New Edition of John Maynard Keynes, The Economic Consequences of the Peace , Palgrave Macmillan, 2019

The Treaty of Versailles has had a bad press. From the time that it was signed and John Maynard Keynes penned his all-too-well-known polemic, The Economic Consequences of The Peace (1919), until a recent book by that aging realpolitiker Henry Kissinger, commentators have had little good to say about the Treaty.¹

In a plaintive letter sent on 16 March 1919 to Vanessa Bell—artist and sister of the novelist Virginia Woolf—John Maynard Keynes wrote that he was ‘absolutely absorbed in this extraordinary but miserable game’ of trying to convince his political superiors that it would be in everybody’s interest to make a decent peace with a defeated enemy in Paris.² But as he confessed, he was making very little headway. He then made what must have sounded like an odd request. Would Bell, he wondered, take him in at Charleston, her house nestled in the Sussex Downs, where he could in his own words ‘finally relapse into insanity’.³ The request was not as odd it seemed. Charleston was after all a rural home-from-home for members of the London-based Bloomsbury group, and since 1916 had even become Keynes’s ‘chief rural outpost’.⁴ Here he felt at home amongst his close friends where he could talk literature, read his official briefs, do the occasional weeding of the garden, and gossip at length about all and sundry including no doubt those leaders in Paris whom he was soon to attack with such relish in The Economic Consequences of the Peace. Two months later he wrote yet another revealing note to another member of his inner circle—Duncan Grant⁵—one of his former lovers and for some years now Vanessa’s partner. He made no effort to conceal his misery. He confessed wearily: ‘I’ve been utterly worn out, partly by incessant work and partly by depression at the evil around me. I’ve been as miserable for the last two or three weeks as a fellow could be. The Peace is outrageous and impossible and can bring nothing but misfortune…no one in England yet has any conception of the iniquities contained in it’.⁶ Two weeks on, and now close to collapse, Keynes even admitted that he was ‘near breaking point’⁷ and was in need of somewhere where he might recover his equilibrium.

However, before finally disappearing into the Sussex countryside where he was to write most of The Economic Consequences of the Peace, Keynes hovered for a while through the spring of 1919 hoping perhaps that his grand scheme for European reconstruction—which he had first put forward in the last months of the war—would be accepted.⁸ But it was not to be. ‘America support’ for the idea was ‘essential’ and when that was not forthcoming, it was clear that there was nothing more Keynes felt he could do.⁹ The die was cast as he made clear (again) to Duncan Grant. ‘Thank God I shall be soon be out of it’ he declared. I’ll soon be ‘writing to the Treasury to be relived of my duties’ he went on. He added for good measure, that if he were a German, he’d ‘rather die than sign such a Peace’.¹⁰ He was somewhat more diplomatic when it came to speaking to Jan Christian Smuts, perhaps his closest colleague and mentor in Paris. The terms of the peace he suggested to the South African were not just immoral, they were ‘unworkable’. Smuts agreed. It was a ‘thoroughly bad peace’ he conceded; so bad perhaps that Keynes, he suggested, ought to write ‘a clear, connected account of what the financial and economic clauses of the Treaty actually are and mean and what their probable results will be’.¹¹ Keynes needed no second urging. Indeed, by the time Smuts had proffered his advice, Keynes was already heading out of the door called exit. On the 19th May he ‘informed his superiors’ that he would soon be resigning’ his position.¹² Then, finally, in early June, he departed Paris ‘once more a free’ but very bitter ‘man’ though not after sending a note to Prime Minister Lloyd George saying that he was ‘slipping away from this scene of nightmare…. I can do no more good here….The battle is lost’.¹³

But if Keynes had lost what he saw as the battle, he was not about to give up the fight and was determined to tell his side of the story about what he saw as the hideous goings on in Paris and the threat which this posed to Europe as a whole. Indeed, it was not just the final peace treaty alone which depressed him. Civilization itself was at risk he felt. As Virginia Woolf was moved to record in early July, ‘Maynard’ was most ‘disillusioned’ and feared for ‘the stability of’ the ‘things’ he most liked including ‘Eton’ (his old school), the ‘governing classes (almost certainly doomed) and perhaps most dreadfully of all, his beloved ‘Cambridge’.¹⁴ There was no time to lose therefore. In fact, even by the time the formal Peace Treaty had been signed (on the 28 June 1919) Keynes was already three days into a book that would, for good or ill, shape the discussion about the Treaty for years to come. Indeed, in much the same way as Churchill’s history of the Second World War helped Churchill set the terms of the debate about that particular conflict, Keynes’s more vitriolic effort penned in just under three months for ever set the terms of the discussion about what went on in Paris between January and June of 1919.¹⁵ As one historian has observed, ‘whatever may have been the economic consequences of the peace, the political consequences of Maynard Keynes were wholly momentous.’¹⁶ The great Austrian economist Schumpeter could not have agreed more. This ‘masterpiece’, as he called it, was a ‘work of art’ to which ‘the word success sounds commonplace and insipid’.¹⁷

