John Maynard Keynes

(1883-1946 )

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So influential was John Maynard Keynes in the middle third of the twentieth
century that an entire school of modern thought bears his name. Many of his ideas
were revolutionary; almost all were controversial. KEYNESIAN ECONOMICS serves as
a sort of yardstick that can define virtually all economists who came after him.
Keynes was born in Cambridge and attended Kings College, Cambridge, where he
earned his degree in mathematics in 1905. He remained there for another year to
study underALFRED MARSHALL and ARTHUR PIGOU, whose scholarship on the quantity
theory of money led to Keyness Tract on Monetary Reform many years later. After
leaving Cambridge, Keynes took a position with the civil service in Britain. While
there, he collected the material for his first book in economics, Indian Currency and
Finance, in which he described the workings of Indias monetary system. He
returned to Cambridge in 1908 as a lecturer, then took a leave of absence to work
for the British Treasury. He worked his way up quickly through the bureaucracy and
by 1919 was the Treasurys principal representative at the peace conference at
Versailles. He resigned because he thought the Treaty of Versailles was overly
burdensome for the Germans.
After resigning, he returned to Cambridge to resume teaching. A prominent
journalist and speaker, Keynes was one of the famous Bloomsbury Group of literary
greats, which also included Virginia Woolf and Bertrand Russell. At the 1944 Bretton
Woods Conference, where the International Monetary Fund was established, Keynes
was one of the architects of the postwar system of fixed exchange rates
(see FOREIGN EXCHANGE). In 1925 he married the Russian ballet dancer Lydia
Lopokova. He was made a lord in 1942. Keynes died on April 21, 1946, survived by
his father, John Neville Keynes, also a renowned economist in his day.
Keynes became a celebrity before becoming one of the most respected economists
of the century when his eloquent bookThe Economic Consequences of the
Peace was published in 1919. Keynes wrote it to object to the punitive reparations
payments imposed on Germany by the Allied countries after World War I. The
amounts demanded by the Allies were so large, he wrote, that a Germany that tried
to pay them would stay perpetually poor and, therefore, politically unstable. We
now know that Keynes was right. Besides its excellent economic analysis of
reparations, Keyness book contains an insightful analysis of the Council of Four
(Georges Clemenceau of France, Prime Minister David Lloyd George of Britain,
President Woodrow Wilson of the United States, and Vittorio Orlando of Italy).
Keynes wrote: The Council of Four paid no attention to these issues [which
included making Germany and Austro-Hungary into good neighbors], being
preoccupied with othersClemenceau to crush the economic life of his enemy,
Lloyd George to do a deal and bring home something which would pass muster for
a week, the President to do nothing that was not just and right (chap. 6, para.
2).
In the 1920s Keynes was a believer in the quantity theory of money (today
called MONETARISM). His writings on the topic were essentially built on the
principles he had learned from his mentors, Marshall and Pigou. In 1923 he
wrote Tract on Monetary Reform, and later he published Treatise on Money,both
on MONETARY POLICY. His major policy view was that the way to stabilize the
economy is to stabilize the price level, and that to do that the governments central
bank must lower INTEREST RATES when prices tend to rise and raise them when
prices tend to fall.
Keyness ideas took a dramatic change, however, asUNEMPLOYMENT in Britain
dragged on during the interwar period, reaching levels as high as 20 percent.
Keynes investigated other causes of Britains economic woes, and The General
Theory of Employment, Interest and Money was the result.
Keyness General Theory revolutionized the way economists think about economics.
It was pathbreaking in several ways, in particular because it introduced the notion
of aggregate demand as the sum of consumption, INVESTMENT, and government
spending; and because it showed (or purported to show) that full employment
could be maintained only with the help of government spending. Economists still
argue about what Keynes thought caused high unemployment. Some think he
attributed it to wages that take a long time to fall. But Keynes actually wanted
wages not to fall, and in fact advocated in the General Theory that wages be kept
stable. A general cut in wages, he argued, would decrease income, consumption,
and aggregate demand. This would offset any benefits to output that the lower
price of labor might have contributed.
Why shouldnt government, thought Keynes, fill the shoes of business by investing
in public works and hiring the unemployed? The General Theory advocated deficit
spending during economic downturns to maintain full employment. Keyness
conclusion initially met with opposition. At the time, balanced budgets were
standard practice with the government. But the idea soon took hold and the U.S.
government put people back to work on public works projects. Of course, once
policymakers had taken deficit spending to heart, they did not let it go.
Contrary to some of his critics assertions, Keynes was a relatively strong advocate
of free markets. It was Keynes, not ADAM SMITH, who said, There is no objection to
be raised against the classical analysis of the manner in which private self-interest
will determine what in particular is produced, in what proportions the factors of
production will be combined to produce it, and how the value of the final product
will be distributed between them.1 Keynes believed that once full employment had
been achieved by FISCAL POLICY measures, the market mechanism could then
operate freely. Thus, continued Keynes, apart from the necessity of central
controls to bring about an adjustment between the propensity to consume and the
inducement to invest, there is no more reason to socialise economic life than there
was before (p. 379).
Little of Keyness original work survives in modern economic theory. His ideas have
been endlessly revised, expanded, and critiqued. Keynesian economics today, while
having its roots in The General Theory, is chiefly the product of work by subsequent
economists including JOHN HICKS, JAMES TOBIN, PAUL SAMUELSON, Alan
Blinder, ROBERT SOLOW, William Nordhaus, Charles Schultze, WALTER HELLER,
and ARTHUR OKUN. The study of econometrics was created, in large part, to
empirically explain Keyness macroeconomic models. Yet the fact that Keynes is the
wellspring for so many outstanding economists is testament to the magnitude and
influence of his ideas.

Selected Works
1913. Indian Currency and Finance. Reprinted in Keynes, Collected Writings. Vol. 1.
1919. The Economic Consequences of the Peace. Reprinted in Keynes,Collected Writings. Vol. 2.
1920. The Economic Consequences of the Peace. New York: Harcourt, Brace, and Howe. Available
online at:http://www.econlib.org/library/YPDBooks/Keynes/kynsCP.html.
1923. A Tract on Monetary Reform. Reprinted in Keynes, Collected Writings. Vol. 4.
1925. The Economic Consequences of Mr. Churchill. Reprinted in Keynes, Collected Writings. Vol. 9.
1930. A Treatise on Money. Vol. 1: The Pure Theory of Money.Reprinted in Keynes, Collected
Writings. Vol. 5.
1930. A Treatise on Money. Vol. 2: The Applied Theory of Money.Reprinted in Keynes, Collected
Writings. Vol. 6.
1936. The General Theory of Employment, Interest and Money.Reprinted in Keynes, Collected
Writings. Vol. 7.
197188. Collected Writings. London: Macmillan, for the Royal Economic Society.

John Maynard Keynes
Also Listed In: Economists
Famous As: Economist
Nationality: British
Political Ideology: Liberal Party
Born On: 05 June 1883 AD Famous 5th June Birthdays
Zodiac Sign: Gemini Famous Geminis
Born In: CambridgeApril
Died On: 01 January 1970 AD
Place Of Death: East Sussex
Father: John Neville Keynes,
Mother: Florence Ada Keynes
Siblings: Sir Geoffrey Keynes, Margaret Neville Keynes
Spouse: Lydia Lopokova (m. 1925-1946)
Children: Sir Geoffrey Keynes
Education: King's College, Cambridge, Eton College, University of Cambridge
Works & Achievements: Became Advisor to several charitable trusts, Director of Bank of
England, His theories popularly known as 'Keynesian Economics' have formed the base for several
economic policies undertaken by Presidents George W. Bush and Barack Obama of the United
States, Prime Minister Gordon Brown of the United Kingdom and many other political figures
around the world
John Maynard Keynes
Keynesian economics gets its name, theories and principles from the great Economist, John
Maynard Keynes who changed the world of economics. John Maynard Keynes was a British
economist who transformed the widely followed traditional economic theories to make way for
revolutionary economic theories. Keynes is the creator and initiator of the use of fiscal and monetary
measures that are used to bring down the crisis situations brought about by economic recessions
and depressions. Keynes' thoughts and theories are followed and referred even today by
economists and economy students. Keyneisan ideas have been adopted by many political figures to
bring positive changes in economic stability in nations around the world. Some of the notable
Keynesian economics adopters are Presidents George W. Bush and Barack Obama of the United
States, Prime Minister Gordon Brown of the United Kingdom. Capitalist nations and countries taking
up the cause of social liberalism have strictly followed Keynes' economic path to build their nations.
It was after Keynes that the world started viewing the theory and practice of modern
macroeconomics in a bigger and better manner. The much influential Keynesian economics have
made way into several economic policies of governments. John Maynard Keynes is regarded as the
founding father of modern macroeconomics.
John Maynard Keynes Childhood
John Maynard Keynes was born on 5 June 1883 in Cambridge, England to a middle class family.
Keynes was the eldest child in a family of three children born to father John Neville Keynes who was
an economist and a lecturer in moral sciences at the University of Cambridge and mother Florence
Ada Keynes who was a local social reformer. Keynes was given love and attention as a child by his
parents.

Keynes received his primary education at home and in kindergarten. He went to St Faith's
preparatory school as a day pupil from 1892-1897. Keynes was a brilliant student according to his
teachers but had a careless nature and lacked determination in studies.

Education
Keynes was enrolled in Eton where he got an admission by earning a scholarship. He showed
brilliance in mathematics, classics and history. In 1902 Keynes left Eton to pursue broader studies in
King's College, Cambridge where he had earned a scholarship to pursue mathematics.

Keynes was urged by famous economist Alfred Marshall to become an economist but Keynes was
more interested in philosophy. While studying in Cambridge, Keynes was influenced by English
philosopher George Edward Moores analytic tradition in philosophy. Keynes also became a active
member of the semi-secretive Cambridge Apostles society, a debating club which was reserved for
the brightest students of the college. Keynes was a great student and attended various other
activities in college which made him the the President of the Cambridge University Liberal Club. In
May 1904 he received a first class B.A. in mathematics. Keynes had maintained cordial relations
with his alma mater throughout his life. In 1905 Keynes sat for his Tripos and in 1906 he appeared
for the Civil Service Exams.

Career
Keynes started his career as a civil servant which began in October 1906 when he joined as a clerk
in the India Office. Initially Keynes loved what he was doing but by 1908 he got bored and resigned
from his office. He left for Cambridge to study and work on probability theory. This mathematical
project was initially started out by funding meted out by Keynes father and the economist Arthur
Pigou. In 1909 Keynes came out with his very first professional economics article which was
published in the Economics Journal. It talked about the plausible effects the global economic
downturn on India could have. In 1909 Keynes was invited to join Cambridge as a lecturer in
economics. This was a course that was personally funded by Alfred Marshall. Keynes became richer
with his growing earnings as a lecturer and also by giving private tuitions to his students. Keynes
also earned as a research fellow in Cambridge. In 1911 Keynes became the editor of the Economic
Journal. By 1913 Keynes came out with his first published book, Indian Currency and Finance. It
was in this year that Keynes got noticed and was appointed as a member of the Royal Commission
on Indian Currency and Finance.

Keynes expertise soon became popular making him get a call from the British Government to take
up a role in the First World War. Formally Keynes had not resumed civil service in 1914 but he
travelled to London on governments request, days before the war. Keynes played a key role in
advising the Chancellor of the Exchequer (then Lloyd George) to not support the bankers demands
of suspending specie payments by converting bank notes into gold. Keynes stated that the citys
reputation would be hurt if payments were stopped. In January 1915 Keynes was recruited as an
official government position at the Treasury. Keynes designed British credit terms with its war allies
and also laid down the plan of collecting scarce currencies. Keynes was greatly appreciated for his
role and tremendous contributions in governmental theory formulations. According to economist
Robert Lekachman Keynes' nerve and mastery became legendary. It was the event of King's
Birthday Honours in 1917 when Keynes was made the Companion of the Order of the Bath as his
appreciation for wartime contributions. This was a turning point in Keynes career and future life. In
1919 Keynes moved forward by being appointed as the financial representative for the Treasury in
the 19 Versailles peace conference. Simultaneously Keynes was recruited as the Officer of the
Belgian Order of Leopold.

Treaty of Versailles was significant for Keynes as he had a leading role to play in it. Keynes aimed at
decreasing Germanys war reparation as he wanted to help the nation and her people to grow.
However, Keynes was excluded from the Treasury as the 1918 coupon election decided to keep out
Keynes from taking part in high level talks concerning reparations. Keynes was unsuccessful in the
Treaty which completely damaged his moral. Soon he resigned from the Treasury.

In June 1919 Keynes did not take the offer of a chairman of the British Bank of Northern Commerce
which was a salaried job of 2000. Keynes was highly disgusted with the damaging treaty. He
analysed the treaty and worked upon its damaging impacts which later appeared in his book The
Economic Consequences of the Peace published in 1919. Keynes upheld his brilliance as an
Economist in the book. His book not only portrayed economic analyses but also urged readers
compassion for Germany. Keynes wrote, I cannot leave this subject as though its just treatment
wholly depended either on our own pledges or on economic facts. The policy of reducing Germany
to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a
whole nation of happiness should be abhorrent and detestable,--abhorrent and detestable, even if it
were possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilised life
of Europe. Keynes made superb predictions of future (bringing out senses of compassion from
readers) If we aim deliberately at the impoverishment of Central Europe, vengeance, I dare predict,
will not limp. Nothing can then delay for very long that final war between the forces of Reaction and
the despairing convulsions of Revolution, before which the horrors of the late German war will fade
into nothing All that Keynes had predicted came out real when Germany went through its
hyperinflation in the Weimar Republic between 1921 and 1923 resulting in the downfall of the
Republic which brought about the World War II. With his The Economic Consequences of the
Peace Keynes was looked upon as a world figure who talked about anti-establishment. His world
fame made Keynes being offered a directorship of a major British Bank.

