Times rejected but Lord Beaverbrook’s Evening Standard published, the restored gold standard meant that bank rate would rise, industrial investment would become costlier, the country would grow less competitive in world markets (especially against the United States) and unemployment would therefore increase. In order to prevent workers in export industries (and in the docks) from bearing the brunt of this, Keynes suggested a 5 per cent levy on all wages together with a shilling increase in income tax. These articles were republished by Leonard and Virginia Woolf at their Hogarth Press as The Economic Consequences of Mr Churchill. When in a BBC radio dialogue Keynes again denounced the terms of Britain’s return to the gold standard, Josiah Stamp (the Tuesday Clubber with whom he was broadcasting) retorted: ‘Hush, Maynard; I cannot bear it. Remember I am a Director of the Bank of England.’ There were many other men in authority who wanted to cry ‘Hush, Maynard’ when he voiced discomfiting truths.³⁰

‘At present,’ Keynes said in 1926, ‘everything is politics, and nothing policies.’ What political affinities influenced his developing ideas in pursuit of the science of public happiness? He abominated the communist temper. He first visited Russia in 1925 (accompanied by his St Petersburg-born wife) as the University of Cambridge representative at the bicentenary celebrations of the Academy of Sciences in Leningrad. This was at the height of the Politburo power struggle that followed Lenin’s death. ‘Red Russia holds too much which is detestable,’ he reported. ‘I am not ready for a creed which does not care how much it destroys the liberty and security of daily life, which uses deliberately the weapons of persecution, destruction and international strife. How can I admire a policy which finds a characteristic expression in spending millions to suborn spies in every family and group at home, and to stir up trouble abroad?’ He was dismayed by the sovereign power of an ideology that seemed to him merely stupid. ‘How can I accept a doctrine which sets up as its bible, above and beyond criticism, an obsolete economic textbook which I know to be not only scientifically erroneous but without interest or application in the modern world?’ He loathed Soviet Russia’s destruction of individual initiative, educational excellence and personal distinction. ‘How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above the bourgeois and the intelligentsia who, with whatever faults, are the quality in life and surely carry the seeds of all human advancement? Even if we need a religion, how can we find it in the turbid rubbish of the Red bookshops?’ Everything in Soviet orthodoxy was a violent affront to the ideals that inspired Keynes.31

In 1928 the two Keyneses revisited Russia. ‘We enjoyed the ballet and the opera … but came back very depressed about the Bolshies,’ Keynes reported to Ottoline Morrell. ‘It is impossible to remember, until one gets in the country, how mad they are.’ The vandalism of the communist economic system, in which doctrinal purity mattered more than making things work, left him aghast. ‘Offered to us as a means of improving the economic situation, it is an insult to our intelligence,’ he wrote in 1934. ‘But offered as a means of making the economic situation worse, that is its subtle, its almost irresistible, attraction.’ He saw communism not as a reaction against the nineteenth-century failure to organize optimal economic output, but as a reaction against agreeable prosperity. ‘It is a protest against the emptiness of economic welfare, an appeal to the ascetic in us all … When Cambridge undergraduates take their inevitable trip to Bolshiedom, are they disillusioned when they find it all dreadfully uncomfortable? Of course not. That is what they are looking for.’ The free-thinking, free-speaking meetings of the Apostles had begun to be marred by young Communist party members parroting party doctrines.* Until then practical politics had been beneath discussion on the hearth-rug. The young communists’ despoliation of a sacred Cambridge totem made Keynes condemn Das Kapital as he did the Koran. ‘I know that many people, not all of whom are idiots, find it a sort of Rock of Ages,’ he said to Bernard Shaw of Marx’s monumental work. Yet its motivating ideas seemed redundant, otiose and barren in the twentieth century. ‘How’, he asked Shaw, ‘could either of these books carry fire and sword round half the world? It beats me.’³²

Socialism, too, seemed an irrational creed for any Apostle of Keynes’s generation. There was no appeal for him in Sidney Webb’s promised nirvana where the population would be bureaucratized and dutiful under governmental controls. ‘You will have some small office no doubt,’ Webb promised (or threatened) Virginia Woolf. ‘My wife & I always say that a Railway Guard is the most enviable of men. He has authority, & is responsible to a government. That should be the state of each one of us.’ Nothing was more alien to Keynes’s outlook. Individual initiative was to him humane: it enriched character, personal fulfilment, the arts, scholarship, benefactions as well as enterprise. Capitalist individualism was an outlet for masculine aggression and a safety-valve on the will to dominate. ‘Dangerous human proclivities can be canalized into comparatively harmless channels by the existence of opportunity for money-making and private wealth, which, if they cannot be satisfied in this way, may find their outlet in cruelty, the reckless pursuit of personal power and authority, and other forms of self-aggrandizement,’ Keynes judged in 1936. ‘It is better that a man should tyrannize over his bank balance than over his fellow-citizens; and while the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative’.33

The Labour party wanted a socialist system. Its supporters had little wish after 1918 to reconstruct the pre-war social and economic order for which Keynes hankered. They accordingly seldom participated in the planning or management of post-war reconstruction. The controlling heights of reform were left to Liberal intellectuals, with Keynes foremost. Labour’s hope that unemployment could be eradicated by socialism in the form of state ownership (nationalization) and high taxation dismayed him by being both ardent and wishy-washy. Labour’s assumption that there would be ample demand for goods, and therefore full employment, once capitalism was superseded by the supposed social justice of socialism seemed to him fuddled. He opposed those who planned to fleece investors of their dividends and to strip them of their comforts. English socialism was not as brutal as Russian communism, but nearly as drab in its attitude to money-making. Keynes’s scorn made him unpopular with Labour doctrinaires. Harold Laski had not a vestige of doubt as to Keynes’s brilliance, he told Oliver Wendell Holmes, ‘but Keynes’s personality seems to me not a national asset. He is sardonic where he might be perceptive and hard where kindness is needed.’³⁴

By upbringing, temperament, conviction and his votes, Keynes was a Liberal. ‘The Liberal Party is the centre of gravity of progressive forces,’ he told its incoming leader, Sir Archibald Sinclair, in 1938. As a member of the House of Lords from 1942, working in the Treasury, he felt compelled to sit with the crossbencher peers; but he identified with the exiguous minority of coroneted Liberals. It might be hard to know what was best to do in either political economy or social policy, he thought; but the progressive and rational traditions of Liberalism provided the best frames of mind in which to manage changes and to persuade people to accept them. Yet Keynes was too questioning and too sharp in his definitions to be a good partisan. Always, as he wrote in 1913, he regretted good public initiatives being ‘smothered in the magnificent and empty maxims of political wisdom’. Sir Eyre Crowe of the Foreign Office said of him in 1919, ‘He has as little aptitude or taste for politics as you or I have for the refinements of economic speculation; but he is a very clever man, and has the talent of the good learner.’35

Traditional diplomacy, as practised by men like Crowe, was mistrusted by Keynes. ‘There are two parties in Europe, two attitudes, two impulses; and it is time that they joined issue,’ he told Manchester Guardian readers in 1922.

The real struggle today, just as in the second quarter of the nineteenth century, is between that view of the world, termed liberalism or radicalism, for which the primary object of government and of foreign policy is peace, freedom of trade and intercourse, and economic wealth, and that other view, militarist or, rather, diplomatic, which thinks in terms of power, prestige, national or personal glory, the imposition of a culture, and hereditary or racial prejudice. To the good English radical the latter is so unreal, so crazy in its combination of futility and evil, that he is often in danger of forgetting, and disbelieving its actual existence.

