John Maynard Keynes(1883-1946 )

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Search CEEBottom of Form Home |CEE |2nd edition |Biographies | John Maynard KeynesSo 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 economicsserves 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 marshallandarthur pigou, whose scholarship on the quantity theory of money led to KeynessTract on Monetary Reformmany 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 (seeForeign 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 Peacewas 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 calledmonetarism). His writings on the topic were essentially built on the principles he had learned from his mentors, Marshall and Pigou. In 1923 he wroteTract on Monetary Reform,and later he publishedTreatise on Money,both onmonetary 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 lowerinterest rateswhen prices tend to rise and raise them when prices tend to fall.Keyness ideas took a dramatic change, however, asunemploymentin Britain dragged on during the interwar period, reaching levels as high as 20 percent. Keynes investigated other causes of Britains economic woes, andThe General Theory of Employment, Interest and Moneywas the result.KeynessGeneral Theoryrevolutionized 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 theGeneral Theorythat 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 Theoryadvocated 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, notadam 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.1Keynes believed that once full employment had been achieved byfiscal policymeasures, 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 inThe General Theory,is chiefly the product of work by subsequent economists includingjohn hicks,james tobin,paul samuelson, Alan Blinder,robert solow, William Nordhaus, Charles Schultze,walter heller, andarthur 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 Works1913.Indian Currency and Finance.Reprinted inKeynes, 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 KeynesAlsoListedIn:EconomistsFamous As:EconomistNationality:BritishPolitical Ideology:Liberal PartyBorn On:05 June 1883 AD Famous 5th June BirthdaysZodiac Sign:Gemini Famous GeminisBorn In:CambridgeAprilDied On:01 January 1970 ADPlace Of Death:East SussexFather:John Neville Keynes,Mother:Florence Ada KeynesSiblings:Sir Geoffrey Keynes, Margaret Neville KeynesSpouse:Lydia Lopokova (m. 1925-1946)Children:Sir Geoffrey KeynesEducation:King's College, Cambridge, Eton College, University of CambridgeWorks & 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 worldTop of FormBottom of FormJohn Maynard KeynesKeynesian 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 KeynesChildhoodJohn 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.EducationKeynes 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.CareerKeynes 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.RiseKeynes 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 publishedhis 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 previousneo-classical economic paradigm which believed that the market would naturally establish full employment equilibrium if it was not controlled by government interference.II World WarIn 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 EconomicsKeynes is regarded as a man having the greatest impact on 20thcentury 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 LifeKeynes 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.DeathKeynes 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 TIMELINE1883:John Maynard Keynes was born on 5 June1892-1897-:He went to St Faith's preparatory school as a day pupil1902:Keynes left Eton to pursue broader studies in King's College, Cambridge where he had earned a scholarship to pursue mathematics1904:He received a first class B.A. in mathematics1905:Keynes sat for his Tripos and in 1906 he appeared for the Civil Service Exams1906:Keynes started his career as a civil servant which began in October when he joined as a clerk in the India Office1908:He got bored and resigned from his office and left for Cambridge to study and work on probability theory1909: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 have1909:Keynes was invited to join Cambridge as a lecturer in economics1911:Keynes became the editor of the Economic Journal.1913: By 1913 Keynes came out with his first published book, Indian Currency and Finance1914:Formally Keynes had not resumed civil service but he travelled to London on governments request, days before the war1915:In January Keynes was recruited as an official government position at the Treasury1919: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 Leopold1919:He analysed the treaty and worked upon its damaging impacts which later appeared in his book The Economic Consequences of the Peace1921:Keynes completed his A Treatise on Probability and published it1921:Keynes fell in love with Lydia Lopokova, a well-known Russian ballerina, and one of the stars of Serge Diaghilev's Ballets Russes1922:Keynes came out with his A Revision of the Treaty which was a continuing work on his persistent quests on reduction of German reparations1923:Keynes attacked the post World War I deflation policies by publishing A Tract on Monetary Reform1924: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 works1925: He got married to Lydia1930:Keynes publishedhis 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 unemployment1931: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 times1933: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 spending1933:Keynes was persuaded by Felix Frankfurter to address President Roosevelt directly1934:He sent letters to President Roosevelt and went face to face1936:Keyness greatest work the General Theory of Employment, Interest and Money was published which entirely challenged the previous neo-classical economic paradigm1939:Keynes great efforts started being adopted by America to formulate its economic policy post1940: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 losses1941:Keynes was invited to join as one of the Court of Directors of the Bank of England in September1942:He served as one of Directors of Bank of England till April1942:In June Keynes got rewarded for his services with a hereditary peerage in the King's Birthday Honours1942:On 7 July Keynes was upgraded on his title, being gazetted as Baron Keynes, of Tilton in the County of Sussex1946: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 Keyneswas an economist who taught atCambridge University. His mother,Florence Keyneshad 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 theEton Collegescholarship examination and attained the tenth out of fifteen places and was first equal in mathematics. In his final year he won an Eton scholarship toKing's College, in mathematics and classics. One of his tutors wasAlfred Marshall. Keynes was