Rise
Keynes completed his A Treatise on Probability and published it in 1921. The book rejected and
attacked the traditional classical theory of probability and proposed a "logical-relationist" theory. The
treatise was great book that combined fundamental philosophy along with extensive mathematical
formulations. In the 1920s Keynes upheld his journalistic career besides pursuing his academic
gaols. He sold his work in the international market and simultaneously worked as a financial
consultant in London. In 1922 Keynes came out with his A Revision of the Treaty which was a
continuing work on his persistent quests on reduction of German reparations. In 1923 Keynes
attacked the post World War I deflation policies by publishing A Tract on Monetary Reform. In 1924
Keynes wrote an obituary dedicated to his former tutor Alfred Marshall which Schumpeter called the
most brilliant life of a man of science I have ever read. In the 1920s itself Britain saw itself struggling
greatly from unemployment which made Keynes propose depreciation of sterling in order to boost
the job market by making British exports more affordable. From 1924 Keynes started taking fiscal
readings to help his government create jobs by spending on public works.

The Great Depression saw Keynes coming up with great many theories, ideas and books to deal
with the situation and come out with minimum losses. Keynes published his work Treatise on
Money in 1930 which stated that the cause of rise in unemployment lay in the amount of money
being saved which when exceeds the amount being invested, happening due to very high interest
rates leads to unemployment. In the 1920s itself Keynes had started stating his theories on the
relationship between unemployment, money and prices which made him come up with his books in
the later years. In 1933 when the Great Depression was rising very high Keynes published The
Means to Prosperity which talked about policy recommendations for tackling unemployment in a
global recession and counter cyclical methods in public spending. In 1931 Keynes got massive
support for his views on counter-cyclical public spending in Chicago which was America's foremost
centre for economic views alternative to the mainstream in those times. In late 1933 Keynes was
persuaded by Felix Frankfurter to address President Roosevelt directly which he obliged to by
sending letters and going face to face in 1934. Keynes great efforts started being adopted by
America to formulate its economic policy post 1939.

Several Keynesian policies were adopted by Sweden and Germany. Keynes greatest work the
General Theory of Employment, Interest and Money was published in 1936 which entirely
challenged the previous neo-classical economic paradigm which believed that the market would
naturally establish full employment equilibrium if it was not controlled by government interference.

II World War
In 1940 Keynes came out with his How to Pay for the War which discussed about the methods and
techniques like taxation, compulsory saving (essentially workers loaning money to the government),
rather than deficit spending that could well save nations from war losses. His book was all about war
efforts that were to be taken in order to ensure financial stabilities. Keynes was invited to join as one
of the Court of Directors of the Bank of England in September 1941 which he served till April 1942.
In June 1942 Keynes got rewarded for his services with a hereditary peerage in the King's Birthday
Honours. On 7 July Keynes was upgraded on his title, being gazetted as Baron Keynes, of Tilton in
the County of Sussex.

Keynesian Economics
Keynes is regarded as a man having the greatest impact on 20
th
century economy around the world.
Though Keynes economics were rejected by the British government many of his theories have been
combined with neo-classical economics to produce Neo-Keynesian economics. Several nations
adopted Keynesian economics to formulate their countrys economic and governmental laws. Since
the end of the Great Depression till the mid-1970s, Keynes inspired many economic policy makers in
Europe, America and much of the rest of the world. Renowned economist like John Kenneth
Galbraith, John Hicks, Franco Modigliani, and Paul Samuelson have been greatly influenced by
Keynesian theories and ideas which led them to interpret Keynes theories and form new age
modern economic theories.

Personal Life
Keynes was to known to have several romantic and sexual relationships with men. Keynes had been
in love with artist Duncan Grant, whom he met in 1908. According to other records Keynes was also
involved with writer Lytton Strachey. Keynes had been open about his homosexual affairs. In the
period between 1901 to1915 he maintained separate diaries in which he tabulated his many
homosexual encounters. In 1921 Keynes fell in love with Lydia Lopokova, a well-known Russian
ballerina, and one of the stars of Serge Diaghilev's Ballets Russes with whom he got married in
1925.

Death
Keynes was a hardworking individual and did not think about health during his work, whether for the
public nor for his friends and family. Keynes was attacked by a series of heart attacks which turned
fatal. Keynes died due to a heart attack which took place at Tilton, his farmhouse home near Firle,
East Sussex, UK, on 21 April 1946.
JOHN MAYNARD KEYNES TIMELINE
1883:
John Maynard Keynes was born on 5 June
1892-1897-:
He went to St Faith's preparatory school as a day pupil
1902:
Keynes left Eton to pursue broader studies in King's College, Cambridge where he had earned a
scholarship to pursue mathematics
1904:
He received a first class B.A. in mathematics
1905:
Keynes sat for his Tripos and in 1906 he appeared for the Civil Service Exams
1906:
Keynes started his career as a civil servant which began in October when he joined as a clerk in the
India Office
1908:
He got bored and resigned from his office and left for Cambridge to study and work on probability
theory
1909:
Keynes came out with his very first professional economics article which was published in the
Economics Journal. It talked about the plausible effects the global economic downturn on India
could have
1909:
Keynes was invited to join Cambridge as a lecturer in economics
1911:
Keynes became the editor of the Economic Journal.
1913:
By 1913 Keynes came out with his first published book, Indian Currency and Finance
1914:
Formally Keynes had not resumed civil service but he travelled to London on governments request,
days before the war
1915:
In January Keynes was recruited as an official government position at the Treasury
1919:
Keynes moved forward by being appointed as the financial representative for the Treasury in the 19
Versailles peace conference. Simultaneously Keynes was recruited as the Officer of the Belgian
Order of Leopold
1919:
He analysed the treaty and worked upon its damaging impacts which later appeared in his book
The Economic Consequences of the Peace
1921:
Keynes completed his A Treatise on Probability and published it
1921:
Keynes fell in love with Lydia Lopokova, a well-known Russian ballerina, and one of the stars of
Serge Diaghilev's Ballets Russes
1922:
Keynes came out with his A Revision of the Treaty which was a continuing work on his persistent
quests on reduction of German reparations
1923:
Keynes attacked the post World War I deflation policies by publishing A Tract on Monetary Reform
1924:
Keynes wrote an obituary dedicated to his former tutor Alfred Marshall which Schumpeter called
the most brilliant life of a man of science I have ever read.
1924:
Keynes started taking fiscal readings to help his government create jobs by spending on public
works
1925:
He got married to Lydia
1930:
Keynes published his work Treatise on Money which stated that the cause of rise in unemployment
lay in the amount of money being saved which when exceeds the amount being invested,
happening due to very high interest rates leads to unemployment
1931:
Keynes got massive support for his views on counter-cyclical public spending in Chicago which was
America's foremost centre for economic views alternative to the mainstream in those times
1933:
When the Great Depression was rising very high Keynes published The Means to Prosperity which
talked about policy recommendations for tackling unemployment in a global recession and counter
cyclical methods in public spending
1933:
Keynes was persuaded by Felix Frankfurter to address President Roosevelt directly
1934:
He sent letters to President Roosevelt and went face to face
1936:
Keyness greatest work the General Theory of Employment, Interest and Money was published
which entirely challenged the previous neo-classical economic paradigm
1939:
Keynes great efforts started being adopted by America to formulate its economic policy post
1940:
Keynes came out with his book, How to Pay for the War which discussed about the methods and
techniques like taxation, compulsory saving (essentially workers loaning money to the government),
rather than deficit spending that could well save nations from war losses
1941:
Keynes was invited to join as one of the Court of Directors of the Bank of England in September
1942:
He served as one of Directors of Bank of England till April
1942:
In June Keynes got rewarded for his services with a hereditary peerage in the King's Birthday
Honours
1942:
On 7 July Keynes was upgraded on his title, being gazetted as Baron Keynes, of Tilton in the
County of Sussex
1946:
Keynes died due to a heart attack which took place at Tilton, his farmhouse home near Firle, East
Sussex, UK, on 21 April

