Barely was the treaty signed than it was exploded. In November 1919 The Economic Consequences of the Peace scuttled what public confidence there was in the settlement. Its author, John Maynard Keynes, was a brilliant intellectual, not only a theorist of economics, an original thinker in the philosophical tradition of John Stuart Mill, but a man of wit and a central figure in the famous Bloomsbury group. He was born into an academically distinguished family – his father was an academic in economics at Cambridge, and his mother attended Newnham Hall (though, like other women at Cambridge at that time, she was not allowed to graduate). As a schoolboy at Eton he achieved distinction with a wide variety of noteworthy essays and a certain fastidiousness of appearance, which derived from his habit of wearing a fresh boutonnière each morning.15 His reputation preceded him to King’s College, Cambridge, where he arrived as an undergraduate in 1902. After only one term he was invited to join the Apostles alongside Lytton Strachey, Leonard Woolf, G. Lowes Dickinson and E. M. Forster. He later welcomed into the society Bertrand Russell, G. E. Moore and Ludwig Wittgenstein. It was among these liberal and rationalist minds that Keynes developed his ideas about reasonableness and civilisation that underpinned his attack on the politics of the peace settlement in The Economic Consequences.
Before describing the main lines of Keynes’s attack, it is worth noting the path he took between Cambridge and Versailles. Convinced from an early age that no one was ever as ugly as he – an impression not borne out by photographs and portraits, although he was clearly far from being physically robust – Keynes put great store in the intellectual life. He also possessed a sharpened appreciation for physical beauty. Among the many homosexual affairs of his that originated at Cambridge was one with Arthur Hobhouse, another Apostle. In 1905 he wrote to Hobhouse in terms that hint at the emotional delicacy at the centre of Keynes’s personality: ‘Yes I have a clever head, a weak character, an affectionate disposition, and a repulsive appearance … keep honest, and – if possible – like me. If you never come to love, yet I shall have your sympathy – and that I want as much, at least, as the other.’16 His intellectual pursuits, however, were conducted with uncommon certainty. Passing the civil service examinations, Keynes took up an appointment at the India Office, not because he had any interest in India but because the India Office was one of the top departments of state.17 The somewhat undemanding duties of the civil service allowed him time to pursue a fellowship dissertation for Cambridge. In 1909 he was elected a fellow of King’s, and in 1911 he was appointed editor of the Economic Journal. Only twenty-eight years old, he was already an imposing figure in academic circles, which is where he might have remained but for the war.
Keynes’s wartime life presents an ironic tension between the economic consequences of his expertise as a member of the wartime Treasury – in effect, negotiating the Allied loans that made possible Britain’s continuance as a belligerent – and the convictions that he shared with conscientious objectors, including his close Bloomsbury friends and the pacifists of Lady Ottoline Morrell’s circle. Indeed, he testified on behalf of his friends before the tribunals but, once the war was being waged, he told Lytton Strachey and Bertrand Russell, ‘There is really no practical alternative.’ And he was practicaclass="underline" one of his coups in the war was to see that there were certain war loans France would never repay to Britain. In 1917, when the Degas collection came up for sale in Paris after the painter’s death, Keynes suggested that the British government should buy some of the impressionist and postimpressionist masterpieces and charge them to the French government. The plan was approved, and he travelled to Paris with the director of the National Gallery, both in disguise to escape the notice of journalists, and landed several bargains, including a Cézanne.18
Keynes attended the peace treaty talks in Versailles representing the chancellor of the exchequer. In effect, terms were dictated to Germany, which had to sue for peace in November 1918. The central question was whether the peace should produce reconciliation, reestablishing Germany as a democratic state in a newly conceived world order, or whether it should be punitive to the degree that Germany would be crippled, disabled from ever again making war. The interests of the Big Three did not coincide, and after months of negotiations it became clear that the proposals of the Armistice would not be implemented and that instead an enormous reparation would be exacted from Germany, in addition to confiscation of a considerable part of German territory and redistribution to the victors of her overseas empire.
Keynes was appalled. He resigned in ‘misery and rage.’ His liberal ideals, his view of human nature, and his refusal to concur with the Clemenceau view of German nature as endemically hostile, combined with a feeling of guilt over his noncombatant part in the war (as a Treasury official he was exempt from conscription), propelled him to write his book exposing the treaty. In it Keynes expounded his economic views, as well as analysing the treaty and its effects. Keynes thought that the equilibrium between the Old and New Worlds which the war had shattered should be reestablished. Investment of European surplus capital in the New World produced the food and goods needed for growing populations and increased standards of living. Thus markets must be freer, not curtailed, as the treaty was to do for Germany. Keynes’s perspective was more that of a European than of a nationalist. Only in this way could the spectre of massive population growth, leading to further carnage, be tamed.19 Civilisation, said Keynes, must be based on shared views of morality, of prudence, calculation, and foresight. The punitive impositions on Germany would produce only the opposite effect and impoverish Europe. Keynes believed that enlightened economists were best able to secure the conditions of civilisation, or at any rate prevent regression, not politicians. One of the most far-reaching aspects of the book was Keynes’s argument, backed with figures and calculations, that there was no probability that Germany could repay, in either money or kind, the enormous reparations required over thirty years as envisaged by the Allies. According to Keynes’s theory of probability, the changes in economic conditions simply cannot be forecast that far ahead, and he therefore urged much more modest reparations over a much shorter time. He could also see that the commission set up to force Germany to pay and to seize goods breached all the rules of free economic association in democratic nations. His arguments therefore became the basis of the pervasive opinion that Versailles inevitably gave rise to Hitler, who could not have taken control of Germany without the wide resentment against the treaty. It didn’t matter that, following Keynes’s book, reparations were in fact scaled down, or that no great proportion of those claimed were ever collected. It was enough that Germany thought itself to have been vengefully treated.
Keynes’s arguments are disputable. From the outset of peace, there was a strong spirit of noncompliance with orders for demilitarisation among German armed forces. For example, they refused to surrender all the warplanes the Allies demanded, and production and research continued at a fast pace.20 Did the enormous success of Keynes’s book create attitudes that undermined the treaty’s more fundamental provisions by putting such an emphasis upon what may have been a peripheral part of the treaty?21 And was it instrumental in creating the climate for Western appeasement in the 1930s, an attitude on which the Nazis gambled? Such an argument forms the basis of a bitter attack on Keynes published in 1946, after Keynes’s death and that of its author, Etienne Mantoux, who might be thought to have paid the supreme price exacted by Keynes’s post-Versailles influence: he was killed in 1945 fighting the Germans. The grim title of Mantoux’s book conveys the argument: The Carthaginian Peace; or, The Economic Consequences of Mr Keynes.22