invited to join theApostles, a small, secret society of dons and undergraduates who met to discuss ethical and political issues. The group includedLytton Strachey,Leonard Woolf,E. M. ForsterandBertrand Russell. His friendship with Woolf and Russell brought him into contact with leaders of theFabian Society, includingSidney Webb,Beatrice WebbandGeorge Bernard Shaw.When Keynes graduated in 1905 he took up a career in the Civil Service. He gained a Fellowship atKing's Collegein 1909 and as well as teaching Keynes' began writing on economic issues. He became editor of theEconomic Journalin 1911 and his first bookIndian Currency and Financewas published in 1913. This was based on lectures he had delivered at theLondon School of Economicstwo years previously.Keynes was apacifistbut 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 theFirst World War. According toKingsley 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 theVersailles Peace Conference. John Maynard Keynes totally disagreed with the harsh terms negotiated at Versailles and after resigning returned to England and wroteThe 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 atCambridge Universityhe also contributed a great number of articles to various newspapers and magazines. In 1923 he became chairman of theLiberaljournal,The Nationand used it as a vehicle to attack the economic policies ofStanley Baldwinand hisConservative Government. As Chancellor of the Exchequer,Winston Churchillcame under attack for his decision to return Britain to the gold standard.Keynes always had a strong interest in ballet. When he initially sawLydia Lopokovahe was unimpressed: "she's a rotten dancer - she has such a stiff bottom". When he saw her again towards the end of 1921 in otherSergei Diaghilevballets, includingThe Sleeping Princess, he fell deeply in love with her and they began a romantic relationship.A member of theBloomsbury Group, Keynes introduced Lopokova to his friends. This includedVirgina Woolf,Leonard Woolf,Lytton Strachey,Vanessa Bell,Clive Bell, andDuncan Grant. They did not always make her feel welcome. According toMargot 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 KeynesQuentin Bellclaimed thatVirginia WoolflikedLydia 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 ofLytton Strachey(1994) pointed out thatDuncan 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 marriedLydia Lopokovaon 4th August 1925 (the year of her divorce fromRandolfo Barocchi) atSt Pancras Registry Office. The wedding received a considerable amount of publicity. For example,Vogue Magazineincluded 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 theSoviet Unionon 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 at46 Gordon SquareandTilton HousenearFirleinEast 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 Woolfvisited the couple atTilton Houseon 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 theSoviet Unionseveral times. He was interested in the economic measures being taken by the communist regime and when he returned to England he wroteThe End of Laissez-Faire. After the onset on theGreat Depressionin 1929, Keynes began to address the problems of unemployment. In a series of articles,The Means to Prosperity, written inThe Times, Keynes argued that the government should "spend its way out of the depression".During this period he was a member of theLiberal Partyand 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 impressedRichard Tawneywho wrote a letter toRamsay 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 the1929 General Electionthe 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 theHouse of Commonsthe 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 theLabour Governmentcoincided with an economic depression andRamsay 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 ColeandWalter Layton, to discuss this problem.In March 1931Ramsay MacDonaldasked SirGeorge 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 Snowdenrejected these ideas and this was followed by the resignation ofCharles 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 theMay Committeeproduced 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 twoLabour Partynominees on the committee,Arthur PughandCharles Latham, refused to endorse the report. AsDavid W. Howellhas 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 ofRamsay MacDonald,Philip Snowden,Arthur Henderson,Jimmy ThomasandWilliam Grahamto 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 thegold standardand 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 Snowdenpresented 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 HendersonandWilliam 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 withNeville Chamberlain,Samuel Hoare,Herbert SamuelandDonald MacLeanto 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, includingWalter CitrineandErnest 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 Hendersonargued 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 toMalcolm MacDonald, the opposition to the cuts in public expenditure was led by Henderson,Albert AlexanderandWilliam Graham. MacDonald went to seeGeorge Vabout 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 MacDonaldwent toBuckingham Palaceto resign.Sir Clive Wigram, the King's private secretary, later recalled thatGeorge 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 withStanley Baldwin,Neville ChamberlainandHerbert SamuelMacDonald 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 theNationwith theNew Statesman, a journal owned by theFabian Society. Keynes now became a regular contributor to what was now Britain's leading intellectual weekly.In 1936 Keynes published his most important bookA 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 PresidentFranklin D. Rooseveltand was a factor in the introduction of theNew Dealand the economic policies of Britain's post-warLabour Government.Bertrand Russellbecame 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 Fonteynadded: "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 theSecond World WarKeynes was an unpaid advisor to the Chancellor of the Exchequer and wrote the influentialHow to Pay for the War(1940). He attended theBretton Woods Conferencein 1944 and theSavannah Conferencein 1946. He was also involved in the negotiations onLend-Leaseand 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.1His 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.3As 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) andThe General Theory of Employment, Interest 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 espousedlaissez-faire.4Keynesian 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.5In 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."6What Keynes'General Theorydid, was to throw economists into two violently opposed camps.7However, 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 thePlatonic visionshad 