John Maynard Keynes

John Maynard Keynes was born on 5th June 1883 at 6 Harvey Road,Cambridge. His father, John
Neville Keynes was an economist who taught atCambridge University. His mother, Florence
Keynes had been educated atNewnham Collegeand was the city's first woman mayor.
His biographer, Alexander Cairncross, has pointed out: "The family kept three servants - a cook, a
parlour maid, and a nursery maid - and there was a German governess. In his first few years
Maynard was a sickly child, suffering to begin with from frequent attacks of diarrhoea and thereafter
from feverishness... In the summer of 1889 he had an attack of rheumatic fever and a few months
later he had to give up attending his kindergarten for a time, suffering from what was diagnosed as
St Vitus's dance."
In 1897 Keynes was entered for the Eton College scholarship examination and attained the tenth out
of fifteen places and was first equal in mathematics. In his final year he won an Eton scholarship
to King's College, in mathematics and classics. One of his tutors was Alfred Marshall. Keynes was
invited to join the Apostles, a small, secret society of dons and undergraduates who met to discuss
ethical and political issues. The group included Lytton Strachey, Leonard Woolf, E. M.
Forsterand Bertrand Russell. His friendship with Woolf and Russell brought him into contact with
leaders of the Fabian Society, including Sidney Webb, Beatrice Webb and George Bernard Shaw.
When Keynes graduated in 1905 he took up a career in the Civil Service. He gained a Fellowship
atKing's College in 1909 and as well as teaching Keynes' began writing on economic issues. He
became editor of the Economic Journal in 1911 and his first book Indian Currency and Finance was
published in 1913. This was based on lectures he had delivered at the London School of
Economics two years previously.
Keynes was a pacifist but wanted to contribute to Britain's war effort. He eventually decided to join
the Treasury Department of the Civil Service that was dealing with the financial side of the First
World War. According to Kingsley Martin, his fellow conscientious objector, Bertrand Russell,
claimed that Keynes' work at the Treasury "consisted of finding ways of killing the maximum number
of Germans at the minimum expense".
By 1919 Keynes was the senior Treasury official sent as part of the British delegation to
the Versailles Peace Conference. John Maynard Keynes totally disagreed with the harsh terms
negotiated at Versailles and after resigning returned to England and wrote The Economic
Consequences of the Peace (1919). The book was very controversial and although many disagreed
with his conclusions, it brought him a great deal of attention. In the book Keynes argued that the war
reparations imposed on Germany could not be paid. This he warned, would led to further conflict in
Europe.
Although Keynes continued to teach at Cambridge University he also contributed a great number of
articles to various newspapers and magazines. In 1923 he became chairman of
the Liberal journal, The Nation and used it as a vehicle to attack the economic policies of Stanley
Baldwin and his Conservative Government. As Chancellor of the Exchequer, Winston
Churchill came under attack for his decision to return Britain to the gold standard.
Keynes always had a strong interest in ballet. When he initially saw Lydia Lopokova he was
unimpressed: "she's a rotten dancer - she has such a stiff bottom". When he saw her again towards
the end of 1921 in other Sergei Diaghilev ballets, including The Sleeping Princess, he fell deeply in
love with her and they began a romantic relationship.
A member of the Bloomsbury Group, Keynes introduced Lopokova to his friends. This
included Virgina Woolf, Leonard Woolf, Lytton Strachey, Vanessa Bell, Clive Bell, and Duncan
Grant. They did not always make her feel welcome. According to Margot Fonteyn: "When Keynes
began to think of marriage, some of his friends were filled with foreboding. They tended to find
Lopokova bird-brained. In reality she was intelligent, wise, and witty, but not intellectual... She artfully
used, and intentionally misused, English to unexpectedly comic and often outrageous effect. Keynes
was constantly amused and enchanted."
Lydia Lopokova and
John Maynard Keynes
Quentin Bell claimed that Virginia Woolf liked Lydia Lopokova. "Lydia as a friend, Lydia as a visiting
bird hopping gaily from twig to twig was, Virginia thought, very delightful. She was pretty, high-
spirited, a comic, a charmer and extremely well-disposed. In that gay, peripatetic capacity she was
altogether irreproachable. But how, without two solid ideas to rub together, could she fail to destroy
the intellectual comforts of Maynard Keynes's friends, and indeed of Maynard himself?" Lytton
Stracheydescribed her as a "half-witted canary".
Vanessa Bell, like everyone else, was enchanted by Lydia, until Keynes announced he intended to
marry her. Vanessa wrote to Keynes: "Clive (Bell) says he thinks it is impossible for any one of us...
to introduce a new wife or husband into the existing circle... We feel that no one can come into the
sort of intimate society we have without altering it." Michael Holroyd, the author of Lytton
Strachey (1994) pointed out that Duncan Grant, his former lover, had good reason to object to the
proposed marriage: "Perhaps Duncan Grant had some excuse for resenting the emergence of a
second great love into Maynard's life. But it was the others who were really malicious. As Maynard's
mistress, Lydia had added something childlike and bizarre to Bloomsbury - she was a more welcome
visitor than Clive's over-chic mistress Mary Hutchinson. But don't marry her... . If he did so Lydia
would give up her dancing, Vanessa warned, become expensive, and soon bore him dreadfully. But
what Vanessa and the other Charlestonians chiefly minded was Lydia's effect as Maynard's wife on
Bloomsbury itself. Living a quarter-of-a-mile from Charleston at Tilton House on the edge of the
South Downs, she would sweep in and stop Vanessa painting - and these interruptions were always
so scatterbrained!"
Keynes married Lydia Lopokova on 4th August 1925 (the year of her divorce from Randolfo
Barocchi) atSt Pancras Registry Office. The wedding received a considerable amount of publicity.
For example,Vogue Magazine included a full-page picture with the caption: "The marriage of the
most brilliant of English economists with the most popular of Russian dancers makes a delightful
symbol of the mutual dependence upon each other of art and science."
They visited the Soviet Union on their honeymoon. His biographer, Alexander Cairncross, has
argued: "The marriage proved a great success and was a turning point in Keynes's life. Lopokova
had gifts to which Bloomsbury was blind and she had a firm hold on his affections. When apart they
wrote every day and she took charge of him in his illnesses and in wartime, when his energies had
to be carefully husbanded. The couple had no children." The couple lived at 46 Gordon
Square and Tilton House nearFirle in East Sussex.
Keynes became increasingly interested in what he called "the management of the economy".
According to his biographer, Alec Cairncross: "Two forms of economic instability preoccupied him.
Of these the first was instability of prices, inflation, deflation, and all that went with them; the second
was unemployment and the fluctuations in economic activity giving rise to it. The two were, of
course, interconnected since the movement of prices reacted on the level of activity: but the
analytical approach to the problem of inflation, for example, was very different from the analysis
necessary for an explanation of unemployment."
Virginia Woolf visited the couple at Tilton House on 3rd September 1927 with J. T. Sheppard: "We
picked the bones of Maynard's grouse of which there were three to eleven people. This stinginess is
a constant source of delight to Nessa - her eyes gleamed as the bones went round. We had a
brilliant entertainment afterwards... Maynard was crapulous and obscene beyond words, lifting his
left leg and singing a song about women. Lydia was Queen Victoria dancing to a bust of Albert."
Keynes visited the Soviet Union several times. He was interested in the economic measures being
taken by the communist regime and when he returned to England he wrote The End of Laissez-
Faire. After the onset on the Great Depression in 1929, Keynes began to address the problems of
unemployment. In a series of articles, The Means to Prosperity , written in The Times, Keynes
argued that the government should "spend its way out of the depression".
During this period he was a member of the Liberal Party and worked closely with its leader, David
Lloyd George. In 1929 Lloyd George published a pamphlet, We Can Conquer Unemployment, where
he proposed a government scheme where 350,000 men were to be employed on road-building,
60,000 on housing, 60,000 on telephone development and 62,000 on electrical development. The
cost would be 250 million, and the money would be raised by loan. Keynes also published a
pamphlet supporting Lloyd George's scheme.
These views impressed Richard Tawney who wrote a letter to Ramsay MacDonald, the leader of
theLabour Party, about the forthcoming election: "If the Labour Election Programme is to be of any
use it must have something concrete and definite about unemployment... What is required is a
definite statement that (a) Labour Government will initiate productive work on a larger scale, and will
raise a loan for the purpose. (b) That it will maintain from national funds all men not absorbed in
such work." MacDonald refused to be persuaded by Tawney's ideas and rejected the idea that
unemployment could be cured by public works.
In the 1929 General Election the Conservatives won 8,664,000 votes, the Labour Party 8,360,000
and the Liberals 5,300,000. However, the bias of the system worked in Labour's favour, and in
the House of Commons the party won 287 seats, the Conservatives 261 and the Liberals 59.
MacDonald became Prime Minister again, but as before, he still had to rely on the support of the
Liberals to hold onto power.
The election of the Labour Government coincided with an economic depression and Ramsay
MacDonaldwas faced with the problem of growing unemployment. In January 1929, 1,433,000
people were out of work, a year later it reached 1,533,000. By March 1930, the figure was
1,731,000. In June it reached 1,946,000 and by the end of the year it reached a staggering
2,725,000. That month MacDonald invited a group of economists, including John Maynard
Keynes, J. A. Hobson, George Douglas Cole and Walter Layton, to discuss this problem.
In March 1931 Ramsay MacDonald asked Sir George May, to form a committee to look into Britain's
economic problems. The committee included two members that had been nominated from the three
main political parties. At the same time, John Maynard Keynes, the chairman of the Economic
Advisory Council, published his report on the causes and remedies for the depression. This included
an increase in public spending and by curtailing British investment overseas.
Philip Snowden rejected these ideas and this was followed by the resignation of Charles Trevelyan,
the Minister of Education. "For some time I have realised that I am very much out of sympathy with
the general method of Government policy. In the present disastrous condition of trade it seems to
me that the crisis requires big Socialist measures. We ought to be demonstrating to the country the
alternatives to economy and protection. Our value as a Government today should be to make people
realise that Socialism is that alternative."
When the May Committee produced its report in July, 1931, it forecast a huge budget deficit of 120
million and recommended that the government should reduce its expenditure by 97,000,000,
including a 67,000,000 cut in unemployment benefits. The two Labour Party nominees on the
committee, Arthur Pugh and Charles Latham, refused to endorse the report. As David W. Howell has
pointed out: "A committee majority of actuaries, accountants, and bankers produced a report urging
drastic economies; Latham and Pugh wrote a minority report that largely reflected the thinking of the
TUC and its research department. Although they accepted the majority's contentious estimate of the
budget deficit as 120 million and endorsed some economies, they considered the underlying
economic difficulties not to be the result of excessive public expenditure, but of post-war deflation,
the return to the gold standard, and the fall in world prices. An equitable solution should include
taxation of holders of fixed-interest securities who had benefited from the fall in prices."
The cabinet decided to form a committee consisting of Ramsay MacDonald, Philip Snowden, Arthur
Henderson, Jimmy Thomas and William Graham to consider the report. On 5th August, John
Maynard Keynes wrote to MacDonald, describing the May Report as "the most foolish document I
ever had the misfortune to read." He argued that the committee's recommendations clearly
represented "an effort to make the existing deflation effective by bringing incomes down to the level
of prices" and if adopted in isolation, they would result in "a most gross perversion of social justice".
Keynes suggested that the best way to deal with the crisis was to leave the gold standard and
devalue sterling. Two days later, Sir Ernest Harvey, the deputy governor of the Bank of England,
wrote to Snowden to say that in the last four weeks the Bank had lost more than 60 million in gold
and foreign exchange, in defending sterling. He added that there was almost no foreign exchange
left.
Philip Snowden presented his recommendations to the MacDonald Committee that included the plan
to raise approximately 90 million from increased taxation and to cut expenditure by 99 million. 67
million was to come from unemployment insurance, 12 million from education and the rest from the
armed services, roads and a variety of smaller programmes. Arthur Henderson and William
Grahamrejected the idea of the proposed cut in unemployment benefit and the meeting ended
without any decisions being made.
The cabinet met on 19th August but they were unable to agree on Snowden's proposals. He warned
that balancing the budget was the only way to restore confidence in sterling. Snowden argued that if
his recommendations were not accepted, sterling would collapse. He added "that if sterling went the
whole international financial structure would collapse, and there would be no comparison between
the present depression and the chaos and ruin that would face us."
The following day MacDonald and Snowden had a private meeting with Neville
Chamberlain, Samuel Hoare, Herbert Samuel and Donald MacLean to discuss the plans to cut
government expenditure. Chamberlain argued against the increase in taxation and called for further
cuts in unemployment benefit. MacDonald also had meetings with trade union leaders,
including Walter Citrine and Ernest Bevin. They made it clear they would resist any attempts to put
"new burdens on the unemployed".
At another meeting of the Cabinet on 20th August, Arthur Henderson argued that rather do what the
bankers wanted, Labour should had over responsibility to the Conservatives and Liberals and leave
office as a united party. According to Malcolm MacDonald, the opposition to the cuts in public
expenditure was led by Henderson, Albert Alexander and William Graham. MacDonald went to
seeGeorge V about the economic crisis on 23rd August. He warned the King that several Cabinet
ministers were likely to resign if he tried to cut unemployment benefit.
After another Cabinet meeting where no agreement about how to deal with the economic crisis could
be achieved, Ramsay MacDonald went to Buckingham Palace to resign. Sir Clive Wigram, the
King's private secretary, later recalled that George V "impressed upon the Prime Minister that he
was the only man to lead the country through the crisis and hoped that he would reconsider the
situation." At a meeting with Stanley Baldwin, Neville Chamberlain and Herbert Samuel MacDonald
told them that if he joined a National Government it "meant his death warrant". According to
Chamberlain he said "he would be a ridiculous figure unable to command support and would bring
odium on us as well as himself."
On 24th August 1931 MacDonald returned to the palace and told the King that he had the Cabinet's
resignation in his pocket. The King replied that he hoped that MacDonald "would help in the
formation of a National Government." He added that by "remaining at his post, his position and
reputation would be much more enhanced than if he surrendered the Government of the country at
such a crisis." Eventually, he agreed to form a National Government.
John Maynard Keynes was extremely active in his campaign to encourage the government to take
more responsibility for running the economy. In 1931 he agreed an amalgamation of the Nation with
the New Statesman, a journal owned by the Fabian Society. Keynes now became a regular
contributor to what was now Britain's leading intellectual weekly.
In 1936 Keynes published his most important book A General Theory of Employment, Interest and
Money. It revolutionized economic theory by showing how unemployment could occur involuntarily.
In the book Keynes argued that the lack of demand for goods and rising unemployment could be
countered by increased government expenditure to stimulate the economy. His views on the planned
economy influenced President Franklin D. Roosevelt and was a factor in the introduction of the New
Deal and the economic policies of Britain's post-war Labour Government.
Bertrand Russell became friendly with Keynes. He later argued: "I do not know enough economics to
have an expert opinion on Keynes's theories, but so far as I am able to judge it seems to me to be
owing to him that Britain has not suffered from large-scale unemployment in recent years. I would go
further and say that if his theories had been adopted by financial authorities throughout the world the
great depression would not have occurred.... Keynes's intellect was the sharpest and clearest that I
have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom
emerged without feeling something of a fool. I was sometimes inclined to feel that so much
cleverness must be incompatible with depth, but I do not think this feeling was justified."
Alexander Cairncross, his biographer, has argued that his wife, Lydia Lopokova, looked after him
when he became ill in 1936: "From the summer of 1936 Keynes was affected by a prolonged spell of
illness, beginning with chest pains and breathlessness. After a complete collapse in May 1937 heart
trouble was diagnosed and a complete rest prescribed. He gradually improved, and was writing
occasional letters and even the odd article by July 1937. But when he returned to London and Tilton
in late September he still needed Lydia's constant care to prevent overexcitement and overwork, and
he continued to need it for the rest of his life." Margot Fonteyn added: "From when Keynes suffered
his first serious illness in 1937... the total dedication she had never quite mustered for her career
came to flower. She was a devoted wife, forsaking all interests save her husband's health and work
while entertaining him and their friends with her unpredictable remarks."
During the Second World War Keynes was an unpaid advisor to the Chancellor of the Exchequer
and wrote the influential How to Pay for the War (1940). He attended the Bretton Woods
Conference in 1944 and the Savannah Conference in 1946. He was also involved in the negotiations
on Lend-Lease and the US loan to Britain.
John Maynard Keynes, who had suffered from heart problems for many years, died on 21st April
1946.
John Simkin, September 1997 - April 2014


Lord, John Maynard Keynes
(1883-1946)
John Maynard Keynes was born in Cambridge, England. His father, Dr. John
Neville Keynes, occupied a high level administrative position at the university.
Maynard's mother was one of the earliest female students to attend Cambridge.
It therefore can be seen that Maynard had a very enriched childhood.
After attending Eton, Keynes went to Cambridge.1 His first dissertation (King's)
was on the theory of probability. And while it certainly did look like Keynes, at
first, was going to concentrate his abilities on mathematics, it was to economics
he was to turn. Indeed, he was tempted to go to the bar, which would normally
lead to positions of political power; but, instead, he chose a course which would
lead him to be an advisor to those in political power: he chose the civil service.
After the competition (he came second) he was appointed to a position in Foreign
Affairs, specifically, the department that extended advice on the administration
of India, which then was one of England's Dominions. (He would have preferred
the Treasury Department.2) Fortunately, in his first position with the civil
service, - boredom overtook him.3
As a result of a reorganization of the economics department at Cambridge, an
opportunity opened up for Keynes (he had earlier come under the influence of its
head, Alfred Marshall). And so, we see that Keynes resigned his position with
government and went back to Cambridge to teach.
With the First World War having put a huge strain on the British economy
(which, for the previous 150 years, had been the engine for the entire world) a
call went out for fresh young minds. In 1915, Keynes was finally offered a job at
the British Treasury. Given his position at Treasury, Keynes was to take an
active part in the war effort, and, indeed, he was part of the British team sent to
the Paris Peace Conference of 1919. The result of the conference was not,
however, to Keynes' liking. On his return to England, Keynes resigned his
position with Treasury and turned bitterly to writing out his thoughts on the
peace process. In the fall of 1919, out came his book, The Economic Consequences
of the Peace. Basically, Keynes was of the view that the amount and the manner
by which Germany was to pay war reparations to the victorious allies would lead
to future problems. Initially, these provisions in the treaty would hamper
Germany's post war economy; and, ultimately, it would lead Germany's
repudiation of it and a rearming of all Europe. Quite a controversy sprung up
over Keynes' views and predictions. This particular controversy over the treaty
signed in Paris in 1919 was soon to die away (mainly because the predictions
almost immediately started to materialize). My point, however, is, that this
controversy, it seems, was to ever put Keynes right in the middle of any economic
controversy that thereafter came along. The principal Keynesian controversy -
the one we shall come to shortly - would survive the death of Keynes; is yet with
us today; and, will remain for a long time yet to come.
With the world wide slump, post 1929, Keynes set himself to the task of
explaining and of coming up with new methods to control trade-cycles. In the
result two books were spawned: A Treatice on Money (London: MacMillan, 1930)
and The General Theory of Employment, I nterest and Money (London:
MacMillan, 1936). In these books Keynes pronounced that there should be both
national and international programs that would lead to a unified monetary
policy. Further, Keynes came to the view that a national budget was to serve not
only the purpose of good financial planning for government revenues and
expenditures; but, that, it ought to be used as a major instrument in the planning
of the national economy. What was needed, in Keynes's view, were policies that
would regulate the booms and slumps of the trade cycle, viz., that it was the
responsibility of government to regulate the levels of employment and
investment. He was of the view that economic equilibrium could, and should, be
restored and maintained by official action. In such a scheme there was not much
room for the classical theory that espoused laissez-faire.4
Keynesian theory, of course, is very appealing to politicians; it has ever since its
pronouncement. What has occurred, and this is its great defect, is that politicians
not only spend in the slumps (as is called for by Keynesian theory), but they also
spend during the boom years.5 In 1936, the United States, in the person F. D.
Roosevelt, quite out of keeping with its constitution, was to embrace Keynesian
theory with the announcement of the "New Deal."6
What Keynes' General Theory did, was to throw economists into two violently
opposed camps.7 However, as it turned out, and principally because of its appeal
to free spending politicians, the Keynesians, up to the 1980s, were to have their
way. The fact is, that Keynesian economics applied during good times, - bring on
bad times. Countries, such as Canada and Great Britain, in the 1960s and 1970s,
went about setting up massive government systems based on the Platonic
visions had by the "liberals" among us; in the process these social designers
imposed on the working citizens an ever increasing debt; and in the process
profaned Keynes. The servicing of this debt took an ever larger bite out of
government operating budgets, and, reality gradually seeped back in, as the
option of more taxing disappeared.8
_______________________________
John Maynard Keynes