He spoke here not only for the conscientious objectors of Bloomsbury and Charleston, and for Cambridge internationalists and combination-room idealists, but for professing Christians (Russell in his autobiography said that Keynes had the air of a bishop in a land of unbelievers), for Liberal leaders from the Marquess of Lincolnshire and the Marquess of Crewe down to constituency party volunteers, for the multitude who gave money to the Save the Children Fund to alleviate suffering in Austria, Germany and Soviet Russia – indeed for all the citizens to whose misgivings about the treaty of Versailles he had given voice in 1919. The old diplomacy believed that England had no permanent friends or enemies, only permanent interests, and should use the varying, adjustable balance of power to protect and extend national and imperial interests. The new diplomacy of the United States, against which Keynes struggled as a financial envoy in the 1940s, was to prove similar in its assumptions and tactics. ‘Soldiers and diplomatists’, Keynes reiterated, ‘– they are the permanent, the immortal foe.’36

One must take Keynes at his word. Politicians might be muddleheaded, keen to bamboozle voters and as socially uncongenial as Eighty Club members, but they were not his immortal foes. He worked and planned with them, sometimes at close quarters, for over thirty years. He was not indifferent to politics, but for a quarter of a century, from 1905 onwards, was a committed party worker who went on the stump at election times. Keynes used the Liberals to infiltrate his ideas into political discourse and to inject his reforms into policy-making. He was treated as a party man. In 1928, for example, he published an article in the Evening Standard urging Churchill to increase public spending: ‘When we have unemployed men and unemployed plant and more savings than we are using at home, it is utterly imbecile to say that we cannot afford these things.’ Inside the Treasury Frederick Leith-Ross, Keynes’s fellow Tuesday Clubber, retorted in a memorandum to Churchill: ‘I am sorry to see that Keynes is renewing the Press propaganda which has done him little credit as a politician and considerable harm as an economist.’ A year later, Sir Laming Worthington-Evans (a City solicitor and member of the Baldwin Cabinet whom Keynes had encountered ten years earlier when he was Minister of Blockade), striving to discredit Keynesian economics among Evening Standard readers, took a similar tack: ‘It is difficult to reconcile Mr Keynes the politician with Professor Keynes the economist.’37*

Throughout the 1920s, when the Liberal party was contending with Labour to be the chief opposition to the Conservatives, Keynes performed as a Liberal platform speaker, and was besought to become a parliamentary candidate. In December 1923, for example, he toured north-west England during the general election called by Bonar Law’s inexperienced successor as Prime Minister, Baldwin, to seek a mandate for the Conservatives to impose import tariffs intended to protect British manufacturing and thus to reduce unemployment. Keynes went first to speak at Blackburn for the Liberal candidate, John Duckworth, a cotton manufacturer. Blackburn was a two-member constituency, where the Liberal and Conservative associations each nominated a single candidate in order not to split the anti-socialist vote. Labour advanced two candidates who during the 1920s were always defeated. Keynes’s Blackburn speech targeted Labour’s fiscal plans for a confiscatory levy (which he had advocated four years earlier in Economic Consequences). ‘The poor were already too heavily taxed,’ he was reported as assuring the town’s cotton operatives and middling classes, ‘but there was a point beyond which they could not push the income-tax payer. The high income tax and the capital levy were both evil, but to make a levy for its own sake seemed to him to be absolute madness, and to put it forward as a cure for unemployment was not only madness but insincere.’38

From Blackburn Keynes went to Blackpool to speak on behalf of the Liberal candidate, Colonel Hugh Meyler, DSO, ‘a Britisher who has fought for his country’ in the words of his election literature (he was a solicitor who was to shoot himself in 1929 after sustaining losses on the Stock Exchange). Meyler stood a good chance, because the sitting Conservative MP for Blackpool, a Catholic with an Irish surname, had been ruthlessly deselected, and Admiral Sir Victor Stanley (brother of the Lancashire powerbroker and Protestant leader Lord Derby) foisted on the constituency instead. Big crowds assembled in the Opera House of Blackpool Winter Gardens for the Liberal rally: Meyler and Keynes both ‘delivered capital addresses’, reported the Blackpool Times (although it elided details of the Cambridge man’s rather technical speech). In the event Colonel Meyler beat Admiral Stanley – their prefixes indicate how the political parties and the nation had become psychologically militarized, as Keynes had feared during the battle over wartime conscription – by over 3,000 votes. Finally, Keynes went north to Barrow-in-Furness to speak for the Liberal candidate, Alderman William Wandless, a pharmacist, who opposed both ‘revolutionary Socialism’ and ‘reactionary Protection’, but believed in ‘a middle policy’ of social amelioration. Barrow was the site of the Vickers shipyards, where there was so little work that birds were nesting in the cranes and the men with jobs were met at the shipyard gates by barefoot children calling, ‘Any bread left?’ Keynes spoke with clarity about the surplus capacity for shipbuilding, but Wandless was trounced by a Conservative promising to drum up naval orders.³⁹

‘I did not like so well the atmosphere of last night’s meeting at Blackpool, and I hated the sound of my own ugly voice more than ever,’ Keynes wrote. ‘It was much more enthusiastic than Blackburn but not so serious. The interest of the public is remarkable. I have never seen a theatre so packed (the whole of the stage behind me was full of people as well as the auditorium crammed to the roof, and they stood in queues to get in an hour before the doors were opened).’ Railwaymen who had attended the rally recognized him next morning at Blackpool station. ‘The station-master and the inspector came to the door of my carriage for a chat, and when the train started the porters jumped onto the steps to wish me good luck and to shout that “All our fellows are going to vote right.”’40

Before the next general election, in 1924, Keynes was asked to stand as Liberal parliamentary candidate for the University of Cambridge constituency, and his mother for the town of Cambridge. Both felt that parliamentary duties in London would divert their energies and time from what they did best. Despite, like his mother, declining the flattering overture, Keynes spoke for the Liberals during the ensuing contest at a packed meeting of nearly 2,000 voters at Cambridge Corn Exchange. ‘Keynes (pale as marble) began [with] an excellent dry speech,’ which puzzled non-university members of the audience, Arthur Benson recorded. A barrister named Sydney Cope Morgan, who was the Liberal candidate adopted instead of Florence Keynes, followed with ‘a loud fighting speech – really I almost expected to see tonsils & lungs blown from his mouth by his yells’. Cambridge’s voters showed why Keynes shrank from parliamentary candidatures. ‘The audience could not understand the simplest point & laughed only at the vulgarest jokes,’ noted Benson. ‘They were orderly & good humoured – but it was a low affair – the aspersions on fellow-candidates sickening. The room was hideous, & the constant singing of “For he’s a jolly good fellow” was loathsome.’ Keynes thought that as a political platform speaker he performed ‘respectably but without éclat’. His Cambridge Corn Exchange tub-thumping prompted an outburst: ‘I hate political meetings. They are always exactly the same – the same vamped-up atmosphere and the same underlying boredom. It makes one feel a fool and a liar. No, I’m not cut out for politics. I don’t enjoy it enough.’41

It is understandable that Keynes felt disgusted with his speech and even self-demeaned. There was opportunism and hypocrisy in his denunciation of the first (minority) Labour government, led by Ramsay MacDonald, for its recent Anglo-Russian loan agreement. In addition to negotiating general and commercial treaties with Soviet Russia, MacDonald’s government had proposed to guarantee the interest and sinking fund on a loan enabling the Bolsheviks to pay their international debts. Although similar financial devices had been used to help Germany, and despite the acknowledged need for an Anglo-Russian financial settlement, Lloyd George, who knew that he had little future if Labour governments succeeded, used the Russian loan proposals as a pretext to bludgeon socialism. Asquith, who also had hopes of returning to Downing Street, endorsed this approach. Accordingly Keynes (peddling the party line) decried the Russian loan to Cambridge voters as an unprecedented risk to taxpayers. It had been suggested that the loan would amount to £40 million. ‘Would every single member of this audience be ready to hand over £1 to the Russian Government?’ asked Keynes. ‘How many of you feel inclined to do it?’ He estimated that £40 million would build and equip five towns the size of Cambridge. Russia, added Keynes, had previously repudiated debts to Britain worth several hundred million pounds. He indulged in further red-baiting with his allusions to the Campbell case. Johnny Campbell was a Scottish communist, who had published ‘An Open Letter to Fighting Forces’ urging servicemen to refuse to shoot their fellow workers or to fight for profiteers. His prosecution under the Incitement to Mutiny Act was abandoned after representations by socialist MPs: the seeming leniency of the Labour government towards a Bolshevik subversive led to defeat in the House of Commons and triggered the general election of 1924. The Labour government was asking taxpayers, said Keynes, ‘to make a loan to a country which, during the negotiations, had been inciting British subjects to work for the overthrow of present institutions by inciting a rising in the Army and the Navy. They were asked to loan this money to the most cruel, tyrannical and incompetent Government that existed.’ To applause he continued, ‘this Russian loan shows just how much we can trust the Labour Party to be sensible’.

