Editing John Maynard Keynes (section)

===Versailles peace conference===
{{Main|Heavenly Twins (Sumner and Cunliffe)|Paris Peace Conference (1919–1920)|Treaty of Versailles}}

[[Image:David Lloyd George 1902.jpg|thumb|upright|Keynes's colleague, [[David Lloyd George]]. Keynes was initially wary of the "Welsh Wizard," preferring his rival [[Asquith]], but was impressed with Lloyd George at Versailles; this did not deter Keynes from painting a scathing picture of the then-prime minister in ''[[The Economic Consequences of the Peace]]''.]]

Keynes's experience at [[Treaty of Versailles|Versailles]] was influential in shaping his future outlook, yet it was not a successful one. Keynes's main interest had been in trying to prevent [[World War I reparations|Germany's compensation payments]] being set so high it would traumatise innocent German people, damage the nation's ability to pay and sharply limit its ability to buy exports from other countries{{snd}}thus hurting not just Germany's economy but that of the wider world.

Unfortunately for Keynes, conservative powers in the coalition that emerged from the [[1918 United Kingdom general election|1918 coupon election]] were able to ensure that both Keynes himself and the Treasury were largely excluded from formal high-level talks concerning reparations. Their place was taken by the [[Heavenly Twins (Sumner and Cunliffe)|Heavenly Twins]]{{snd}}the judge [[John Hamilton, 1st Viscount Sumner|Lord Sumner]] and the banker [[Walter Cunliffe, 1st Baron Cunliffe|Lord Cunliffe]], whose nickname derived from the "astronomically" high war compensation they wanted to demand from Germany. Keynes was forced to try to exert influence mostly from behind the scenes.

The three principal players at the Paris conferences were Britain's Lloyd George, France's [[Georges Clemenceau]] and America's President [[Woodrow Wilson]].<ref name="origins">
{{cite book
|first = Frank
|last= McDonough
|pages = 43–46
|title = The Origins of the First and Second World Wars
|year=1997
|publisher=Cambridge University Press
|isbn=1-4051-0664-6}}
</ref>
It was only Lloyd George to whom Keynes had much direct access; until the 1918 election he had some sympathy with Keynes's view but while campaigning had found his speeches were well received by the public only if he promised to harshly punish Germany, and had therefore committed his delegation to extracting high payments.

Lloyd George did, however, win some loyalty from Keynes with his actions at the Paris conference by intervening against the French to ensure the dispatch of much-needed food supplies to German civilians. Clemenceau also pushed for substantial reparations, though not as high as those proposed by the British, while on security grounds, France argued for an even more severe settlement than Britain.

Wilson initially favoured relatively lenient treatment of Germany{{snd}}he feared too harsh conditions could foment the rise of extremism and wanted Germany to be left sufficient capital to pay for imports. To Keynes's dismay, Lloyd George and Clemenceau were able to pressure Wilson to agree to include pensions in the reparations bill.

Towards the end of the conference, Keynes came up with a plan that he argued would not only help Germany and other impoverished central European powers but also be good for the world economy as a whole. It involved the radical writing down of war debts, which would have had the possible effect of increasing international trade all round, but at the same time thrown over two-thirds of the cost of European reconstruction on the United States.{{r|2003 Skidel|pp=225–232}}{{efn|In ''Essays in Persuasion'', Keynes estimates that cancellation of all inter-ally debts after the First World War would have resulted in a net cost to the US of £2.0 billion and of £0.9 billion to the UK (figures not adjusted for subsequent cumulative inflation).{{r|persuasion|p=[https://archive.org/details/dli.ernet.30390/page/31/mode/2up 32]}} See §3 – "Proposals for the Reconstruction of Europe (1919)": §§(ii) "The Settlement of Inter-Ally Indebtedness",{{r|persuasion|pp=29–39}} within chapter "The Treaty of Peace".}}

Lloyd George agreed it might be acceptable to the British electorate. However, America was against the plan; the US was then the largest creditor, and by this time Wilson had started to believe in the merits of a harsh peace and thought that his country had already made excessive sacrifices. Hence despite his best efforts, the result of the conference was a treaty which disgusted Keynes both on moral and economic grounds and led to his resignation from the Treasury.{{r|2003 Skidel|pp=231–235}}

In June 1919 he turned down an offer to become chairman of the [[British Bank of Northern Commerce]], a job that promised a salary of £2,000 in return for a morning per week of work.{{r|2003 Skidel|p=234}}