John Maynard Keynes was born on 5th June 1883 at 6 Harvey Road,Cambridge. His father, John
Neville Keynes was an economist who taught atCambridge University. His mother, Florence
Keynes had been educated atNewnham Collegeand was the city's first woman mayor.
His biographer, Alexander Cairncross, has pointed out: "The family kept three servants - a cook, a
parlour maid, and a nursery maid - and there was a German governess. In his first few years
Maynard was a sickly child, suffering to begin with from frequent attacks of diarrhoea and thereafter
from feverishness... In the summer of 1889 he had an attack of rheumatic fever and a few months
later he had to give up attending his kindergarten for a time, suffering from what was diagnosed as
St Vitus's dance."
In 1897 Keynes was entered for the Eton College scholarship examination and attained the tenth out
of fifteen places and was first equal in mathematics. In his final year he won an Eton scholarship
to King's College, in mathematics and classics. One of his tutors was Alfred Marshall. Keynes was
invited to join the Apostles, a small, secret society of dons and undergraduates who met to discuss
ethical and political issues. The group included Lytton Strachey, Leonard Woolf, E. M.
Forsterand Bertrand Russell. His friendship with Woolf and Russell brought him into contact with
leaders of the Fabian Society, including Sidney Webb, Beatrice Webb and George Bernard Shaw.
When Keynes graduated in 1905 he took up a career in the Civil Service. He gained a Fellowship
atKing's College in 1909 and as well as teaching Keynes' began writing on economic issues. He
became editor of the Economic Journal in 1911 and his first book Indian Currency and Finance was
published in 1913. This was based on lectures he had delivered at the London School of
Economics two years previously.
Keynes was a pacifist but wanted to contribute to Britain's war effort. He eventually decided to join
the Treasury Department of the Civil Service that was dealing with the financial side of the First
World War. According to Kingsley Martin, his fellow conscientious objector, Bertrand Russell,
claimed that Keynes' work at the Treasury "consisted of finding ways of killing the maximum number
of Germans at the minimum expense".
By 1919 Keynes was the senior Treasury official sent as part of the British delegation to
the Versailles Peace Conference. John Maynard Keynes totally disagreed with the harsh terms
negotiated at Versailles and after resigning returned to England and wrote The Economic
Consequences of the Peace (1919). The book was very controversial and although many disagreed
with his conclusions, it brought him a great deal of attention. In the book Keynes argued that the war
reparations imposed on Germany could not be paid. This he warned, would led to further conflict in
Europe.
Although Keynes continued to teach at Cambridge University he also contributed a great number of
articles to various newspapers and magazines. In 1923 he became chairman of
the Liberal journal, The Nation and used it as a vehicle to attack the economic policies of Stanley
Baldwin and his Conservative Government. As Chancellor of the Exchequer, Winston
Churchill came under attack for his decision to return Britain to the gold standard.
Keynes always had a strong interest in ballet. When he initially saw Lydia Lopokova he was
unimpressed: "she's a rotten dancer - she has such a stiff bottom". When he saw her again towards
the end of 1921 in other Sergei Diaghilev ballets, including The Sleeping Princess, he fell deeply in
love with her and they began a romantic relationship.
A member of the Bloomsbury Group, Keynes introduced Lopokova to his friends. This
included Virgina Woolf, Leonard Woolf, Lytton Strachey, Vanessa Bell, Clive Bell, and Duncan
Grant. They did not always make her feel welcome. According to Margot Fonteyn: "When Keynes
began to think of marriage, some of his friends were filled with foreboding. They tended to find
Lopokova bird-brained. In reality she was intelligent, wise, and witty, but not intellectual... She artfully
used, and intentionally misused, English to unexpectedly comic and often outrageous effect. Keynes
was constantly amused and enchanted."
Lydia Lopokova and
John Maynard Keynes
Quentin Bell claimed that Virginia Woolf liked Lydia Lopokova. "Lydia as a friend, Lydia as a visiting
bird hopping gaily from twig to twig was, Virginia thought, very delightful. She was pretty, high-
spirited, a comic, a charmer and extremely well-disposed. In that gay, peripatetic capacity she was
altogether irreproachable. But how, without two solid ideas to rub together, could she fail to destroy
the intellectual comforts of Maynard Keynes's friends, and indeed of Maynard himself?" Lytton
Stracheydescribed her as a "half-witted canary".
Vanessa Bell, like everyone else, was enchanted by Lydia, until Keynes announced he intended to
marry her. Vanessa wrote to Keynes: "Clive (Bell) says he thinks it is impossible for any one of us...
to introduce a new wife or husband into the existing circle... We feel that no one can come into the
sort of intimate society we have without altering it." Michael Holroyd, the author of Lytton
Strachey (1994) pointed out that Duncan Grant, his former lover, had good reason to object to the
proposed marriage: "Perhaps Duncan Grant had some excuse for resenting the emergence of a
second great love into Maynard's life. But it was the others who were really malicious. As Maynard's
mistress, Lydia had added something childlike and bizarre to Bloomsbury - she was a more welcome
visitor than Clive's over-chic mistress Mary Hutchinson. But don't marry her... . If he did so Lydia
would give up her dancing, Vanessa warned, become expensive, and soon bore him dreadfully. But
what Vanessa and the other Charlestonians chiefly minded was Lydia's effect as Maynard's wife on
Bloomsbury itself. Living a quarter-of-a-mile from Charleston at Tilton House on the edge of the
South Downs, she would sweep in and stop Vanessa painting - and these interruptions were always
so scatterbrained!"
Keynes married Lydia Lopokova on 4th August 1925 (the year of her divorce from Randolfo
Barocchi) atSt Pancras Registry Office. The wedding received a considerable amount of publicity.
For example,Vogue Magazine included a full-page picture with the caption: "The marriage of the
most brilliant of English economists with the most popular of Russian dancers makes a delightful
symbol of the mutual dependence upon each other of art and science."
They visited the Soviet Union on their honeymoon. His biographer, Alexander Cairncross, has
argued: "The marriage proved a great success and was a turning point in Keynes's life. Lopokova
had gifts to which Bloomsbury was blind and she had a firm hold on his affections. When apart they
wrote every day and she took charge of him in his illnesses and in wartime, when his energies had
to be carefully husbanded. The couple had no children." The couple lived at 46 Gordon
Square and Tilton House nearFirle in East Sussex.
Keynes became increasingly interested in what he called "the management of the economy".
According to his biographer, Alec Cairncross: "Two forms of economic instability preoccupied him.
Of these the first was instability of prices, inflation, deflation, and all that went with them; the second
was unemployment and the fluctuations in economic activity giving rise to it. The two were, of
course, interconnected since the movement of prices reacted on the level of activity: but the
analytical approach to the problem of inflation, for example, was very different from the analysis
necessary for an explanation of unemployment."
Virginia Woolf visited the couple at Tilton House on 3rd September 1927 with J. T. Sheppard: "We
picked the bones of Maynard's grouse of which there were three to eleven people. This stinginess is
a constant source of delight to Nessa - her eyes gleamed as the bones went round. We had a
brilliant entertainment afterwards... Maynard was crapulous and obscene beyond words, lifting his
left leg and singing a song about women. Lydia was Queen Victoria dancing to a bust of Albert."
Keynes visited the Soviet Union several times. He was interested in the economic measures being
taken by the communist regime and when he returned to England he wrote The End of Laissez-
Faire. After the onset on the Great Depression in 1929, Keynes began to address the problems of
unemployment. In a series of articles, The Means to Prosperity , written in The Times, Keynes
argued that the government should "spend its way out of the depression".
During this period he was a member of the Liberal Party and worked closely with its leader, David
Lloyd George. In 1929 Lloyd George published a pamphlet, We Can Conquer Unemployment, where
he proposed a government scheme where 350,000 men were to be employed on road-building,
60,000 on housing, 60,000 on telephone development and 62,000 on electrical development. The
cost would be 250 million, and the money would be raised by loan. Keynes also published a
pamphlet supporting Lloyd George's scheme.
These views impressed Richard Tawney who wrote a letter to Ramsay MacDonald, the leader of
theLabour Party, about the forthcoming election: "If the Labour Election Programme is to be of any
use it must have something concrete and definite about unemployment... What is required is a
definite statement that (a) Labour Government will initiate productive work on a larger scale, and will
raise a loan for the purpose. (b) That it will maintain from national funds all men not absorbed in
such work." MacDonald refused to be persuaded by Tawney's ideas and rejected the idea that
unemployment could be cured by public works.
In the 1929 General Election the Conservatives won 8,664,000 votes, the Labour Party 8,360,000
and the Liberals 5,300,000. However, the bias of the system worked in Labour's favour, and in
the House of Commons the party won 287 seats, the Conservatives 261 and the Liberals 59.
MacDonald became Prime Minister again, but as before, he still had to rely on the support of the
Liberals to hold onto power.
The election of the Labour Government coincided with an economic depression and Ramsay
MacDonaldwas faced with the problem of growing unemployment. In January 1929, 1,433,000
people were out of work, a year later it reached 1,533,000. By March 1930, the figure was
1,731,000. In June it reached 1,946,000 and by the end of the year it reached a staggering
2,725,000. That month MacDonald invited a group of economists, including John Maynard
Keynes, J. A. Hobson, George Douglas Cole and Walter Layton, to discuss this problem.
In March 1931 Ramsay MacDonald asked Sir George May, to form a committee to look into Britain's
economic problems. The committee included two members that had been nominated from the three
main political parties. At the same time, John Maynard Keynes, the chairman of the Economic
Advisory Council, published his report on the causes and remedies for the depression. This included
an increase in public spending and by curtailing British investment overseas.
Philip Snowden rejected these ideas and this was followed by the resignation of Charles Trevelyan,
the Minister of Education. "For some time I have realised that I am very much out of sympathy with
the general method of Government policy. In the present disastrous condition of trade it seems to
me that the crisis requires big Socialist measures. We ought to be demonstrating to the country the
alternatives to economy and protection. Our value as a Government today should be to make people
realise that Socialism is that alternative."
When the May Committee produced its report in July, 1931, it forecast a huge budget deficit of 120
million and recommended that the government should reduce its expenditure by 97,000,000,
including a 67,000,000 cut in unemployment benefits. The two Labour Party nominees on the
committee, Arthur Pugh and Charles Latham, refused to endorse the report. As David W. Howell has
pointed out: "A committee majority of actuaries, accountants, and bankers produced a report urging
drastic economies; Latham and Pugh wrote a minority report that largely reflected the thinking of the
TUC and its research department. Although they accepted the majority's contentious estimate of the
budget deficit as 120 million and endorsed some economies, they considered the underlying
economic difficulties not to be the result of excessive public expenditure, but of post-war deflation,
the return to the gold standard, and the fall in world prices. An equitable solution should include
taxation of holders of fixed-interest securities who had benefited from the fall in prices."
The cabinet decided to form a committee consisting of Ramsay MacDonald, Philip Snowden, Arthur
Henderson, Jimmy Thomas and William Graham to consider the report. On 5th August, John
Maynard Keynes wrote to MacDonald, describing the May Report as "the most foolish document I
ever had the misfortune to read." He argued that the committee's recommendations clearly
represented "an effort to make the existing deflation effective by bringing incomes down to the level
of prices" and if adopted in isolation, they would result in "a most gross perversion of social justice".
Keynes suggested that the best way to deal with the crisis was to leave the gold standard and
devalue sterling. Two days later, Sir Ernest Harvey, the deputy governor of the Bank of England,
wrote to Snowden to say that in the last four weeks the Bank had lost more than 60 million in gold
and foreign exchange, in defending sterling. He added that there was almost no foreign exchange
left.
Philip Snowden presented his recommendations to the MacDonald Committee that included the plan
to raise approximately 90 million from increased taxation and to cut expenditure by 99 million. 67
million was to come from unemployment insurance, 12 million from education and the rest from the
armed services, roads and a variety of smaller programmes. Arthur Henderson and William
Grahamrejected the idea of the proposed cut in unemployment benefit and the meeting ended
without any decisions being made.
The cabinet met on 19th August but they were unable to agree on Snowden's proposals. He warned
that balancing the budget was the only way to restore confidence in sterling. Snowden argued that if
his recommendations were not accepted, sterling would collapse. He added "that if sterling went the
whole international financial structure would collapse, and there would be no comparison between
the present depression and the chaos and ruin that would face us."
The following day MacDonald and Snowden had a private meeting with Neville
Chamberlain, Samuel Hoare, Herbert Samuel and Donald MacLean to discuss the plans to cut
government expenditure. Chamberlain argued against the increase in taxation and called for further
cuts in unemployment benefit. MacDonald also had meetings with trade union leaders,
including Walter Citrine and Ernest Bevin. They made it clear they would resist any attempts to put
"new burdens on the unemployed".
At another meeting of the Cabinet on 20th August, Arthur Henderson argued that rather do what the
bankers wanted, Labour should had over responsibility to the Conservatives and Liberals and leave
office as a united party. According to Malcolm MacDonald, the opposition to the cuts in public
expenditure was led by Henderson, Albert Alexander and William Graham. MacDonald went to
seeGeorge V about the economic crisis on 23rd August. He warned the King that several Cabinet
ministers were likely to resign if he tried to cut unemployment benefit.
After another Cabinet meeting where no agreement about how to deal with the economic crisis could
be achieved, Ramsay MacDonald went to Buckingham Palace to resign. Sir Clive Wigram, the
King's private secretary, later recalled that George V "impressed upon the Prime Minister that he
was the only man to lead the country through the crisis and hoped that he would reconsider the
situation." At a meeting with Stanley Baldwin, Neville Chamberlain and Herbert Samuel MacDonald
told them that if he joined a National Government it "meant his death warrant". According to
Chamberlain he said "he would be a ridiculous figure unable to command support and would bring
odium on us as well as himself."
On 24th August 1931 MacDonald returned to the palace and told the King that he had the Cabinet's
resignation in his pocket. The King replied that he hoped that MacDonald "would help in the
formation of a National Government." He added that by "remaining at his post, his position and
reputation would be much more enhanced than if he surrendered the Government of the country at
such a crisis." Eventually, he agreed to form a National Government.
John Maynard Keynes was extremely active in his campaign to encourage the government to take
more responsibility for running the economy. In 1931 he agreed an amalgamation of the Nation with
the New Statesman, a journal owned by the Fabian Society. Keynes now became a regular
contributor to what was now Britain's leading intellectual weekly.
In 1936 Keynes published his most important book A General Theory of Employment, Interest and
Money. It revolutionized economic theory by showing how unemployment could occur involuntarily.
In the book Keynes argued that the lack of demand for goods and rising unemployment could be
countered by increased government expenditure to stimulate the economy. His views on the planned
economy influenced President Franklin D. Roosevelt and was a factor in the introduction of the New
Deal and the economic policies of Britain's post-war Labour Government.
Bertrand Russell became friendly with Keynes. He later argued: "I do not know enough economics to
have an expert opinion on Keynes's theories, but so far as I am able to judge it seems to me to be
owing to him that Britain has not suffered from large-scale unemployment in recent years. I would go
further and say that if his theories had been adopted by financial authorities throughout the world the
great depression would not have occurred.... Keynes's intellect was the sharpest and clearest that I
have ever known. When I argued with him, I felt that I took my life in my hands, and I seldom
emerged without feeling something of a fool. I was sometimes inclined to feel that so much
cleverness must be incompatible with depth, but I do not think this feeling was justified."
Alexander Cairncross, his biographer, has argued that his wife, Lydia Lopokova, looked after him
when he became ill in 1936: "From the summer of 1936 Keynes was affected by a prolonged spell of
illness, beginning with chest pains and breathlessness. After a complete collapse in May 1937 heart
trouble was diagnosed and a complete rest prescribed. He gradually improved, and was writing
occasional letters and even the odd article by July 1937. But when he returned to London and Tilton
in late September he still needed Lydia's constant care to prevent overexcitement and overwork, and
he continued to need it for the rest of his life." Margot Fonteyn added: "From when Keynes suffered
his first serious illness in 1937... the total dedication she had never quite mustered for her career
came to flower. She was a devoted wife, forsaking all interests save her husband's health and work
while entertaining him and their friends with her unpredictable remarks."
During the Second World War Keynes was an unpaid advisor to the Chancellor of the Exchequer
and wrote the influential How to Pay for the War (1940). He attended the Bretton Woods
Conference in 1944 and the Savannah Conference in 1946. He was also involved in the negotiations
on Lend-Lease and the US loan to Britain.
John Maynard Keynes, who had suffered from heart problems for many years, died on 21st April
1946.
John Simkin, September 1997 - April 2014
John Maynard Keynes - Timeline
The Pre-Career Years
John Maynard Keynes - 1883 to 1905
Date Event
5 June 1883 John Maynard Keynes is born at his parents' home - 6 Harvey Road,
Cambridge. He is born into comfortable circumstances, into a household
staffed with domestic servants.