As to the Conservatives, said Keynes, they still itched for tariff protection. Other reactionary measures could be expected from them. They yearned to enlarge the prerogatives of the House of Lords by repealing the Parliament Act passed by the Asquith government in 1911. ‘In this age of transition there existed one danger. It was that the struggle should develop into a struggle between wealth and prosperity on the one hand, and poverty and revolution on the other.’ Only the Liberals could save the nation from this. ‘Every Government and every party makes mistakes sooner or later, and becomes unpopular,’ said Keynes in his peroration. ‘Let us suggest that Mr Baldwin and the Conservative Party were returned to power. In a year or two we shall be thoroughly sick of them – all of us – and the swing of the pendulum will come, and when that time arrives, do you want the Socialists to be the only alternative? Then use your votes and influence at this election to make the Liberal Party strong, self-confident and vigorous.’42

It is notable that, despite his mother’s commitment to welfare work and medical charities, Keynes never referred in his campaign speeches, and seldom in his political writings, to the topics that a quarter of a century later would be covered by the terms ‘welfare state’ and ‘National Health Service’. This was partly because state spending on welfare had a bigger leap under the predominantly Conservative governments of the early 1920s than under the Labour government of 1945–51. The opportunities for Liberal fault-finding were therefore limited. But, more than that, this was an area in which Keynes had neither close interest nor technical expertise.

In May 1926 Keynes and the Nation discarded their hopes of an Asquith revival and endorsed Lloyd George as leader of the Liberals following party ructions about the General Strike. ‘I know what L.G. is like’, he told Asquith’s wife, but there was ‘absolutely no choice. I find a unanimous – an astonishingly unanimous – feeling that this is so among every single leftist liberal whom I have spoken to in the last week. A party which has to look forward to consisting mainly of Simon and Runciman seems to me almost as gloomy and mouldering an affair as one can well conceive. I couldn’t breathe in that mortuary.’ His feelings for her husband were unchanged: he ‘remains the one whom I should like to follow and whom I love and respect’. Thereafter, for three years, he worked hard for Lloyd George Liberalism.43

Political oratory, whether indoors or in the open air, went out of fashion in the 1920s, Keynes said. In an article for the Radio Times in 1926, he advocated the wireless broadcast of Churchill’s budget speech, and the inauguration of party political broadcasts to interest and inform voters. However, as he lamented at a dinner of Lady Colefax’s attended by among others H. G. Wells and Oswald Mosley, it was impossible to convey the complexities of an economic reform programme when voters only understood war-cries or catchphrases. He was more effective at talking sense into people, and in improving their comprehension, by lecturing in honest language, shorn of slogans or attitudinizing, at Liberal summer schools to party workers.

Keynes was a strenuous member of the Liberal working-party that, often meeting at Lloyd George’s house on a Surrey hilltop, produced the pioneering report entitled Britain’s Industrial Future (also known as the Liberal Yellow Book). Sidney Russell-Cooke, his pre-war lover, now a partner in the stockbroking firm of Rowe & Pitman, was a colleague in this work. The drafting and revision was shared by all of the working-party, but Keynes took the labouring oar in writing the dry and formal chapters recommending various corporatist remedies for unemployment, including investment in modernized factories, a national investment board to regulate Stock Exchange issues made on behalf of foreign interests, public corporations intermediate between privately owned business and state-owned bodies, and reformed budgetary accounts. Editors however preferred to dramatize the obsequies for Field Marshal Earl Haig, whose state funeral clashed with publication of Britain’s Industrial Future, rather than to dissect technical expositions and mince economic niceties. ‘The Liberal Enquiry has had rather a bad press,’ Keynes noted, ‘but I daresay it deserves it. Long-winded, speaking when it has nothing to say, as well as when it has … it would have been so much better at half the length splashing only what is new and interesting.’ Beatrice Webb, who had a high tolerance of prolixity, said the Report ‘read as if it were a Fabian document tempered by a desire not to appear socialistic’.44

After Keynes again declined the Liberal candidature for the University of Cambridge seat, his protégé Hubert Henderson was adopted in his place to fight the 1929 general election. The two men in the meantime prepared a pamphlet advancing the Liberal programme entitled Can Lloyd George Do It? They indicted the Treasury for upholding the notion that ‘the less the government borrows, the better … are the chances of converting the national debt into loans carrying a lower rate of interest’. To facilitate debt conversion, the Treasury had striven to curb ‘all public borrowing, all capital expenditure by the State, no matter how productive or desirable in itself’. The futility of this, given that the capital market was international, was protested by Henderson and Keynes. ‘All sorts of influences which are outside our control go to determine the gilt-edged rate of interest; and the effect which the British government can exert on it by curtailing or expanding its capital programme is limited. Suppose, which is putting the case extremely high, that the effect might be as much as a ¼ per cent.’ This percentage, when applied to the £2,000 million of War Loan, which was ripe for conversion, represented a difference in the annual debt charge of £5 million, which was nugatory compared with over £50 million spent in the previous year on the Unemployment Fund.45

Henderson and Keynes, as Liberal election propagandists, stressed that nations are enriched by the positive act of people using their savings to augment the country’s capital equipment – not by the negative act of individuals restraining their consumption. ‘It is not the miser who gets rich; but he who lays out his money in fruitful investments.’ They inveighed against the Baldwin government with its campaign slogan ‘Safety first’. ‘Negation, restriction, inactivity – these are the government’s watchwords. Under their leadership we have been forced to button up our waistcoats and compress our lungs. Fears and doubts and hypochondriac precautions are keeping us muffled up indoors. But we are not tottering to our graves. We are healthy children. We need the breath of life. There is nothing to be afraid of.’ Britain should feel ‘free to be bold, to be open, to experiment, to take action, to try the possibilities of things. And over against us, standing in the path, there is nothing but a few old gentlemen tightly buttoned-up in their frock coats, who need only to be treated with a little friendly disrespect and bowled over like ninepins.’⁴⁶

The Lloyd George Liberals fought the general election of June 1929 on an economic programme (which few of its candidates understood) that repudiated laissez-faire and budgets founded in classical economics. Lloyd George advocated a programme of road-building, house-building, electricity and railway development to reduce the suffering caused by unemployment. He published an election pamphlet entitled We Can Conquer Unemployment with the sub-title ‘We Mobilised for War – Let us Mobilise for Prosperity’. It pledged to reduce unemployment to the pre-1914 level of 570,000, and claimed that its schemes would provide work for 586,000 men in the first year. Keynes and Henderson suspected that the schemes would need longer to take effect, and might reduce unemployment by as little as 400,000. Later calculations by economic historians put the likely figure at 300,000.

Encouraged by a run of Liberal by-election victories, Keynes expected that the Liberals would win between 100 and 150 seats in the new House of Commons. In fact the Liberals secured only fifty-nine MPs: Hubert Henderson, at Cambridge, was not one of them. It was evident that the electoral advantage had passed from liberalism to socialism since 1923, when for the last time a third party attained over 100 seats in a general election. Ramsay MacDonald, as Prime Minister of the Labour government which took office in 1929, began to consult Keynes in an encouraging manner. It took two years for it to become clear how little was achieved by MacDonald’s overtures.