There was little doubting that, and within a few months of its publication the book had become one of the publishing sensations of the age, possibly ‘one of the “most successful published” polemics’ of all time.¹⁸ It certainly had a massive impact on Keynes himself. Not only did it make him a fair deal of money—some of which he later lost in currency speculation—but almost overnight turned him into a major public figure with a world-wide reputation.¹⁹ The change was both dramatic and long term. Before the appearance of the book—published by his Eton and Cambridge friend, Daniel Macmillan—²⁰ Keynes might be described as the quintessential ‘insider’ inhabiting a highly circumscribed world defined by his beloved College (King’s), the India Office (for a while), the Treasury (for four years), and regular attendance at the dining tables of the great and the good where he was always a welcome ‘guest’ in a world ‘that produced future prime ministers, permanent secretaries and rulers of the Empire’.²¹ This he was not about to give up. If anything the invitations to dine now came thicker and faster than ever. But with the publication of what one German admirer in 1919 called this ‘landmark’ work,²² but what one later British critic termed this ‘slighting and perverted sketch,’²³ he was to become, and was to remain until his death in 1946, a public intellectual of the first order.

But why did The Economic Consequences of the Peace provoke such admiration in some quarters for its realism²⁴ and downright hostility in others because of its avowedly ‘destructive’ character?²⁵ And why does it still do so today with some writers praising its integrity and its ‘I was there immediacy’,²⁶ and others insisting that it is a mere polemic penned by someone who should have spent less time pouring scorn on the peace-makers and more trying to understand the almost impossible situation in which they found themselves in 1919. Five years after Keynes died, his friend and pupil Roy Harrod, observed that the book was ‘seldom read’ any more.²⁷ But this was certainly not the case in the years immediately following its publication. Nor is it true today. As one of the great historians of the Treaty has observed, this ‘little book with a very dry title’²⁸ penned by someone with a Bloomsbury ‘propensity for moral superiority’²⁹ has cast a very long shadow over all subsequent discussion about Versailles. Indeed, for a fairly short book it has managed to provoke one ‘great debate’ after another between economic historians who are still discussing the accuracy or otherwise of Keynes’s figures on reparations,³⁰ scholars of International Relations who cannot quite make up their minds whether Keynes was an idealist or not,³¹ and a whole group of writers who have for many years held Keynes—this ‘Isaiah of appeasement’³²—responsible for the failure of British foreign policy in the 1930s. Nor has the discussion surrounding his 1919 book become any the less fraught since, especially amongst that very large group of international historians who have made the Versailles treaty their own, very special subject. In fact, most modern historians have been deeply critical of Keynes’s account with the result—as shall see—that his ‘vivid polemic’ which once held sway amongst so many of his contemporaries has come to be regarded by many historians as being at best of limited value, and at worst no better than fiction. David Cannadine has suggested that The Economic Consequences of the Peace ‘would now appear to have ‘been superseded’ by more recent accounts.³³ Keynes’s more muscular critics would argue that the account should never have been accepted in the first place.

I certainly would not expect this new edition to lay all these discussions and controversies to rest. What it will try to do however will be altogether more useful I hope: namely explain how Keynes came to write the kind of book he did in 1919, why it provoked the different reactions it did, both for and against, why it has been so much discussed ever since, and whether or not there is much if anything we can learn from it today. Others of course have written about The Economic Consequences of the Peace before, including his many biographers. There have also been numerous editions of the book itself, including at least two containing introductions written by serious Keynes’ scholars³⁴ and one by a senior US economic policy-maker who could hardly be described as an admirer of Keynesianism.³⁵ However, all these were written some time ago and would never pretend to be histories of the book itself. Here I try to fill this particular gap, not I should add by hiding behind some smoke screen of faux ‘objectivity’—Keynes I believe wrote a brilliant, opinionated and often misunderstood book in 1919—but by trying to explore how the book has been received at different times in different countries by different political actor and writers. But before doing so it might be useful first to look at Keynes’s earlier life and seek to understand why this well established figure decided at the end of the war to ‘brave the boos and catcalls of a hostile audience’ (not all members of the ‘audience’ were as hostile as Peter Clarke has suggested) ...