His father, John Neville Keynes, is an Economics lecturer at Cambridge
University. His mother, one of the first female graduates of Cambridge
University, is active in charitable works for less-privileged people. She
will later serve as mayor of the city. His parents, who ultimately
survived him, lived at 6 Harvey Road throughout Keynes's life.
1888 A four and a half year old Keynes is asked what interest is and replies,
"If I let you have a halfpenny and you kept it for a very long time, you
would have to give me back that halfpenny and another too."
1890 Keynes attends the Perse School Kindergarten while receiving
elementary educational instruction at home.
1892 Keynes becomes a pupil at St Faith's preparatory school. He attends as
a day boy (a non-boarder). His academic performance is uneven. He is
recognised to be quick at arithmetic and algebra. His large vocabulary is
also noted. He is criticised for carelessness.
1893 Keynes's father writes in his diary that St Faith's is driving Keynes too
hard. There are lengthy sickness absences from school - Keynes's
constitution seems to be rather frail.
June 1894 Keynes is now top of his class at school.
December
1894
A mathematics teacher comments that Keynes, "does really brilliant
work" but that he "soon tires and has not perseverance in the face of
difficulty."
Late 1896 St Faith's headmaster writes that Maynard is "head and shoulders
above all the other boys in the school." He is confident that Keynes
could get a scholarship to Eton.
Early 1897 Keynes is preparing for Eton's scholarship exam, beginning work at 7
a.m. each day - the same starting time as the Eton exam.
July 5 1897 Three days of examinations for Eton begin.
July 12
1897
Twenty scholarships for Eton are awarded. Keynes ranks tenth out of
twenty overall, and first in mathematics.
September
25 1897
Keynes begins at Eton three days late, following a fever. Keynes is
taller than his classmates, his voice has broken and he is intellectually
self-confident. His classmates look to him for leadership - he is a
natural leader.
December
1897
At the end of his first term at Eton, Keynes places first in classics and
second in mathematics.
Early 1898 Ill-health strikes in Keynes's second term at Eton, including a bout of
measles. There are frequent absences from classes.
Mid 1898 Keynes wins Eton's Junior Mathematical Prize.
1899 Keynes scores full marks for his essay 'Responsibilities of Empire'. His
examination results are considered outstanding - 1,156 out of 1,400.

A teacher writes of him, "in his work there is absolutely nothing of the
mercenary, mark-getting feeling... He takes a real interest in anything
which it is worthwhile to be interested in."

Keynes tops the select list in the Senior Mathematical Prize.
4 February
1900
The new century sees Britain engaged in the Boer War. Keynes does
not join the "Eton Shooters" for military training. He writes to his
father, "Some say that patriotism requires one to join the useless Eton
shooters, but it seems to me to be the sort of patriotism that requires
one to wave the Union Jack."
Mid 1900 Eton's Senior Mathematical Prize is won by Keynes.
25
November
1900
Keynes competes for and wins the Richards English Essay Prize.
26 January
1901
Keynes is elected to the College Pop - Eton's prestigious debating
society.
July 1901 The Tomline, Eton's principal mathematical prize, is added to Keynes's
ever-growing bag of honours.
July 1902 Keynes wins the Chamberlayne Prize, worth 60 a year for four years,
by placing first in the Higher Certificate Examination. He placed first in
mathematics and history and first for English essay.
1902 A teacher at Eton, Geoffrey Young, later wrote of Keynes, "His reading
had been immense, his selection was admirable, and wit and some well-
calculated indiscretions illuminated an astonishingly mature
performance. We were listening to something much beyond the range
of the normal clever sixth-form boy..."
October
1902
John Maynard Keynes begins at King's College, Cambridge as an
undergraduate.

He spends most evenings engaged in social activities, ending each night
in endless intellectual arguments with his friends, going to bed at about
3 a.m.

In his first year at university, he joins or is invited to join several highly
prestigious debating and intellectual societies. Throughout his
undergraduate years Keynes is a frequent speaker at the Union -
Cambridge's renowned debating society.

His intellectual and social activities will shape Keynes's development
more than his formal studies will.

Although he is an intellectual, Keynes does not abandon sport. He wins
a cup when his boat wins in the Trail Eights. He plays tennis and golf
and is fond of horse riding.
May 1904 Keynes is elected Secretary of the Union, which will lead to his
becoming President. He is also elected President of the University
Liberal Club. He is awarded a first class in mathematics from King's
College.
1904 - 1905 Keynes prepares for Cambridge's Tripos examinations in mathematics
while continuing to pursue his other intellectual interests.
June 1905 In the Tripos list, Keynes is ranked in twelfth place, a highly creditable
result. For Keynes, however, while some offered congratulations, others
offered condolences.



The Budding Economist
John Maynard Keynes - 1905 to 1913
Date Event
Summer
1905
Keynes spends summer enjoying a mountain climbing holiday in
Switzerland and with his family. He also does some serious reading -
Marshall's Principles of Economics.
Autumn
1905
Keynes returns to Cambridge to attend economics lectures by Marshall,
the author of his summer time reading. Marshall writes to Keynes's
father:

"Your son is doing excellent work in Economics. I have told him that I
should be greatly delighted if he should decide on the career of a
professional economist."

Keynes writes to Strachey:

"I find Economics increasingly satisfactory, and I think I am rather good
at it. I want to manage a railway or organise a Trust, or at least swindle
the investing public."
February
1906
In one of his frequent letters to his friend G.L. Strachey Keynes writes,
"I am studying Ethics for my Civil Service." (Keynes is preparing for the
Civil Service entrance examinations.)
August
1906
Keynes sits the Civil Service examinations in London between 3 August
and 25 August.
October
1906
The results of his civil service exams infuriate Keynes. He writes to
Strachey:

"I have done worst in the only two subjects of which I possessed a solid
knowledge - Mathematics and Economics. I scored more marks for
English History than for Mathematics - is it credible? For Economics I
got a relatively low percentage and was eight or ninth in order of merit -
whereas I knew the whole of both papers in a really elaborate way. On
the other hand, in Political Science, to which I devoted less than a
fortnight in all, I was easily first of everybody. I was also first in Logic
and Psychology and in Essay."

He was later to say: "I evidently knew more about Economics than my
examiners."
Late 1906 Keynes is offered and accepts a position in London with the civil service,
working in the India Office. He will work there for the next two years
while probing probability theory in his spare time. Much of this "spare
time" seems to occur at work where he says, "I have not averaged an
hour's office work a day this week so that I am well up to date with the
(probability) dissertation."
April 1907 Keynes is now working hard in the Revenue, Statistics and Commerce
Department of the India Office, which he enjoys. He writes, "I really
believe that I have written almost every despatch in the Department
this week."
September
1907
"I'm thoroughly sick of this place and would like to resign. Now the
novelty has worn off I'm bored nine-tenths of the time and rather
unreasonably irritated the other tenth whenever I can't have my own
way," Keynes writes.
October
1907
Hoping to obtain a fellowship at King's College, Keynes spends a
fortnight in Cambridge working on his probability dissertation. He fails
to obtain a fellowship.
June 1908 Keynes resigns from the India office to work on probability theory in
Cambridge. He will receive 100 each year from his father and the
same amount, paid privately, from Pigou, the chair of Economics at
Cambridge.
19 January
1909
Keynes begins lecturing at Cambridge University three times a week on
Money, Credit and Prices.
2 February
1909
In a letter to his friend, Duncan Grant, Keynes writes, "I have received
today the offer of an appointment - to be representative of H.M.'s
Government on the Permanent International Commission for Agriculture
at Rome. Salary 500 increasing; duties practically nil. Shall I accept?
March 1909 On the basis of his dissertation in Probability, Keynes is elected a Fellow
of King's College - adding 120 per annum to his income.
Spring 1909 The Economist publishes a series of letters from Keynes arguing that
estimates of British investments in India are exaggerated.
May 1909 Keynes wins the Adam Smith Prize (60) for an essay on Index
numbers.
15 October "I seem to spend most of my time seeing pupils. I have already got
1909 eighteen of these, which will be rather hard work, but ought to bring in
nearly 60."
7 November
1909
Keynes reports to his father that his income has reached 700 per
annum, including the money his father gives him.
January
1910
In the General Election campaign Keynes travels to Birmingham for five
days to support his old friend Edward Hilton Young who is standing for
East Worcester as a Liberal.
September
1911
After a tour of Ireland with Liberal politicians, Keynes writes to Duncan
Grant, "You have not, I suppose, ever mixed with politicians at close
quarters. They are awful... their stupidity is inhuman... The rest of them
had minds and opinions as deplorable as their characters."
Autumn
1911
Keynes becomes the editor of the Economics Journal - a considerable
honour.
Autumn
1912
Keynes is elected to 'the council' the body that governs King's College.
He was elected the previous year to the Estates Committee and now
has motions attacking the amount of cash held by the college and
querying the running of the college carried. His motion calling for a pay
increase for College Fellows is defeated.
Early 1913 Keynes completes his first major work on Economics -Indian Currency
and Finance. He persuades MacMillan, his publisher, to share profits
from this and other books 50/50. (By 1942 4,900 copies have sold,
netting Keynes 295.)
3 April 1913 Before his book is published, Keynes is offered and accepts a seat on a
Royal Commission to enquire into Indian Finance and Currency.
12 August
1913
Austen Chamberlain writes to Keynes, "You will certainly be considered
the author of the Commission's report... I am amazed to see how
largely the views of the Commission... are a mere repetition of the
arguments and conclusions to which your study had previously led you."