Eighteen months after the general election a minor – but significant – episode taxed Keynes’s loyalty to Liberalism. In December 1930 a young woman called Millie Orpen, who was Jewish, not Christian, brought an action against a cinema chain in the High Court under the Sunday Observances Act of 1780. The judge ruled that cinemas were illegal on Sundays, and cast doubt on the legality of Sunday concerts, the Sunday opening of the Royal Zoological Gardens and the holding of educational lectures for which tickets were sold. Moreover, under the 1780 Act, a common informer could obtain a reward of up to £200 for every Sunday performance that he or she denounced: Orpen claimed £25,000, and the judge reluctantly awarded her £5,000. Within a week of winning her case, she issued further writs claiming a total of £195,000 from other cinema companies, and also sued Sunday newspapers. In April 1931 the Labour government brought to the House of Commons the so-called Sunday Cinema Bill, which permitted film-shows on the Sabbath and mitigated the law of 1780. The Home Secretary (a trade unionist named Clynes, who had begun work in a Lancashire cotton mill at the age of ten) gave an apologetic, tepid recommendation of the Bill, which was treated as a free vote of conscience. It was left to the Conservative frontbenchers Neville Chamberlain and Lord Eustace Percy to prove the Bill’s necessity in robust speeches.

Ian Macpherson, the Gaelic-speaking Liberal MP for faraway Ross & Cromarty and President of the Free Trade Union, who had earlier caused controversy by enforcing his right, as a Presbyterian MP, to have his son baptized in the crypt of the House of Commons chapel, led the speeches against Sunday cinema opening. Liberals with Cornish, Welsh and Scots constituencies spoke and voted against Sunday cinemas, including Megan Lloyd George, Sir Donald Maclean, Goronwy Owen and Walter Runciman. So did Sir Herbert Samuel, who a few months later replaced Lloyd George as Leader of the Liberal party. Large crowds gathered outside the Commons awaiting the vote: cries of ‘Give Us Liberty!’ and ‘Down with the Continental Sunday!’ were heard from opposing sides. The Bill was carried, to cheers, by just 258 to 210 votes. Keynes, who upheld people’s freedom to choose to enjoy secular Sundays and mistrusted anti-European slogans, was so riled by the Liberal nonconformists that he told Clive Bell and the parliamentarian and former diplomat Harold Nicolson that the Sunday Cinema vote, coupled with the free-trade propensities of the puritans, was enough to make him think of forsaking the Liberals and vote for Oswald Mosley’s New Party, which was campaigning for tariffs to protect manufacturers from imports, public-works programmes to provide employment, and state ownership of key industries.47

A financial journalist once praised Keynes’s Essays in Persuasion (the selection of his livelier, less technical writings of the 1920s that he described on their publication in 1931 as the croakings of a Cassandra who had never influenced the course of events in time) for its tendency ‘to relegate economics to the back seat where it belongs leaving us free to discuss the things that really matter, such as human relationships and religion’. In his evidence of 1932 to the Royal Commission on Lotteries and Betting, Keynes indulged human psychology, derogated religious proprieties and presented the private vice of ‘occasional flutters’ as conducive to the public good. ‘Gambling should be cheap, fair, frivolous and on a small scale, if its evil economic results are to be reduced to a minimum, and the fun and mild excitement to be maximised,’ he urged. He mistrusted the pretence of skill in gambling, preferring the chance wins of lotteries or sweepstakes to horse-racing and Stock Exchange speculation, because the latter category wasted people’s time in trying to perfect a spurious system. In a passage based on a witty paragraph in Clive Bell’s tract On British Freedom (1923), Keynes proposed a weekly state lottery, raising about £10 million a year for the Treasury in taxation, with the operating expenses paid by the Sunday newspapers in return for a monopoly of publishing each Sunday the numbers of the winning tickets. He twitted the solemn godliness surrounding the Christian day of rest, as exemplified by the killjoys who defended the Sunday Observance Act, and irritated the chapel-goers among the Royal Commissioners, by suggesting that ‘it would add to the cheerfulness of life if practically everyone in the country was to wake up each Sunday morning stretching out for the Sunday paper with just a possibility that they had won a small fortune’.48

Lloyd George, despite his debt to Keynes in preparing Britain’s Industrial Future and for writing Can Lloyd George Do It?, was so irritated by the references to him in Keynes’s Essays in Biography that he retaliated in his War Memoirs of 1933. ‘He is an entertaining economist whose bright but shallow dissertations on finance and political economy, when not taken seriously, always provide a source of innocent merriment,’ Lloyd George wrote in his sly way. The don had perched himself in ‘the rocking-chair of a pundit’ during McKenna’s tenure as Chancellor of the Exchequer, Lloyd George continued: ‘it seems rather absurd now, when not even his friends – least of all his friends – have any longer the slightest faith in his judgments on finance’. With these petulant and ungrateful words Lloyd George proved himself yesterday’s man. Even as they were published Keynes’s influence was reaching a new ascendancy. This was achieved by him as a public man, talking and acting in London, rather than by academic thinking in his university.⁴⁹

The French economist Jacques Rueff, speaking at Cambridge, extolled the English as a logical people – ‘unique in a government that thinks economic reasons are worth applying to daily life or have anything to do with politics, and which asks Royal Commissions for reasons for changes that it contemplates’. To which Keynes, who was present, retorted that the English pride themselves on reaching the right solution in the wrong way. In November 1929, hard on the Wall Street crash and the rise in bank rate to 6 per cent, he was appointed to an official inquiry instigated by the newly elected Labour government. The Committee on Finance and Industry had a remit to investigate the banking system’s impact on manufacturers. Labour’s Chancellor of the Exchequer, Philip Snowden, a fervent free trader, stipulated that the abandonment of the gold standard was beyond the committee’s remit. Its chairmanship was first offered to Keynes’s admirer Lord D’Abernon, an international financier who had recently retired as Ambassador in Berlin and was the very model of what Keynes meant by the ‘Ins’. After D’Abernon’s refusal (he had leased a Venetian palazzo where he was intent on enjoying leisure), it was taken by a barrister called Hugh Macmillan, who was soon afterwards promoted to the judicial bench as a lord of appeal.50

Keynes dominated the deliberations of Lord Macmillan’s committee. He took a leading part in questioning fifty-seven witnesses over forty-nine days; he attended 100 meetings. He explained his views to the committee during five lengthy sessions in February and March 1930 and on a further three occasions in November. This extended seminar on the monetary system’s workings was commanding and incontrovertible: he taught his fellow committee-members the difference between investment and saving; argued that the world’s wealth had been accumulated by enterprise rather than thrift; insisted that savings achieved nothing unless they were put to work. He explained the operation of bank rate, and stressed the difficulties for an economy dependent on foreign trade when wages were high (as Britain’s were). He told fellow committee-members that if bank rate was raised to protect the balance of payments, investment would fall, business would report losses and prices would follow downwards. If losses continued without a drop in costs, unemployment would ensue. He recommended home investment by the government to remedy underinvestment and to increase domestic demand. Hopefulness that export expansion would reduce unemployment was insufficient. Keynes recommended cheap money (low interest rates), tariff barriers to protect home markets (forsaking his traditional free-trade loyalties) and the rationalization of industry (the closure of inefficient or surplus factories, the amalgamation of businesses that were competing in contracting markets, and the shedding of duplicated managerial, technical and sales staff).