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 Keyneswas an economist who taught atCambridge University. His mother,Florence Keyneshad 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 theEton Collegescholarship examination and attained the tenth out of fifteen places and was first equal in mathematics. In his final year he won an Eton scholarship toKing's College, in mathematics and classics. One of his tutors wasAlfred Marshall. Keynes was invited to join theApostles, a small, secret society of dons and undergraduates who met to discuss ethical and political issues. The group includedLytton Strachey,Leonard Woolf,E. M. ForsterandBertrand Russell. His friendship with Woolf and Russell brought him into contact with leaders of theFabian Society, includingSidney Webb,Beatrice WebbandGeorge Bernard Shaw.When Keynes graduated in 1905 he took up a career in the Civil Service. He gained a Fellowship atKing's Collegein 1909 and as well as teaching Keynes' began writing on economic issues. He became editor of theEconomic Journalin 1911 and his first bookIndian Currency and Financewas published in 1913. This was based on lectures he had delivered at theLondon School of Economicstwo years previously.Keynes was apacifistbut 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 theFirst World War. According toKingsley 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 theVersailles Peace Conference. John Maynard Keynes totally disagreed with the harsh terms negotiated at Versailles and after resigning returned to England and wroteThe 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 atCambridge Universityhe also contributed a great number of articles to various newspapers and magazines. In 1923 he became chairman of theLiberaljournal,The Nationand used it as a vehicle to attack the economic policies ofStanley Baldwinand hisConservative Government. As Chancellor of the Exchequer,Winston Churchillcame under attack for his decision to return Britain to the gold standard.Keynes always had a strong interest in ballet. When he initially sawLydia Lopokovahe was unimpressed: "she's a rotten dancer - she has such a stiff bottom". When he saw her again towards the end of 1921 in otherSergei Diaghilevballets, includingThe Sleeping Princess, he fell deeply in love with her and they began a romantic relationship.A member of theBloomsbury Group, Keynes introduced Lopokova to his friends. This includedVirgina Woolf,Leonard Woolf,Lytton Strachey,Vanessa Bell,Clive Bell, andDuncan Grant. They did not always make her feel welcome. According toMargot 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 KeynesQuentin Bellclaimed thatVirginia WoolflikedLydia 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 ofLytton Strachey(1994) pointed out thatDuncan 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 marriedLydia Lopokovaon 4th August 1925 (the year of her divorce fromRandolfo Barocchi) atSt Pancras Registry Office. The wedding received a considerable amount of publicity. For example,Vogue Magazineincluded 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 theSoviet Unionon 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 at46 Gordon SquareandTilton HousenearFirleinEast 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 Woolfvisited the couple atTilton Houseon 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 theSoviet Unionseveral times. He was interested in the economic measures being taken by the communist regime and when he returned to England he wroteThe End of Laissez-Faire. After the onset on theGreat Depressionin 1929, Keynes began to address the problems of unemployment. In a series of articles,The Means to Prosperity, written inThe Times, Keynes argued that the government should "spend its way out of the depression".During this period he was a member of theLiberal Partyand 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 impressedRichard Tawneywho wrote a letter toRamsay 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 the1929 General Electionthe 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 theHouse of Commonsthe 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 theLabour Governmentcoincided with an economic depression andRamsay 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 ColeandWalter Layton, to discuss this problem.In March 1931Ramsay MacDonaldasked SirGeorge 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 Snowdenrejected these ideas and this was followed by the resignation ofCharles 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 theMay Committeeproduced 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 twoLabour Partynominees on the committee,Arthur PughandCharles Latham, refused to endorse the report. AsDavid W. Howellhas 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 ofRamsay MacDonald,Philip Snowden,Arthur Henderson,Jimmy ThomasandWilliam Grahamto 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 thegold standardand 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 Snowdenpresented 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 HendersonandWilliam 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 withNeville Chamberlain,Samuel Hoare,Herbert SamuelandDonald MacLeanto 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, includingWalter CitrineandErnest 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 Hendersonargued 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 toMalcolm MacDonald, the opposition to the cuts in public expenditure was led by Henderson,Albert AlexanderandWilliam Graham. MacDonald went to seeGeorge Vabout 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 MacDonaldwent toBuckingham Palaceto resign.Sir Clive Wigram, the King's private secretary, later recalled thatGeorge 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 withStanley Baldwin,Neville ChamberlainandHerbert SamuelMacDonald 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 theNationwith theNew Statesman, a journal owned by theFabian Society. Keynes now became a regular contributor to what was now Britain's leading intellectual weekly.In 1936 Keynes published his most important bookA 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 PresidentFranklin D. Rooseveltand was a factor in the introduction of theNew Dealand the economic policies of Britain's post-warLabour Government.Bertrand Russellbecame 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 Fonteynadded: "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 theSecond World WarKeynes was an unpaid advisor to the Chancellor of the Exchequer and wrote the influentialHow to Pay for the War(1940). He attended theBretton Woods Conferencein 1944 and theSavannah Conferencein 1946. He was also involved in the negotiations onLend-Leaseand 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 2014John Maynard Keynes - TimelineThe Pre-Career YearsJohn Maynard Keynes - 1883 to 1905DateEvent