The War and its Immediate Aftermath
John Maynard Keynes - 1914 to 1919
Date Event
August
1914
World War 1 Begins

Chancellor of the Exchequer David Lloyd George reads a memorandum
written by Keynes urging resistance to demands being made by bankers
for the creation of new assets and suspension of liabilities.

Basil Blackett, working in the Treasury, writes in his diary, "Lloyd
George has at last come down on the right side ... He has clearly
imbibed much of Keynes's memorandum and is strong against
suspension of specie payments..."
November
1914
News of the deaths at the front of friends and undergraduates comes to
Keynes who is back at work in Cambridge.

He writes to G.L. Strachey, "I am absolutely and completely desolated.
It is utterly unbearable to see day by day the youths going away, first to
boredom and discomfort, and then to slaughter."

In April 1915, he writes to Duncan Grant, "It is horrible, a nightmare to
be stopt anyhow. May no other generation live under the cloud we live
under."
January
1915
Keynes joins the Treasury to assist Sir George Paish, whose role is to
provide advice to David Lloyd George independent of that given by civil
service officials.

Soon after his appointment, Keynes is asked by Lloyd George to
comment on Lloyd George's views on the state of affairs in France.
Keynes replies, "With the utmost respect, I must, if asked for my
opinion, tell you that I regard your account as rubbish."
May 1915 Reginald McKenna replaces Lloyd George as Chancellor of the
Exchequer. Keynes's role at the Treasury is formalised and he joins No.
1 Division, which deals with finance. Following this, he makes rapid
progress in the Treasury.

Sir Otto Niemeyer and Sir Richard Hopkins wrote later:

"His quick mind and inexhaustible capacity for work rapidly marked out
a kingdom for itself, and, before long he was a leading authority on all
questions of external, and particularly inter-allied finance... It was
Keynes who developed and applied the system of allied war loans...
When America came into the war, the American Treasury found the
system fully fledged and itself adopted a similar practice.
26 March
1916
Despite the war, Keynes - who is now based in London while working for
the Treasury - continues to lead an active social life. He writes to his
mother:

"I have been leading such a giddy life lately that there has been no time
to write letters - only two evenings in the last fortnight when I haven't
dined out."
Early 1917 Keynes's takes authority for Treasury 'A' Division, carved out of No. 1.
Division. He is now in the key position at the centre of the inter-allied
economic effort. His success in this role is universally acclaimed. This is
as high as Keynes will rise in a formal administrative role in
Government.
30 March
1917
In a letter to his mother, Keynes writes, in support of the Russian
Revolution:

"I was immensely cheered and excited by the Russian news. It's the sole
result of the war so far worth having... I see not the remotest chance,
however, of any pro-Tsar counter-revolution..."
6 May 1917 In another letter to his mother, Keynes writes:

"Work has not been overwhelmingly heavy and the negotiations with the
U.S., which occupy a good deal of my time, are going extremely well. If
all happens as we wish, the Yanks ought to relieve me of some of the
most troublesome of my work for the future. Relations with Russia, on
the other hand are not what they should be. That's a piece of diplomacy
over which we have blundered hopelessly, with our ridiculous tears for
the Tsar and the rest of it."
24
December
1917
Keynes writes to his mother - again in a pro-Russian revolution, anti-
British establishment tone:

"My Christmas thoughts are that a further prolongation of the war, with
the turn things have taken, probably means the disappearance of the
social order we have known hitherto. With some regrets I think I am not
on the whole sorry. The abolition of the rich will be rather a comfort and
serve them right anyhow. What frightens me more is the prospect of
general impoverishment. In another year's time we shall have forfeited
the claim we had staked out in the New World and in exchange this
country will be mortgaged to America.

"Well the only course open to me is to be buoyantly bolshevik; and as I
lie in bed this morning I reflect with a good deal of satisfaction that,
because our rulers are as incompetent as they are mad and wicked, one
particular era of a particular kind of civilization is very nearly over."
October
1918
Keynes and his future wife Lydia Lopokova are guests (independently of
one another) at a party to celebrate the Russian Ballet in London.
Autumn
1918
Victory over Germany seems close. Keynes and 'A' Division begin to look
in earnest at reparations - the financial compensation Germany should
pay other countries for the war.

Looking at the performance of the German economy they conclude that
Germany might possibly be able to pay 3,000 million, but 2,000
million is a more likely figure.

Charging 2,000 million at 5 percent interest would lead to annual
interest payments of 100 million from Germany.

Meanwhile, an independent committee estimates the full cost of the war
at 24,000 million and, at 5 percent of this sum, they conclude Germany
should pay 1,200 million per year until the capital is paid off. (By way
of contrast, to see how huge a sum this was, in 1931 Britain claimed it
was economically impossible to pay off just 35 million per year to the
U.S.)
11
November
1918
The war ends with an armistice.
January No food gets into Germany for four months - against the terms of the
Armistice. The Germans must pay for food in gold but the French are
1919 blocking this - they want the gold as part of German reparations. British
troops are sickened by the sight of sick and hungry children.
14 May
1919
Keynes writes:

"I have been as miserable for the last two or three weeks as a fellow
could be. The Peace is outrageous... Meanwhile there is no food or
employment anywhere, and the French and Italians are pouring
munitions into Central Europe to arm everyone against everyone else."
28 May
1919
Harsh reparations are going to imposed on Germany. Harold Nicholson
writes:

"Lunch with Maynard Keynes... Keynes is very pessimistic about the
German Treaty. He considers it not only immoral but incompetent."

AND

"...Keynes has been too splendid about the Austrian Treaty. He is going
to fight. He says he will resign."
5 June
1919
Keynes writes to Prime Minister David Lloyd George:

"I ought to let you know that on Saturday I am slipping away from this
scene of nightmare. I can do no more good here. I've gone on hoping
even through these last dreadful weeks that you'd find some way to
make of the Treaty a just and expedient document. But now it's
apparently too late. The battle is lost."



Personal Wealth, Reparations,
Probability and the Gold Standard
John Maynard Keynes - 1919 to 1926
Date Event
June 1919 Keynes seeks to have a wider influence on public opinion than a return
to his pre-war life lecturing in Cambridge will allow him. He informs the
University he will lecture once weekly on 'The Economic Aspects of the
Peace Treaty'. He also requests an involvement in King's College's
finances.
June 1919 Acting on the advice of friends, Keynes turns down 2,000 per annum
(10 to 20 times his academic remuneration) for one day's work per
week acting as Chairman of a foreign bank. His friends believe such an
appointment might jeopardize other City appointments. Keynes also
has concerns about whether he would truly be in control or merely a
figurehead.
25 June
1919
"On Monday I actually began writing a book about the economic
condition of Europe, but may not persevere with it."
14 August
1919
Keynes opens a trading account to begin speculating in the currency
markets on his own behalf. He trades on high margin, initially making
large profits.
August,
September
1919
Keynes writes The Economic Consequences of Peace, castigating the
allies for the punitive reparations they had imposed on Germany at the
end of the war.

In one passage of the book he writes chillingly of what might be
unleashed in Europe:

"If we aim deliberately at the impoverishment of Central Europe,
vengeance, I dare predict, will not be limp. Nothing can then delay for
very long that final Civil War between the forces of Reaction and the
despairing convulsions of Revolution, before which the horrors of the
late German war will fade into nothing, and which will destroy, whoever
is victorious the civilization and progress of our generation."

(The subsequent rise of Adolf Hitler in an economically desperate
Germany is held by many observers to justify Keynes's condemnation
of the punitive actions taken by the allies against Germany following
World War One.)
September
1919
Keynes accepts and invitation to join the Board of Directors of the
National Mutual Life Insurance Company. (He will become chairman in
1921.)
December
1919
Keynes's The Economic Consequences of Peace is published in Britain
and in January it will be published in America. The left welcome the
book. The centre and right are hostile - they believe it is right that
German criminality should be punished. With time, this view will
change to one of 'I suppose this fellow is right; I suppose we have
made a fearful hash of things.'

The book brings fame to Keynes but also turns him into a figure the
establishment will be wary of for a considerable period of time.
May 1920 Keynes loses disastrously in his currency speculating. His brokers -
treating Keynes more favourably than the norm - request 7,000 to
keep the account open. Keynes is given 5,000 by a financier and
obtains 1,500 in advance for future sales of The Economic
Consequences of Peace.
July 1920 Keynes is back in the currency markets, speculating again - this time
successfully. He wants to be independently wealthy - his authorship
of The Economic Consequences of Peace - seen as an anti-
establishment work - has ruined his chances of obtaining a position on
the board of any of the great British banks.
November
1920
Keynes is appointed Second Bursar at King's College with a stipend of
100 per year. As a Supernumerary Fellow, his academic activities are
now unpaid.
1921 It is a busy year - and in fact it will be a busy decade - as Keynes
juggles a multiplicity of jobs and responsibilities.

Friday to Tuesday each week Keynes is at King's College, tutoring
pupils, lecturing and presiding over his Monday evening club.

His bursarial duties grow and he takes increasing responsibility for the
College's investment policy.

He writes to the Cambridge Review, supporting the cause of women,
and continues as Editor of the Economic Journal.

With a view to increasing his personal wealth, Keynes forms or joins a
number of investment syndicates while continuing to speculate on his
own behalf.

In London, he becomes a financial consultant and follows the markets
daily.

He decides he will write a new book on the German reparations
problem and has frequent correspondence with people connected with
this issue.

Keynes is also writing frequently for newspapers, particularly
the Manchester Guardian. He sells his articles overseas and earns a
significant income from journalism.

He is a member of the Liberal Committee on Industrial Policy.

Meanwhile, he continues to be a main player with his Bloomsbury
friends in London where the concerns revolve around the finer things in
life - the arts, good conversation, gossip about friends, literature and
parties.
Easter 1921 On vacation in Algeria and Tunisia, Keynes returns to his earlier
dissertation on probability, preparing it for publication with the
title Treatise on Probability.

In North Africa, he and a friend have their shoes polished by a street-
boy. Keynes believes he knows how much the boy should be paid and
refuses to pay more. Natives throw stones at Keynes as he makes his
way from the scene. Keynes comments, "I will not be a party to
debasing the currency."

Later in 1921 Treatise on Probability is published. It is Keynes's first
and last major work in Mathematics, exploring the foundations of
knowledge.

Keynes argues against the validity of probabilities based on the
frequency of past occurrences where probabilities may be subject to
interpretation by people. He argues that probability is a logical relation
and so it is objective. A statement involving probability relations has a
truth-value independent of people's opinions. He says:

"Perception of probability, weight, and risk are all highly dependent on
judgement," and "the basis of our degrees of belief is part of our
human outfit."
May 1921 Keynes loves the Ballet and he begins to fall under the romantic spell of
the well-known Russian ballerina, Lydia Lopokova. Lydia is separated
from her husband, who lives in America. Keynes persuades Lydia to
move to a flat closer to his Bloomsbury friends and begins to advise her
financially.
January
1922
A Revision of the Treaty, Keynes's second work on German reparations
is published. The book documents the course of events since his
previous work and argues again for a reduction in payments demanded
from Germany.
1922 Keynes publishes his views - and those of many other distinguished
authors - on Europe's economies in twelveManchester
Guardian supplements. These run to 810 large three-column pages.
Keynes argues for currency devaluation in all but a few European
countries and a new Gold Standard.
1923 Keynes begins contributing monthly articles - mainly on reparations -
to the Nation, the Liberal weekly. He also writes regular 'Notes on
Finance and Investment' for theNation.
7 July 1923 The Bank of England, amid falling prices and rising unemployment,
increases the base rate from three to four percent in preparation for
Sterling's return to its pre-war gold parity.
14 July 1923 Referring to the increased interest rate, a horrified Keynes writes in
the Nation:

"The Bank of England acting under the influence of a narrow and
obsolete doctrine has made a great mistake."
November
1923
Keynes publishes A Tract on Monetary Reform, calling for an end to the
Gold Standard, which he refers to as "a barbarous relic". He states that
devaluation is preferable to deflation. On the question of whether it is
preferable to manage a currency to achieve a stable external value or
stable internal prices, Keynes concludes that stable internal prices are
preferrable.
12 April
1924
British unemployment has reached one million. Lloyd George writes to
the Nation demanding the Government should intervene to fund a large
program of public works to create jobs.
1924 Keynes become First Bursar at King's College, taking control of the
College's finances.
24 May
1924
Keynes's Does Unemployment Need a Drastic Remedy? is published in
the Nation. He proposes Government capital spending of 100 million
per annum to stimulate the economy, specifically spending on housing,
roads and electrical power distribution. He further proposes National
Savings should be spent on works in Britain rather than invested
overseas.
Second Half
1924
Sterling is appreciating on the currency markets. Speculators are
buying Sterling anticipating it will rise to its pre-war value when it
rejoins the Gold Standard.
November
1924
Keynes gives the Sydney Ball Foundation Lecture at Cambridge. The
title he chooses for his lecture is The End of Laissez-Faire and he says:

"I believe that in many cases the ideal size for the unit of control and
organisation lies somewhere between the individual and the modern
State. I suggest, therefore, that progress lies in the growth and the
recognition of semi-autonomous bodies within the State-bodies whose
criterion of action within their own field is solely the public good as they
understand it, and from whose deliberations motives of private
advantage are excluded..."