Keynes criticized the Bank of England’s secretiveness about its concealed reserves, which he estimated at between £50 million and £100 million, and the obscurity of the Bank’s published figures about its earnings (he suspected that its earning assets were put too low). The trouble arose, he said, from the Bank still pretending to be a private institution (it was not nationalized until 1946), and therefore fearful of disclosing its profits. The neurotic aberrations of its cryptic, self-mystifying Governor, Montagu Norman, and the Bank directors’ belief that banking mystique was helpful rather than befuddling, were further obstacles. ‘I attach enormous importance … to getting rid of unnecessary secrecy and mystery of all kinds,’ Keynes told the Macmillan committee. ‘If everything is secret and everything has to be discussed in confidence the circle within which opinions can be freely exchanged is unduly narrowed.’ Open discussion about the Bank’s intentions was not to be mistrusted: it would help the market to adapt to the Bank’s intentions – not fight or bet against them. Publicity about the Bank’s operations would ‘educate the public … and bring much nearer the day’, Keynes urged with touching optimism, ‘when the principles of central banking will be utterly removed from popular controversy and will be regarded as a kind of beneficent technique of scientific control such as electricity or other branches of science are’. The Bank of England’s abstruseness made it vulnerable ‘to popular pressure and to dangerous charges’.51

Secrecy camouflaged financiers’ intractability, Keynes told a closed session of the Macmillan deliberations, in which he reverted to the Bank’s reluctance to state its objectives or discuss its tactics. ‘Industry has no orthodoxy; industry is changing all the time, industry is not governed by wise sayings and traditions; it is all the time experimenting; it is opportunist,’ said Keynes, ‘but the extraordinary character of finance is the extent to which it is governed by orthodoxy, it is kept back by maxims, and things handed down, and things that were established as sound a long time ago.’52

For Keynes, furtiveness was a protection for illusions and delusions. As an Apostle and as a Bloomsbury grouper, he believed in frank truths. The passion for detailed precision that he had shown before 1914 when investigating Indian finance led him always to press for improved statistics and their free discussion. He did more than anyone after 1919 to integrate statistical analysis into administrative practice. He was active in the Royal Statistical Society, and took a lead in 1922 in starting the pioneering London and Cambridge Economic Service, which compiled and disseminated statistics. After his return to the Treasury in 1940, he encouraged the decision to collect national income statistics and other financial data that came to be indispensable in budget-making.

Witnesses from the Treasury, the Bank of England, the joint-stock banks, the Trades Union Council and business gave evidence to the Committee on Finance and Industry, and were cross-examined. Along with Lord Macmillan, Keynes was the most vocal member of the committee. His Tuesday Club banker friends Reginald McKenna and Robert Brand, together with Theodor Gregory (Professor of Banking at London University) and the trade unionist Ernest Bevin, also intervened effectively. Lord Bradbury, Keynes’s former chief at the Treasury, indicated his demurral from Keynesian ideas by his frosty, stilted taciturnity. Keynes’s disquisitions on the arcana of monetary policy baffled some of his committee colleagues, including Macmillan, who was impressed when Keynes was putting his case, but forgot it swiftly. Geoffrey Crowther, who was awarded a double first in economics at Cambridge in 1928 and afterwards became editor of the Economist, said that Keynes’s lectures were so brilliant and clarifying that he never needed to write notes; but that whenever it came to writing an essay, he could never recall the lecture’s substance.53

Economic fluctuations had become more violent since the war, as Keynes stressed. The existence of the ‘dole’ for the unemployed meant that wages did not fall even at times of falling prices, a falling cost of living and higher unemployment. After the onset of the Slump, real wages increased faster than ever before: the dole had altered the nature of all traditional market adjustments. Within a dozen years – which in economics amounted to a generation for Keynes – there had been an about-face in economic factors and expectations. He found a set determination in most quarters not to reduce wages except as a last resort. The employers who testified before Macmillan, and whom he questioned on this point, were all averse to wage reductions.

The drafting of the committee’s report was undertaken by Brand, Gregory, Keynes, Macmillan and a long-serving Bank of England director Cecil Lubbock (the brother of Keynes’s Eton tutor, Lubbock had been a social worker in Whitechapel before joining the Home Office, and then entered business as managing director of Whitbread’s brewery). A hostile Treasury official, P. J. Grigg, characterized the finished document as a long, ‘wishy-washy report which tended slightly in the Keynes direction. At the same time there were a number of addenda with variations on or divergences from the central theme, the most important of these being signed by Keynes, McKenna, Ernest Bevin and others, advocating the whole paraphernalia of public works plus tariffs or devaluation, according to the varying tastes of the signatories.’ Bradbury submitted a solo dissentient report ‘saying that the rest of the committee were talking something like nonsense’.⁵⁴

Grigg’s Treasury colleague Leith-Ross however thought the Macmillan Report remained ‘a classic review’ of the banking system and its relations with industry for three decades. It called for a managed economy – with a currency that would be managed in the interests of price stability – that would later be known as Keynesian. Bankers were recommended to adopt policies that, at home and abroad, would help enterprise by providing better and cheaper facilities for credit. An international fund to guarantee loans was proposed. So, too, were reforms at the Bank of England. Improved cooperation between the City and manufacturers – a subject that had been repeatedly but inconclusively discussed in Whitehall since 1916 – was again recommended. Austerity measures were opposed. Keynes, McKenna and Bevin submitted a powerful addendum to the main report recommending a tariff on imports and a bounty on exports, urging productive capital expenditure through a National Investment Board, and deprecating wage reductions.55

Keynes ensured that the Macmillan Report corrected an entrenched delusion about the balance of payments. The British thought of themselves as a trading nation which exported manufactured goods to pay for the food and raw materials that were imported: in fact this trading account had not shown a credit balance since 1822. Banking, shipping and interest on foreign investment – so-called invisible earnings – had adjusted this balance in every year except 1847, 1918 and 1926. After the publication of the Macmillan Report in 1931, politicians and the public could no longer duck the reality.

The Macmillan Report was not released until mid-July 1931. At almost 200 pages long, it seemed too technical and prolix to read on hot summer days in town. MPs therefore deferred their scrutiny until the parliamentary recess. But disastrously, on 1 August, just as the House of Commons was rising, Snowden published a four-page report on the national economy, tendered by a small committee, working to narrow terms of reference, headed by Lord May, an actuary lately retired as company secretary of Prudential Assurance. One of May’s committee-members was Sir Mark Webster Jenkinson, an accountant associated with the English Steel Corporation and the Vickers-Armstrong group, who in his testimony to the Macmillan committee had advocated forming a financial trust charged with providing capital for industry, industrial banks to promote the rationalization of different industrial sectors, and an expanded contracts-guarantee scheme to enable manufacturers to take foreign contracts on deferred payment terms. Jenkinson was evidently receptive to institutional change; but he and his fellow accountant Lord Plender, together with May, treated the national economy as if it was a shaky business needing rescue from crushing debts. They made alarmist predictions of budget deficits, and proposed inordinate cuts in government spending. International confidence in British economic viability was damaged. Keynes told Ramsay MacDonald that his views of the May Report were unprintable.

Publication of May’s recommendations precipitated a run on sterling. Moves towards a balanced budget were suddenly considered essential to restore confidence in sterling. MacDonald’s Labour government disintegrated, a coalition government was formed on 24 August, on 15 September sailors of the Royal Navy mutinied in protest at pay cuts, and on 21 September Montagu Norman, returning from Canada by ocean-liner, received the cryptic telegram ‘Old Lady goes off on Monday’, which signalled that Britain was abandoning the gold standard (but which he interpreted as meaning that his ancient mother was leaving for an unexpected holiday). ‘Our departure from the Gold Standard’, P. J. Grigg judged in 1948, ‘heralded the beginning of our repellent modern world.’56

In the autumn of 1928 T. S. Eliot, as a commissioning editor at Faber, had proposed to Keynes that he should write a book about free trade and protection, ‘giving a Liberal view of the situation’, to be published before the general election due in 1929. ‘As for the length of the book,’ wrote Eliot, ‘it might be hardly more than a pamphlet, or it might be two volumes: that would be for you to decide.’ Keynes declined, stating ‘I am struggling to finish a big Treatise on Money, which has been turbulently gestating for four years now, and has the claim on all my time.’ He did not add that he could not be a sound guide to best Liberal opinion on free trade, as he was rescinding, in his own mind, his opposition to tariffs.57

Keynes’s public switch to protection began to emerge after February 1930, when he attended the first of the monthly meetings of the businessmen, trade union leaders and technical experts of the newly convened Economic Advisory Council, chaired by the Prime Minister, MacDonald. These Council meetings proved to be a diffuse and frustrating talking-shop, which spawned numerable sub-committees of indifferent value. After six months of hubbub, Keynes convinced MacDonald to appoint a sub-committee of economists to provide an agreed diagnosis of contemporary problems and recommendations of remedies. He promised the Prime Minister, in effect, that, if the economists were left alone, they would reach unanimous recommendations. Under his chairmanship the sub-committee comprised Henderson, the Cambridge classical economist A. C. Pigou, Lionel Robbins (newly appointed to the chair of economics at the London School of Economics) and Stamp (with Keynes’s King’s protégé Richard Kahn as joint secretary).