Keynes's analysis on the predicted damaging effects of the treaty appeared in the highly influential book, ''[[The Economic Consequences of the Peace]]'', published in 1919.<ref>{{cite web |url=http://www.policonomics.com/keynes/ |title=John Maynard Keynes |date=29 March 2012 |publisher=Policonomics |access-date=26 May 2012 |archive-date=15 May 2021 |archive-url=https://web.archive.org/web/20210515225045/https://policonomics.com/keynes/ |url-status=live }}</ref> This work has been described as Keynes's best book, where he was able to bring all his gifts to bear{{snd}}his passion as well as his skill as an economist. In addition to economic analysis, the book contained appeals to the reader's sense of [[compassion]]:{{r|ecp|p=209}}

{{blockquote|I cannot leave this subject as though its just treatment wholly depended either on our 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 was possible, even if it enriched ourselves, even if it did not sow the decay of the whole civilized life of Europe.|author=Keynes
|title="Reparation" p. [https://archive.org/details/in.ernet.dli.2015.14117/page/n217/mode/1up 209]
|source=''The Economic Consequences of the Peace'' (1919)}}

Also present was striking imagery such as "year by year Germany must be kept impoverished and her children starved and crippled" along with bold predictions which were later justified by events:{{r|ecp|p=251}}

{{blockquote|text=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. |author=Keynes |title="Remedies" p. [https://archive.org/details/in.ernet.dli.2015.14117/page/n259/mode/1up 251]
|source=''The Economic Consequences of the Peace'' (1919)}} 

Keynes's followers assert that his predictions of disaster were borne out when the German economy suffered the [[Hyperinflation in the Weimar Republic|hyperinflation of 1923]], and again by the collapse of the [[Weimar Republic]] and the outbreak of the Second World War. However, historian [[Ruth Henig]] claims that "most historians of the Paris peace conference now take the view that, in economic terms, the treaty was not unduly harsh on Germany and that, while obligations and damages were inevitably much stressed in the debates at Paris to satisfy electors reading the daily newspapers, the intention was quietly to give Germany substantial help towards paying her bills, and to meet many of the German objections by amendments to the way the reparations schedule was in practice carried out".<ref>{{cite book|last=Henig|first=Ruth|title=Versailles and After, 1919–1933|url=https://books.google.com/books?id=lqInX6qQPyUC&pg=PA65|edition=second|year=1995|publisher=Routledge|isbn=978-1-134-79873-5|page=65|access-date=10 May 2017|archive-date=15 June 2020|archive-url=https://web.archive.org/web/20200615023209/https://books.google.com/books?id=lqInX6qQPyUC&pg=PA65|url-status=live}}</ref><ref name="marks">{{cite journal |first=Sally |last=Marks |title=Mistakes and Myths: The Allies, Germany, and the Versailles Treaty, 1918–1921 |journal=[[The Journal of Modern History]] |date=September 2013 |volume=85 |issue=3 |pages=632–659 |jstor=10.1086/670825 |doi=10.1086/670825 |s2cid=154166326 |quote=For nearly forty years, historians of twentieth-century diplomacy have argued that the Versailles treaty was more reasonable than its reputation suggests and that it did not of itself cause the Depression, the rise of Hitler, or World War{{nbsp}}II|quote-page=632}}</ref>{{efn|Marks also claims that the book is a "brilliant but warped polemic",{{r|marks|p=636}} that is "long-discredited by scholars", and which Keynes regretted writing.{{r|marks|p=656}} }}

Only a small fraction of reparations was ever paid. In fact, historian [[Stephen A. Schuker]] demonstrates in ''American 'Reparations' to Germany, 1919–33'', that the capital inflow from American loans substantially exceeded German out payments so that, on a net basis, Germany received support equal to four times the amount of the post-Second World War [[Marshall Plan]].<ref>{{Cite book |last=Schuker |first=Stephen A. |title=American 'Reparations' to Germany, 1919–33: Implications for the Third-World Debt Crisis |date=July 1988 |publisher=International Finance Section, Department of Economics, Princeton University |isbn=0881652334 |series=Princeton Studies in International Finance |page=119}}</ref>

Schuker also shows that, in the years after Versailles, Keynes became an informal reparations adviser to the German government, wrote one of the major German reparation notes, and supported hyperinflation on political grounds. Nevertheless, ''The Economic Consequences of the Peace'' gained Keynes international fame, even though it also caused him to be regarded as anti-establishment{{snd}}it was not until after the outbreak of the Second World War that Keynes was offered a directorship of a major British Bank, or an acceptable offer to return to government with a formal job. However, Keynes was still able to influence government policy-making through his network of contacts, his published works and by serving on government committees; this included attending high-level policy meetings as a consultant.{{r|2003 Skidel|pp=593–598}}