"One of the most interesting and unnoticed developments of recent
decades has been the tendency of big enterprise to socialise itself. A
point arrives in the growth of a big institution... at which the owners of
the capital, i.e. its shareholders, are almost entirely dissociated from
the management, with the result that the direct personal interest of the
latter in the making of great profit becomes quite secondary. When this
stage is reached, the general stability and reputation of the institution
are the more considered by the management than the maximum of
profit for the shareholders."

"We must aim at separating those services which are technically social
from those which are technically individual... The important thing for
government is not to do things which individuals are doing already, and
to do them a little better or a little worse; but to do those things which
at present are not done at all."

"For my part I think that capitalism, wisely managed, can probably be
made more efficient for attaining economic ends than any alternative
system yet in sight, but that in itself it is in many ways extremely
objectionable. Our problem is to work out a social organisation which
shall be as efficient as possible without offending our notions of a
satisfactory way of life."
December
1924
By virtue of astute speculation in the financial markets, Keynes's assets
have grown from nil (virtual bankruptcy) in May 1920 to 57,797. He
has achieved his objective of becoming a wealthy man.
April 1925 Keynes, almost on his own, continues to argue against the Gold
Standard. He writes in the Nation of his concerns about the over-
valuation of Sterling.
29 April
1925
Winston Churchill, acting on the advice of his economic advisers,
returns Sterling to the Gold Standard. Keynes continues to protest that
Sterling is overvalued. (Churchill would later admit that rejoining the
Gold Standard at the prewar level was one of the greatest mistakes he
ever made.)
4 August
1925
Lydia Lopokova becomes Keynes's wife and the married couple travel
to Russia to meet Lydia's family.
1925 - 1926 British coal exports become uncompetitive because of Sterling's high
value. Mine owners decide coal miner's wages should be cut.

Stanley Baldwin's Conservative government intervenes and provide a
nine-month subsidy to maintain the miners' wages.
February Keynes calls for a working agreement between the Liberal and Labour
1926 Parties in order to rid the country of the Conservative Government.
May 1926 A general strike in support of the miners causes widespread disruption.
The aftermath of the strike is highly damaging and Britain's industrial
development between 1925 and 1929 lags most of its competitors.



Treatise on Money and the
General Theory of Employment, Interest and Money
1927 to 1939
Date Event
1927 Keynes continues working in his academic and bursarial duties at King's
College, a variety of business roles and his editorial and journalistic
activities. He takes a less prominent role in public life as he develops
ideas and drafts his next major work - A Treatise on Money.
Summer
1929
Keynes is made Fellow of the British Academy.
October
1929
Led by Wall Street, the world's stock markets crash, heralding an
economic depression.
4 November
1929
Keynes joins the government's Macmillan Committee of Enquiry into
Finance and Industry.
30 January
1930
Keynes joins the Economic Advisory Council, set up to report to the
government on economic policy.
10 May
1930
Keynes writes in the Nation:

"The fact is - a fact not yet recognized by the great public - that we are
now in the depths of a very severe international slump, a slump which
will take its place in history amongst the most acute ever experienced.
It will require not merely passive movements of bank rates to lift us out
of a depression of this order, but a very active and determined policy."
September
1930
A large, long-lasting, world-wide cut in interest-rates is required,
Keynes writes in Svenska Handelsbanken Index.
December
1930
A Treatise on Money is published in two volumes. The central thrust of
the treatise is the distinction between Investment and Saving. If
Investment exceeds Saving, there will be inflation Keynes says. If
Saving exceeds Investment there will be recession. One implication of
this is that, in the midst of an economic depression, the correct course
of action should be to encourage spending and discourage saving. This
runs contrary to the prevailing wisdom, which says that thrift is required
in hard times. In Keynes's words:

"For the engine which drives Enterprise is not Thrift, but Profit."
May/June
1931
At the invitation of the University of Chicago, Keynes travels to America
to give a lecture on the Harris foundation. His chief desire is to study
America's economic conditions at first hand. He has interviews with
senior people in the Federal Reserve and with President Hoover. He his
happy with the Federal Reserve's attitude that it should promote
economic expansion.
September
1931
The British Government, reeling from the depression, abandons the
Gold Standard and devalues sterling by twenty percent. In doing so, it
finally acts as Keynes has been advocating since the mid-1920s.
September
1931
Keynes attacks Ramsay MacDonald's National Government's budget - in
particular the wage cut for school-teachers and the reduction in the
road building and house building programmes. He warns the budget will
cause both deflation and unemployment to worsen.
1932 / 1933 Keynes continues to advocate that the government should borrow
money and undertake large-scale public works to stimulate the
economy.
June 1933 The BBC broadcasts a transatlantic conversation between Keynes and
Walter Lippmann - the first ever broadcast of a transatlantic
conversation.
17 April
1934
Walter Lippman writes to Keynes from America about the effect a letter
from Keynes to the New York Times has had:

"...I do not know whether you realize how great an effect that letter
[viz. that in the New York Times] had, but I am told that it was chiefly
responsible for the policy which the Treasury is now quietly but
effectively pursuing... reducing the long-term rate of interest."
June 1934 Keynes visits America again. He studies its economy and its stocks and
bonds for personal investment purposes. He concludes that share prices
- particularly of public utilities - are priced for exceptional value and he
invests a large part of his own funds - with great success.

He meets President Roosevelt who writes to Felix Frankfurter, "I had a
grand talk with K and liked him immensely..."

Keynes wins the enmity of American advocates of laissez-faire
economics who believe Roosevelt is allowing American economic policy -
The New Deal - to be influenced by a foreign economist.
Late 1934 Keynes finishes writing his first draft of The General Theory of
Employment, Interest and Money - an analysis of the causes of
unemployment. Keynes argues against the classical economic theory
that full employment could always be reached by making wages
sufficiently low.
January
1935
In a letter to George Bernard Shaw, Keynes writes:

"... you have to know that I believe myself to be writing a book on
economic theory which will largely revolutionize - not, I suppose, at
once but in the course of the next ten years - the way the world thinks
about economic problems."
Early 1935 Keynes sends copies of the first draft of The General Theory of
Employment, Interest and Money to a variety of figures whose views he
respects and engages in a significant amount of detailed
correspondence with these people as he works to perfect the book. In a
letter to George Bernard Shaw, Keynes writes:

"The city of Cambridge has always lacked a first class theatre. Keynes,
as First Bursar of King's College, releases land for the construction of a
theatre and funds much of the construction personally."
June 1935 Copies of the second draft are sent out, again resulting in vigorous
correspondence.
February
1936
The General Theory of Employment, Interest and Money is published.
Keynes proposes that economies are made up of aggregate quantities
of output resulting from aggregate streams of expenditure -
unemployment is caused if people don't spend enough money.
1936 As Hitler's Germany grows ever more menacing Keynes who, in the
1920s, had favoured disarmament, speaks and writes in favour of a
militarily strong Britain.

He travels to Russia and to Europe and continues with his normal
duties.
Summer
1937
Keynes suffers life-threatening illness, with thrombosis of the coronary
artery. He moves to Ruthin Castle in Wales for rest and reduces his
workload dramatically.
February
1938
Keynes makes his first public appearance since he fell ill, at the Annual
General Meeting of the National Mutual Life Assurance Society.
October
1938
In an article in the New Statesman, Keynes writes of the Munich
agreement between Neville Chamberlain and Adolf Hitler:

"Neither the Prime Minister nor Herr Hitler ever intended for one
moment that the play-acting should devolve into reality."



The War Years
America, Lend-Lease, the IMF, and a Peerage
1939 to 1945
Date Event
September
1939
Germany invades Poland and Britain declares war on Germany. World
War Two has begun. Keynes, although continuing to suffer ill health,
resumes his work in Cambridge and London.
October 1939 Keynes attacks the attitude of the intellectual Left to the war, writing
in The Times:

"The intelligentsia of the Left were the loudest in demanding that the
Nazi aggression should be resisted at all costs. When it comes to a
showdown, scarce four weeks have passed before they remember that
they are pacifists and write defeatist letters to your columns, leaving
the defence of freedom and civilization to Colonel Blimp and the Old
School Tie, for whom Three Cheers."
November
1939
Party politics have more or less ceased and Keynes is offered the
(likely to be uncontested) position of Member of Parliament for
Cambridge University. He turns this honour down, in order that he can
remain aloof from government and take his own individual stance on
issues.
February
1940
Keynes publishes a small book entitled How to Pay for the War, which
sells 35,000 copies. He actively promotes his proposals that interest
rates should be kept low and that compulsory saving (deferred pay)
should be used as a mechanism to prevent the inflation that occurred
during World War One.
7 June 1940 Keynes's doctor says he is now, "fit for any moderate activity."
July 1940 Enemy aliens are rounded up and sent to the Isle of Man, including a
number of academics who have fled Nazi Germany. They will later be
released but meanwhile Keynes writes, "I can remember nothing equal
to what is going on for stupidity and callousness." He writes a stream
of letters to various authorities on behalf of internees.

Keynes is given a room in the Treasury and becomes a government
economic adviser. He receives no pay for his duties, but now spends
most of his time in London in this capacity.
September
1940
A German bomb falling on London smashes windows in Keynes's
house and there's an unexploded bomb in the neighbourhood. Keynes
commutes into London for three weeks from his Tilton vacation home.
May 1941 Keynes makes the first of several very important visits he will make to
America between now and 1946. The good personal relationships he
has developed in past visits to America - and he will continue to
develop - will make it easier for Keynes to negotiate with America on
Britain's behalf. On this occasion, Keynes is concerned mainly with
arrangements for Lend-Lease and to explain in detail Britain's financial
predicament after two years of war.
29 May 1941 Anthony Eden makes an important speech on Britain's war objectives -
the economic thrust of which is based on Keynes's ideas.
October 1941 Keynes is elected to the Court of the Bank of England.

He has grave concerns for Britain's post-war economy and wonders
about the possibility of applying "Keynesian" solutions on a world-
scale. He writes his first draft of an international 'Clearing Union' of a
non-political character, to aid and support other international
institutions concerned with the planning and regulation of the world's
economic life.
1942 - 1944 Keynes is heavily engaged in making proposals for and engaging in
discussions about what will later become the International Monetary
fund (IMF), the World Bank, and the Breton Woods system for
international currency management.
1942 Keynes gives his broad support to proposals from Sir William
Beveridge for a large-scale expansion of social insurance - later to be
called the welfare state and the National Health Service. Keynes is
confident the proposals are affordable but persuades Beveridge to cut
down on overall costs in the first five years. This results in a
postponement of the right to higher pensions until contributions had
been accumulated.
May 1942 Manchester University makes Keynes an Honorary Doctor of Laws.
June 1942 Keynes is awarded a peerage, bringing him a seat in the House of
Lords. His title is Baron Keynes of Tilton. He chooses to take a seat
with the Liberal Party in the Lords.
September
1943
Keynes makes his second wartime visit to the United States, refusing
to be deterred by his poor health. He meets Harry Dexter White, Chief
International Economist at the U.S. Treasury, who he will cross swords
with frequently on the post-war economic settlement. (Harry Dexter
White will later be exposed as a Soviet agent.) Whatever Keynes's
abilities as a negotiator, Britain's weak economic position means that
America holds the trump cards in most negotiations. Nevertheless,
close co-operation between the British and Americans on economic
matters is established and Keynes manages to shift White's position
closer to his own in many important respects.
March 1944 Illness prevents Keynes attending an important series of economic
meetings with the Dominions - Australia, Canada and New Zealand.
June 1944 Keynes sets sail for Bretton Woods for further talks with American
negotiators about the post-war economic settlement. In his journal,
one of the British contingent at the talks, Professor Robbins, writes:

"In the late afternoon we had a joint session with the Americans, at
which Keynes expounded our views on the Bank. This went very will
indeed. Keynes was in his most lucid and persuasive mood: and the
effect was irresistible. At such moments, I often find myself thinking
that Keynes must be one of the most remarkable men that have ever
lived - the quick logic, the birdlike swoop of intuition, the vivid fancy,
the wide vision, above all the incomparable sense of the fitness of
words, all combine to make something several degrees beyond the
limit of ordinary human achievement."
July 1944 Emmanual Goldenweiser writes of Keynes's chairmanship of the Bank
Commission:

"He shone in two respects - in the fact that he is, of course, one of the
brightest lights of mankind ... and also by being the world's worst
chairman."

Dean Acheson, America's representative tells the Treasury Secretary
that Keynes was rushing things, "in a perfectly impossible and
outrageous way ... He knows this thing inside out so that when
anybody says section 15-C he knows what it is. Nobody else in the
room knows. So before you have an opportunity to turn to Section 15-
C and see what he is talking about, he says, 'I hear no objection to
that', and it is passed. Well, everybody is trying to find 15-C. He then
says, we are talking about Section 26-D. Then they begin fiddling
around with their papers, and before you find that, it is passed."