During intense day-long meetings, amid a blizzard of papers, Keynes was an inspiring and dominant leader. ‘To witness those bird-like swoops of intuition with which he opened up a subject, to listen to that unique voice expatiating with wit, understanding and compassion upon problems of life and politics, and to enjoy his genial company … were indeed privileges,’ recalled Robbins. He was entranced, almost against his will, by Keynes’s ‘idealism and moral fervour; above all, the life-enhancing quality of his presence’. And yet there were blazing rows. Robbins was an austere free trader and upholder of laissez-faire, who saw the Slump as the healthy antidote to the insalubrious years of over-expanded credit. The nation had consumed its capital during the war, but had not accordingly reduced its standard of living, which the downturn was now enforcing as a matter of hygiene. Robbins insisted upon appending a separate document in which he explained his support of free trade and opposition to increased public expenditure. ‘Keynes, who, then as always, was capable of fits of almost ungovernable anger, was furious,’ said Robbins. ‘In his wrath he treated me very roughly.’ Robbins later recanted his views on public investment, and came to regret this dispute as the biggest mistake of his academic life. As a result, the diagnosis and remedies proposed by the economists’ sub-committee were neither unanimous nor cogent, as Keynes had all but pledged to MacDonald.58

One of the issues considered by Keynes at the Economic Advisory Council was tariff protection. ‘The arguments against tariffs on the grounds of political morality, national and international, and of the invariable tendency of tariffs, once started, to be overdone and irrecoverable, are just as strong as ever they were,’ he averred in a memorandum circulated to the Council in 1930. Nevertheless, he was no longer a free trader, and doubted that anyone else was in the old sense of the term. The traditional doctrine of abandoning industries that could not compete, or closing operations that no longer held their own, was inoperative when wages were immobile. The nation would always need motor-cars, steel and agriculture, and it would be foolish to let them go out of business in order to preserve doctrinal purity. ‘Ever since 1918 we, alone amongst the nations of the world, have been the slaves of “sound” general principles regardless of particular circumstances … Nearly all our difficulties have been traceable to an unfaltering service to the principles of “sound finance” which all our neighbours have neglected.’59

On this subject, as on others, Keynes thought that one-third of the way through the twentieth century, the English, and indeed other industrial nations, were still trying to escape from the nineteenth. ‘I was brought up, like most Englishmen, to respect free trade not only as an economic doctrine, which a rational and instructed person could not doubt, but almost as a part of the moral law,’ he said in a lecture on ‘National Self-Sufficiency’ delivered in Dublin in 1933. Departures from it, he thought when young, were ‘an imbecility and an outrage’. Speeches by Edwardian tariff reformers had seemed to him as authoritarian, life-diminishing, backward and crabbed as pulpit sermons. But although free trade remained to him a banner of decency in the world, circumstances changed. He attributed his altered outlook ‘to my hopes and fears and preoccupations, along with those of many or most … of this generation throughout the world, being different from what they were’. He came to want an internationalized outlook for humanity, but national self-sufficiency in business. ‘Ideas, knowledge, science, hospitality, travel – these are the things that should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible, and, above all, let finance be primarily national.’ The economic internationalism of the developed world before 1914 had not proved peaceable: perhaps economic isolation would do better. ‘The decadent international but individualistic capitalism, in the hands of which we found ourselves after the war, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn’t deliver the goods. In short, we dislike it, and we are beginning to despise it.’ It had been possible to idealize the pre-war system whereby British savings were invested in railways installed by British engineers to carry British emigrants to new areas of development, but Keynes felt that it was hard to feel pride in the virtues of international investments in the 1930s, when Chicago speculators had stakes in Germany’s Allgemeine Elektricitäts-Gesellschaft or English spinsters put their savings into a loan for the municipal improvement of Rio de Janeiro.60

The shrivelling of Liberal certitudes about free trade and unregulated markets was reflected in the decision to absorb the Liberal Nation and Athenæum into the Labour-inclined New Statesman. Keynes had first proposed this merger in the aftermath of the depressing result for Liberals of the general election of 1929. His overture was rejected by the board of the New Statesman, which was then chaired by Arnold Bennett. Keynes renewed his advance a year later for reasons of personnel: Henderson had left the editorship of the Nation to become joint secretary of the Economic Advisory Council; his counterpart at the New Statesman was an inebriate; and Kingsley Martin, a former London School of Economics lecturer who had become an intemperate editorial writer on the Manchester Guardian, was ready to assume the combined posts. The merger was implemented on terms that favoured the financially stronger New Statesman, and the first issue of the New Statesman and Nation appeared on 28 February 1931. Keynes rather than Bennett became chairman of the combined company.

The New Statesman and Nation did not become the rational, constructive influence that Keynes wished for. Kingsley Martin was a restless, melodramatic man who postured as the torchbearer of a righteous, harassed minority. He established the ‘Staggers’ as the leading exponent of democratic socialism, and as a recruiting-sergeant for anti-colonialism and other progressive causes; but editorially he proved hot-headed, unsteady and devious. From the mid-1930s he lived with Dorothy Woodman, secretary of the Union of Democratic Control, who juggled the ideologies of pacifism, anti-fascism and anti-capitalism, and wrote unscrupulous conspiracy-theorist bestsellers belabouring armaments companies, The Secret International (1932) and Patriotism Ltd (1933). She and Martin converged in their politics, and his judgement became more suspect under her influence. One of the New Statesman’s star columnists was Noel Brailsford, whom Keynes anathematized to Martin in revealing terms: ‘He seems to me to have almost every defect – almost incredibly misinformed and ill-informed, carrying credulity to the point when it is almost certifiable, extraordinarily tendentious in a frightfully boring way, with bees in bonnets that entirely distort the right balance.’ Brailsford’s pathology contaminated the magazine: ‘all the weeklies are mere homes for inferiority complexes’, Keynes told Virginia Woolf in 1935. He was wary of zealots who embraced good causes only to turn other people against them.61

Keynes used the second issue of the New Statesman and Nation, published on 7 March 1931, to announce his conversion to support for a revenue tariff and export subsidy scheme to make industry more profitable at the 1925 gold-standard exchange rate. His arguments followed from his privately circulated memorandum to the Economic Advisory Council. In these public proposals, he advocated a 15 per cent tariff on all manufactured and semi-manufactured goods, and 5 per cent on foodstuffs and some raw materials. As he wrote in a gloss for the Daily Mail on 13 March, ‘Unqualified free trade is part of an austere philosophy which depends, and indeed insists, on things being allowed to find their own level without interference. But if economic changes are very violent and very rapid, human nature makes it impossible for some things to find their proper levels quick enough.’ Uproar followed, with vehement counter-blasts from free-trade economists. Keynes regretted that his critics ignored his analysis of the crisis in order to inveigh against the tariff proposals. ‘Is it that economics is a queer subject, or is in a queer state?’ he asked. ‘New paths of thought have no appeal to the fundamentalists of free trade. They have been forcing me to chew over a lot of stale mutton, dragging me along a route I have known all about as long as I have known anything, which cannot … lead one to a solution of our present difficulties – a peregrination of the catacombs with a guttering candle.’62