5 June 1883John 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.

1888A 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."

1890Keynes attends the Perse School Kindergarten while receiving elementary educational instruction at home.

1892Keynes 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.

1893Keynes'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 1894Keynes is now top of his class at school.

December 1894A mathematics teacher comments that Keynes, "does really brilliant work" but that he "soon tires and has not perseverance in the face of difficulty."

Late 1896St 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 1897Keynes 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 1897Three days of examinations for Eton begin.

July 12 1897Twenty scholarships for Eton are awarded. Keynes ranks tenth out of twenty overall, and first in mathematics.

September 25 1897Keynes 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 1897At the end of his first term at Eton, Keynes places first in classics and second in mathematics.

Early 1898Ill-health strikes in Keynes's second term at Eton, including a bout of measles. There are frequent absences from classes.

Mid 1898Keynes wins Eton's Junior Mathematical Prize.

1899Keynes 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 1900The 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 1900Eton's Senior Mathematical Prize is won by Keynes.

25 November 1900Keynes competes for and wins the Richards English Essay Prize.

26 January 1901Keynes is elected to the College Pop - Eton's prestigious debating society.

July 1901The Tomline, Eton's principal mathematical prize, is added to Keynes's ever-growing bag of honours.

July 1902Keynes 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.

1902A 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 1902John 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 1904Keynes 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 - 1905Keynes prepares for Cambridge's Tripos examinations in mathematics while continuing to pursue his other intellectual interests.

June 1905In 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 EconomistJohn Maynard Keynes - 1905 to 1913DateEvent

Summer 1905Keynes spends summer enjoying a mountain climbing holiday in Switzerland and with his family. He also does some serious reading - Marshall'sPrinciples of Economics.

Autumn 1905Keynes 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 1906In 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 1906Keynes sits the Civil Service examinations in London between 3 August and 25 August.

October 1906The 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 1906Keynes 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 1907Keynes 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 1907Hoping 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 1908Keynes 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 1909Keynes begins lecturing at Cambridge University three times a week on Money, Credit and Prices.

2 February 1909In 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 practicallynil. Shall I accept?

March 1909On the basis of his dissertation in Probability, Keynes is elected a Fellow of King's College - adding 120 per annum to his income.

Spring 1909The Economistpublishes a series of letters from Keynes arguing that estimates of British investments in India are exaggerated.

May 1909Keynes wins the Adam Smith Prize (60) for an essay on Index numbers.

15 October 1909"I seem to spend most of my time seeing pupils. I have already got eighteen of these, which will be rather hard work, but ought to bring in nearly 60."

7 November 1909Keynes reports to his father that his income has reached 700 per annum, including the money his father gives him.

January 1910In 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 1911After 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 areawful... their stupidity is inhuman... The rest of them had minds and opinions as deplorable as their characters."

Autumn 1911Keynes becomes the editor of theEconomics Journal- a considerable honour.

Autumn 1912Keynes 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 1913Keynes 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 1913Before his book is published, Keynes is offered and accepts a seat on a Royal Commission to enquire into Indian Finance and Currency.

12 August 1913Austen 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 AftermathJohn Maynard Keynes - 1914 to 1919DateEvent

August 1914World 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 1914News 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 1915Keynes 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 1915Reginald 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 1916Despite 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 1917Keynes'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 1917In 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 1917In 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 1917Keynes 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 1918Keynes and his future wife Lydia Lopokova are guests (independently of one another) at a party to celebrate the Russian Ballet in London.

Autumn 1918Victory 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 1918The war ends with an armistice.

January 1919No 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 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 1919Keynes 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 1919Harsh 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 1919Keynes 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 StandardJohn Maynard Keynes - 1919 to 1926DateEvent

June 1919Keynes 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