Keynes suffers a heart attack while in the United States, but it does
not seem too serious.
September -
November
1944
The cost of fighting the war has pushed Britain's external debt to
enormous levels. Anticipating the defeat of Germany, Keynes travels
to the United States for a fourth time, to negotiate Lend-Lease for the
war against Japan after Germany's defeat. He spends over two months
in Washington, taking every opportunity to describe Britain's dire
financial position to the Americans.
August 1945 Churchill has been replaced by Atlee and Roosevelt is dead, replaced
by Truman. The bomb has been dropped on Hiroshima. Keynes is
deeply engaged in negotiations with the Americans again. Fighting the
war for six years has bankrupted Britain. Keynes is engaged in the
task of eliciting American assistance to keep Britain solvent in the
post-war years, when the Americans may feel less well disposed to
helping a country it is no longer fighting shoulder-to-shoulder with.

America announces that Lend-Lease to the United Kingdom has been
stopped. Mainstream American opinion is that, with the war over, if
the British are not starving, they should not need further assistance.

Keynes will need to fight hard to secure further American assistance
for Britain.



After the War
The World Bank, the IMF, and the End
1945 to 1946
Date Event
September
1945 to
Keynes travels to the United States again, hoping to secure a loan to
help Britain rebuild its economy. If he does not succeed, food rations
December
1945
in Britain will have to be cut severely.

Keynes speaks at the Federal Reserve for three days, presenting facts
without embellishment. All present agree it is the finest presentation
of a case they have ever heard.

Members of the British and American delegation break into separate
commissions to discuss individual problems - over a period of three
months.

The British obtain a loan from America, which will be interest free for
six years and then charged at two percent. Also, Britain's huge
potential Lend-Lease obligations to America will be remitted in their
entirety. It is likely that Keynes's efforts for Britain have been
rewarded with more generous terms than might have been obtained
otherwise.
December
1945
Keynes returns to Britain, his health poor with fatigue, to find a
significant degree of malcontent with the loan agreement he has
negotiated with America. In Parliament and in the country at large
there is a growing anti-American feeling, spurred by the belief that
Britain is being forced into too many concessions to America in order
to obtain the loan.

Unfortunately, most people are not acquainted with the economic
facts. Keynes gives a masterful performance in the House of Lords,
explaining the terms of the loan agreement and how Britain could not
reasonably expect more.
February 1946 Keynes finds time to return to Cambridge and to dine amongst
friends in his old Monday Evening Club.
20 February
1946
Keynes suffers a slight heart attack while visiting the ballet at Covent
Garden.
24 February
1946
Keynes sets sail for New York, from where he travels to Savannah,
Georgia for what will prove to be his final visit to the United States.
He anticipates a pleasant time at the inaugural meetings of the World
Bank and the International Monetary Fund and plans to enjoy a
vacation afterwards in Savannah, a place he has previously found to
be highly agreeable.

In fact, the meeting proves to be difficult and ill-tempered. In
Keynes's view, the Americans are taking advantage of their strong
economic position to force ill-conceived decisions on the IMF and
Bank. Nations in debt to the Americans are voting with America, not
because they want to but because, owing to their dependence on
American aid, they feel they have no other option.

Until now, Keynes has always spoken strongly in favour of Americans
- he has always found them to be pragmatic, ready to look at issues
from all angles and ready to compromise. Now it seems they merely
wish to dictate. When the meeting is over, Keynes abandons his plans
for a vacation in Savannah. The place now has bitter associations
and, on March 18 he leaves on the night train for Washington.
19 March On the train to Washington Keynes suffers a severe heart attack.
1946
11 April 1946 Over lunch at the Bank of England, Keynes tells Henry Clay of his
hopes that Adam Smith's 'invisible hand' can help Britain out of the
economic hole it is in:

"I find myself more and more relying for a solution of our problems
on the invisible hand which I tried to eject from economic thinking
twenty years ago."
21 April 1946 John Maynard Keynes dies at home, in bed.
22 April 1946 The Times obituary writes of Keynes:

"To find an economist of comparable influence, one would have to go
back to Adam Smith."

TIMELINES OF THE GREAT DEPRESSION:
1920s (Decade)
During World War I, federal spending grows three times larger than tax collections. When the
government cuts back spending to balance the budget in 1920, a severe recession results.
However, the war economy invested heavily in the manufacturing sector, and the next decade
will see an explosion of productivity... although only for certain sectors of the economy.
An average of 600 banks fail each year.
Organized labor declines throughout the decade. The United Mine Workers Union will see its
membership fall from 500,000 in 1920 to 75,000 in 1928. The American Federation of Labor
would fall from 5.1 million in 1920 to 3.4 million in 1929.
Over the decade, about 1,200 mergers will swallow up more than 6,000 previously independent
companies; by 1929, only 200 corporations will control over half of all American industry.
By the end of the decade, the bottom 80 percent of all income-earners will be removed from
the tax rolls completely. Taxes on the rich will fall throughout the decade.
By 1929, the richest 1 percent will own 40 percent of the nation's wealth. The bottom 93
percent will have experienced a 4 percent drop in real disposable per-capita income between
1923 and 1929.
Individual worker productivity rises an astonishing 43 percent from 1919 to 1929. But the
rewards are being funneled to the top: the number of people reporting half-million dollar
incomes grows from 156 to 1,489 between 1920 and 1929, a phenomenal rise compared to
other decades. But that is still less than 1 percent of all income-earners.
1922
The conservative Supreme Court strikes down federal child labor legislation.
1923
President Warren Harding dies in office. Calvin Coolidge, becomes president. Coolidge is no less
committed to laissez-faire and a non-interventionist government.
Supreme Court nullifies minimum wage for women in District of Columbia.
1924
The stock market begins its spectacular rise. Bears little relation to the rest of the economy.
1925
The top tax rate is lowered to 25 percent - the lowest top rate in the eight decades since World
War I.
1928
Between May 1928 and September 1929, the average prices of stocks will rise 40 percent. The
boom is largely artificial.
1929
Herbert Hoover becomes President.
Annual per-capita income is $750. More than half of all Americans are living below a minimum
subsistence level.
Backlog of business inventories grows three times larger than the year before.
Recession begins in August, two months before the stock market crash. During this two month
period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent,
and personal income at 5 percent.
Stock market crash begins October 24. Investors call October 29 Black Tuesday. Losses for the
month will total $16 billion, an astronomical sum in those days.
1930
By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Treasury
Secretary Andrew Mellon announces that the Fed will stand by as the market works itself out:
'Liquidate labor, liquidate real estate... values will be adjusted, and enterprising people will pick
up the wreck from less-competent people'.
The Smoot-Hawley Tariff passes on June 17. With imports forming only 6 percent of the GNP,
the 40 percent tariffs work out to an effective tax of only 2.4 percent per citizen. Even this is
compensated for by the fact that American businesses are no longer investing in Europe, but
keeping their money stateside. The consensus of modern economists is that the tariff made only
a minor contribution to the Great Depression in the U.S., but a major one in Europe.
Supreme Court rules that the monopoly U.S. Steel does not violate anti-trust laws as long as
competition exists, no matter how negligible.
The GNP falls 9.4 percent from the year before. The unemployment rate climbs from 3.2 to 8.7
percent.
1931
No major legislation is passed addressing the Depression.
The GNP falls another 8.5 percent; unemployment rises to 15.9 percent.
1932
This and the next year are the worst years of the Great Depression. For 1932, GNP falls a record
13.4 percent; unemployment rises to 23.6 percent.
Industrial stocks have lost 80 percent of their value since 1930.
10,000 banks have failed since 1929, or 40 percent of the 1929 total.
GNP has also fallen 31 percent since 1929.
Over 13 million Americans have lost their jobs since 1929.
International trade has fallen by two-thirds since 1929.
Congress passes the Federal Home Loan Bank Act and the Glass-Steagall Act of 1932.
Top tax rate is raised from 25 to 63 percent.
Popular opinion considers Hoover's measures too little too late. Franklin Roosevelt easily
defeats Hoover in the fall election. Democrats win control of Congress.
1933
Roosevelt inaugurated; begins 'First 100 Days'; of intensive legislative activity.
A third banking panic occurs in March. Roosevelt declares a Bank Holiday; closes financial
institutions to stop a run on banks.
Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of
millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow
Roosevelt with a military coup and install a fascist government modelled after Mussolini's
regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army
of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when
Butler reports it to Congress.
Congress authorizes creation of the Agricultural Adjustment Administration, the Civilian
Conservation Corps, the Farm Credit Administration, the Federal Deposit Insurance Corporation,
the Federal Emergency Relief Administration, the National Recovery Administration, the Public
Works Administration and the Tennessee Valley Authority.
Congress passes the Emergency Banking Bill, the Glass-Steagall Act of 1933, the Farm Credit Act,
the National Industrial Recovery Act and the Truth-in-Securities Act.
Roosevelt does much to redistribute wealth from the rich to the poor, but is concerned with a
balanced budget. He later rejects Keynes' advice to begin heavy deficit spending.
The free fall of the GNP is significantly slowed; it dips only 2.1 percent this year. Unemployment
rises slightly, to 24.9 percent.
1934
Congress authorizes creation of the Federal Communications Commission, the National
Mediation Board and the Securities and Exchange Commission.
The economy turns around: GNP rises 7.7 percent, and unemployment falls to 21.7 percent. A
long road to recovery begins.
Sweden becomes the first nation to recover fully from the Great Depression. It has followed a
policy of Keynesian deficit spending.
1935
The Supreme Court declares the National Recovery Administration to be unconstitutional.
Congress authorizes creation of the Works Progress Administration, the National Labor Relations
Board and the Rural Electrification Administration.
Congress passes the Banking Act of 1935, the Emergency Relief Appropriation Act, the National
Labor Relations Act, and the Social Security Act.
Economic recovery continues: the GNP grows another 8.1 percent, and unemployment falls to
20.1 percent.
1936
Top tax rate raised to 79 percent.
Economic recovery continues: GNP grows a record 14.1 percent; unemployment falls to 16.9
percent.
1937
The Supreme Court declares the National Labor Relations Board to be unconstitutional.
Roosevelt seeks to enlarge and therefore liberalize the Supreme Court. This attempt not only
fails, but outrages the public.
Economists attribute economic growth so far to heavy government spending that is somewhat
deficit. Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That
summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0
percent, and unemployment falls to 14.3 percent.
1938
No major New Deal legislation is passed after this date, due to Roosevelt's weakened political
power.
The year-long recession makes itself felt: the GNP falls 4.5 percent, and unemployment rises to
19.0 percent.
1939
The United States will begin emerging from the Depression as it borrows and spends $1 billion
to build its armed forces. From 1939 to 1941, when the Japanese attack Pearl Harbor, U.S.
manufacturing will have shot up a phenomenal 50 percent!
The Depression is ending worldwide as nations prepare for the coming hostilities.
Roosevelt began relatively modest deficit spending that arrested the slide of the
economy and resulted in some astonishing growth numbers. (Roosevelt's average
growth of 5.2 percent during the Great Depression is even higher than Reagan's 3.7
percent growth during his so-called 'Seven Fat Years!') When 1936 saw a phenomenal
record of 14 percent growth, Roosevelt eased back on the deficit spending, worried
about balancing the budget. But this only caused the economy to slip back into a
recession in 1938.
World War II starts with Hitler's invasion of Poland.
1945
Although the war is the largest tragedy in human history, the United States emerges as the
world's only economic superpower. Deficit spending has resulted in a national debt 123 percent
the size of the GDP. By contrast, in 1994, the $4.7 trillion national debt will be only 70 percent of
the GDP!
The top tax rate is 91 percent. It will stay at least 88 percent until 1963, when it is lowered to 70
percent. During this time, America will experience the greatest economic boom it had ever
known until that time.
The above timeline has been complied by Steve Kangas from the Resurgence Magazine.
See also cycle of past depressions.
The Great Depression Timelines
The Great Depression and its effects lasted more than a decade, from 1929 until 1941.

Click here for more facts about timelines of the Great Depression.

Following are some of the key dates in the timeline of the Great Depression:
October 29, 1929: Stock market crashed, Black Tuesday
1930: Severe drought and Dust Bowl conditions began to ruin farmers land, a condition that lasted until
1935
1931: Food riots broke out, workers marched on Detroit, and foreign workers were deported
January 1932: Congress established the Reconstruction Finance Corporation to lend $2 billion to banks,
insurance companies, building and loan associations, and farming organizations
Late 1932: Stocks reached their lowest point
November 1932: Franklin D. Roosevelt beat Herbert Hoover in a landslide
March 1933: Franklin D. Roosevelt took office
1933: More than 11,000 of the nations 25,000 banks had closed
1933: Roosevelt announced a three-day bank holiday to prevent a third run on banks and to shore up
the banking system
1933: Unemployment reached its highest level, at 25%
1933: The Civilian Conservation Corp (CCC) was established to put young men to work in federal and
state parks
1933: The National Recovery Administration (NRA) was introduced
1933: The Federal Deposit Insurance Corporation (FDIC) was established to insure bank deposits
1933: The Civil Works Administration (CWA) was established to employ up to 4 million people on public
works projects
1935: The Work Projects Administration (WPA) was formed to employ up to 8.5 million people on public
works projects across the country
1935: The Social Security Act was signed into law, financed through payroll taxes
November 1936: FDR was elected to a second term as president
April 1938: FDR asked Congress for an additional $3.75 billion to stimulate the still floundering economy
November 1940: FDR was elected to a third term as president
1941: Preparations for World War II stimulated the American economy and effectively brought an end to
the Great Depression