The failure on 11 May 1931 of the Austrian bank Credit-Anstalt was the Lehmann Brothers moment of the 1930s. Keynes visited the USA in June and July of that year (his first trip since 1917). Back in England, he wrote a report on US economic conditions, which was circulated by direction of Ramsay MacDonald to the Economic Advisory Council, with further copies going to Cecil Lubbock, Walter Layton of the Economist and other experts. Keynes found ‘an absolute mania for liquidity’ among small-town banks which feared runs by depositors. ‘Moreover I fancy that the great New York institutions have more skeletons in their cupboards than anyone yet knows for certain, and that their concealed anxieties cramp their action more than is admitted.’ By mid-August Keynes was despondent. ‘A general breakdown is inevitable,’ he told the connoisseur of arts and letters Raymond Mortimer. ‘America will revert to a Texas type of civilisation. France and Germany will go to war. Russia will starve. And we, though impoverished, may just survive … Food will be cheap, and thus riots not too serious.’⁶³

After the coalition National Government had been elected in October 1931, Keynes’s public interventions were shorn of party affiliation. As the onset of the Depression hit banks across Europe and America, nervous investors shifted their money between countries, always seeking a safer haven for their funds, and leaving bank runs and currency crises in their wake. Nations devalued their currencies as a ploy to attract funds; they imposed exchange regulations, and erected protectionist barriers. ‘Well, we’re about as bad as we can be,’ Keynes told Mrs George Bernard Shaw during luncheon in June 1932. ‘Never been so bad. We may go over the edge – but as it’s never been like this, nobody knows.’ He spoke, said Virginia Woolf, who overhead him, ‘in the low tone of a doctor saying a man was dying in the next room; but didn’t want to disturb the company’. This was a new mood for Keynes, who was no longer flicking taunts at the stupidity of politicians and bankers. The time was past for making a show of unorthodoxy, rebellion and disobedience to the established order. Now he found a new tone to conciliate and convince.64

This change of tack was clear in the four articles that Keynes wrote in February 1933 for The Times. These were intended to influence both the budget which Neville Chamberlain and his Treasury officials were preparing for April and the deliberations of the World Economic Conference, which was to convene in London in June (which the USA had agreed to attend on condition that inter-Allied debts were not discussed). Accordingly a stately sobriety pervades the four articles. Publication had to be deferred to allow the publicity storm aroused by the arson attack on the Reichstag to subside, and they finally appeared on 13–16 March. With the World Economic Conference in mind, Keynes addressed global problems: he did not so much prescribe remedies for his own country as advance an international recovery plan, and outlined the means to induce world reflation. He renewed his call for public works financed by loans. He urged that taxation should be remitted without reducing public expenditure, thus adding purchasing power to the economy to help depressed business. It is significant that, when the articles were expanded into a pamphlet (entitled The Means to Prosperity), Keynes chose Macmillan as the publisher rather than the Woolfs’ Hogarth Press: their tone was grave not teasing; he wrote as an assured public man rather than as a Bloomsbury gadfly.

In The Means to Prosperity articles Keynes publicized the ‘multiplier effect’, which had been recently identified by his young coadjutor Richard Kahn. In his famous article ‘The Relation of Home Investment to Unemployment’, published in 1931 in the Economic Journal, under Keynes’s editorship, Kahn put a precise order of magnitude on the total increase in employment that would ensue from a primary increase of employment created by public works. He showed by mathematical proof, under specified conditions, the ripple-effect of investment expenditure on levels of total economic activity: the initial expenditure multiplies income in the national economy. A proportion of the income generated by the purchase of extra capital goods will be spent on consumer goods. Part of that income from consumer goods will be spent too, and thus generate more income than the initial outlay. Rising national income will induce business people to invest.

The Means to Prosperity articles had momentous impact – not only because the pleasure felt in understanding subtle arguments predisposes people towards accepting their conclusions. The articles sparked international discussions which inaugurated the oncoming Keynesian Revolution. They established Keynes as a constant factor in world opinion on economic policy. Reviewing The Means to Prosperity in the Manchester Guardian, Sir Arthur Salter (a fellow member of the Economic Advisory Council) wrote: ‘He has expressed the strong, and now almost overwhelming, mass of opinion, lay and expert alike, that the time has come for expanding public investment and for more effectively assisting an upward movement of prices by monetary action.’ Salter endorsed the Keynesian view that increased public expenditure on capital work would radiate economic activity over the economy, stimulate a trade revival, reduce the costs of unemployment and increase taxable income for the Exchequer. Salter was tantalized by the possibilities of the Keynesian global programme. An international authority would issue certificates, to be treated as the equivalent of gold, worth up to $5 billion to be distributed among participating nations. The certificates would increase each country’s current resources and relieve budget deficits or taxation. They would strengthen the reserves of countries striving to maintain the gold standard by means of exchange restrictions, and enable those restrictions to be lifted. They would stimulate public expenditure and increase the general level of prices.65

Keynes had to contend, however, with the English mistrust of a smartiboots. Austen Chamberlain spoke for many of his compatriots who mistook conformist notions of common sense for actual good sense when he wrote on 26 March: ‘Keynes is extraordinarily clever & marvellously lucid; he has it to his credit that he was the one man who at the moment of the peace negotiations made a true estimate of Germany’s capacity to pay; but he is not, I am convinced, a safe guide in business or politics. He excels in theory, but his theories are too fine-spun to stand the wear-and-tear of workaday practice.’⁶⁶

‘With mingled hopes and doubts,’ Keynes told BBC radio listeners in June 1933 on the eve of the opening of the World Economic Conference, ‘sixty-six nations are assembling: statesmen and financiers arrive by every train. The world’s needs are desperate: we have, all of us, mismanaged our affairs, we live miserably in a world of the greatest potential wealth.’ But most people expected a fiasco. ‘Every previous conference … has ended in empty platitudes and ambiguous phrases so boring and vapid that they have expired in a universal yawn. Isn’t the present shocking state of the world partly due to the lack of imagination which they have shown?’ He banked his hopes on Britain and the USA agreeing a programme.⁶⁷

France and its allies insisted at the World Economic Conference that monetary stabilization must precede tariff reductions. The British and American delegations conciliated the French by indicating willingness to negotiate; but then President Roosevelt in Washington disclaimed the attitude taken by his own negotiators, and sent a man from the US Treasury hurrying across the Atlantic to undermine the American delegation. ‘This undignified incident was the death-blow of the conference,’ wrote E. H. Carr, then a Foreign Office expert on eastern Europe. ‘The World Economic Conference failed because the delegates, whatever their opinions as to the next step, were all seeking ultimately to bring back an irrevocable past – the regime of low tariffs and fixed currencies.’ After this diplomatic failure, economic nationalism and state regulation of trade became fixed features of the balance of power. This outcome was a victory for Keynes’s immortal foes who framed policies while contemplating national glory, cultural hegemony and racial superiority.68

This was the frustrating context for Keynes’s turn in his late forties to his great work of theoretical revision. Early in the 1920s, at one of the meetings of the Keynes Club in his room at King’s, he told the assembled younger economists that the implicit working assumptions of classical economists offered a fruitful area of investigation. The biographical essays on Marshall and others that he wrote over the next ten years were part of his investigatory programme. This was not far under way when in 1923 he published his Tract on Monetary Reform, which proposed a new institutional framework to improve economic performance, but made no theoretical advances. In 1924 he started a sequel, which did not proceed to schedule, missed self-imposed deadlines and took six years to complete. During those years, Keynes wrested himself, in Richard Kahn’s words, ‘from the stranglehold of the Quantity Theory of Money in its crude form’. In doing so, he jettisoned by the age of forty-seven what he had upheld at the age of forty: Keynesian economics developed from its progenitor’s rejection of the quantity theory of money. He once told Austin Robinson that he reached his best ideas ‘from messing about with figures and seeing what they must mean’. They were not derived from painstaking mathematical model-making. Keynes liked to recount the story of Newton explaining his discoveries of planetary motion to Edmond Halley, who asked, ‘but how do you know that? Have you proved it?’ Newton was startled. ‘Why I have known it for years,’ he replied. ‘If you give me a few days, I’ll certainly find a proof for it.’ Robinson thought Newton’s remark a perfect description of Keynesian methods in the 1930s, ‘when there was no doubt about the truth, but a good deal of trouble about the proof’.69

The two volumes of Keynes’s Treatise on Money were published in October 1930. The book’s primary purpose was to advance towards a managed world currency. He argued that monetary policy should adapt to social tendencies and the level of earnings: that nations should not rely on market forces. The Bank of England policy of directing monetary policy with the priority of protecting gold reserves – necessitated by the return to the gold standard – was injurious to profit-making and levels of employment. Expectations of profit stimulated enterprise, which built and improved the world’s possessions. ‘Not only may thrift exist without enterprise, but as soon as thrift gets ahead of enterprise, it positively discourages the recovery of enterprise and sets up a vicious circle by its adverse effect on profits.’ The banking and monetary system, even more than peace, warfare, inventions, laws or educational levels, governed both expectations of profit and levels of enterprise.⁷⁰

Richard Kahn was the key figure in the Cambridge ‘Circus’ which started to meet in the autumn of 1930 to discuss the newly published Treatise. Joan Robinson, Piero Sraffa, Austin Robinson and James Meade were its other luminaries. Keynes did not attend the weekly Circus meetings, the results of which were retailed to him by Kahn. When the Circus levelled criticisms at his assumptions regarding employment and output levels, he never used his authority to quash the youngsters. Nor did he justify every position that he had taken. Instead, he welcomed goading to revise his ideas. ‘Keynes never even appeared to hesitate,’ Austin Robinson recalled. ‘He was off with the rest of us in pursuit of truth with as enthusiastic a zest as if he were demolishing the work of his worst enemy.’ Yet, as Joan Robinson said, ‘there were moments when we had some trouble in getting Maynard to see what the point of his revolution really was’.71

Having explored the implicit assumptions of classical economists, Keynes turned to the implicit assumptions of his own mindset. It was assumed, often wrongly, he realized, that achieving more of one thing required the acceptance of less of another. ‘It was’, said Austin Robinson in 1947,

a great step forward in economic thought when Keynes insisted that we should have a general theory – a theory which was valid not only with full (or near-full) employment, but also with unemployment – and that we should know clearly which of the propositions of economics were universally valid, and which were valid only in conditions in which it might be true that an increase of one activity was possible only at the expense of another activity. In the Cambridge thought of my time I believe that no single forward step has been so important. It has gone right to the heart of the method of estimation of the opportunity costs of doing anything.⁷²

Keynes determined to write a book that would free savings and investment from their neo-classical straitjacket: explicitly addressed to fellow economists, his General Theory of Employment, Interest and Money was published in 1936. It is one of the most influential works of economic thought, and arguably the most intellectually audacious, ever published. Kahn called it ‘a world-shattering book’. The central argument, which seemed revolutionary to classical economists, was that the economy had no natural tendency towards full employment. High unemployment could persist indefinitely if governments did not intervene forcefully. Although Keynes denied the classical nineteenth-century liberal faith in the self-regulation of the free market, there was minimal promotion in his General Theory of the policies that were later called Keynesian. ‘Our final task’, he wrote, ‘might be to select those variables which can be deliberately controlled or managed by central authority in the kind of system in which we actually live.’ The variables which were apt for management by central authorities were interest rates and taxation, which he proposed that governments should adjust in order to stimulate investment and to seek full employment. However, he said little of emergency public works, and nothing about fiscal methods of demand management. He did not recommend increasing the government’s current expenditure by running a budget deficit to meet a deficiency of demand. He gave no encouragement to profligate finance ministers. He urged that additional government expenditure should be on capital account and financed from a separate capital budget while so far as possible the regular budget should be kept in balance. He suggested that full employment might be maintained by redistribution of income. If wealth was more equitably dispersed in the population, effective demand would be stimulated and would thus help capital growth. As the scarcity of capital diminished, investors would be rewarded less. He never believed that state planning would eliminate economic instability. He saw national economies as inherently wobbling: they were susceptible to rational management, but with irrational elements.73

‘If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid,’ Keynes wrote. He wished his colleagues to recognize the limitations of economic theory, to accept that they were not omniscient and thus to make themselves useful in formulating policy without banging the kettledrum of absolutist authority. Yet Keynes’s braininess was too obvious for him to be mistaken for a white-coated drone who extracted wisdom teeth week after week. Similarly General Theory aroused hostility, because it was a technical work, which proclaimed abstraction in its title and used terminology directed at his technical peers. ‘Enveloped in a vast cobweb of abstract definition, eked out by algebraic formulas, it contains a few commonplaces, obvious to all except the “classical” economists, to the effect that full employment depends upon a due adjustment between consumption and productive investment, that over-investment in productive equipment, coupled with frenzied Stock Exchange gambling, can produce a disastrous slump, that lowering wages all round reduces the consuming power on which employment depends,’ the Conservative politician Leo Amery concluded after his second reading. And yet to many economists General Theory has seemed light on data, and certainly less filled with quantitative facts than the Tract on Monetary Reform.74

Keynes is the economist who plumbed ulterior motives: who appraised instincts, shibboleths, memories, national customs and liberties, opportunities taken and missed – and incorporated his sense of them into his economic schemes. He was a public figure, who happened to be an economist: a quondam official, still consulted by government ministers, departmental heads, City directors and Royal Commissions, an inveterate diner-out who listened, argued and spread his influence at the tables, the chairman of a weekly magazine which formed opinion on the Liberal left, the editor of an eminent academic journal who saw all the submissions, a newspaper commentator, platform speaker and broadcaster. His great book of 1936 arose from all this: derived, too, from his earlier work and thought on behalf of the Liberal party.

Keynes had no illusions about Liberalism. Writing of Britain’s Industrial Future to the editor of the Observer in 1928, he said that the report received more publicity by appearing as a party manifesto than it would have done as a pamphlet co-authored by neutral economists. Its ideas, he predicted, would be purloined over the years by rival parties. ‘If one regards the activities and existence of a Liberal Party as a route to power, I agree that one is probably wasting one’s time’; but as a source of influence and as an accelerator of reforms, it was useful. ‘As things stand at present, the Liberal Party, split and divided as it is and with uncertain aims, provides an almost perfect tabernacle for independent thought which shall at the same time be … in touch with the realities of politics.’ In this Keynes proved right: the dangerous Liberal prescriptions of 1928–9 seemed safe enough by the general election year of 1935, when Treasury officials advised their Chancellor of the Exchequer, Neville Chamberlain, that expanded public borrowing would help to maintain the impetus of economic recovery. Chamberlain, among other acts, authorized a road-building programme costing £100 million.75

For a time Keynes gave vitality and even militancy to the Liberals: he saw himself as a lancer riding into the thick of the fight against impractical stupidity. Asked in 1926 to define the three groups of non-revolutionary reformers, Keynes had his answer pat. ‘A whig is a perfectly sensible Conservative. A radical is a perfectly sensible Labourite. A Liberal is anyone who is perfectly sensible.’⁷⁶

* The first communist was Alister Watson, a King’s mathematician turned physicist. When Anthony Blunt was elected to the Apostles in 1928, Keynes co-hosted a celebratory supper party attended by Blunt, Dickinson, Rylands, Sheppard and George Thomson. Contrary to some tall tales, Blunt was neither solely responsible for the election to the Apostles in 1932 of the future Soviet spy Guy Burgess nor a pervasive communist influence: during 1933 he attended only two meetings of the society.

* ‘Why is it’, Keynes asked, ‘that Sir Laming holds such very odd opinions? It is like asking me why he wears a top hat. He is a Conservative. The reasons are wrapped in the mists of history. But, roughly, I know them. He half understands an ancient theory, the premises of which he has forgotten.’ (CW, XIX, p. 811)