Notoriety as the author of a bestseller did not distract Keynes from economics—particularly from his continuing interest in the exchange rate question. Since the end of the war he had been concerned with the problem of restoring the convertibility of the pound and as early as January 1919 he produced a scheme for doing so by means of a tax on the export of existing gold stocks. It appears in the Treasury files as a memorandum submitted to Sir John Bradbury dated 4 January 1919 (T 170/129).

THE REGULATION OF THE EXCHANGES AND OF GOLD EXPORT

When this country is buying from abroad more than it is selling, a depreciation of the exchanges is very disadvantageous, especially if the excess of purchases is paid by loans expressed in terms of sterling and if the volume of purchases, being made by Government under stress of war, is not contracted by reason of the increased sterling cost due to the depreciation.

When, however, the tide turns and a country is endeavouring to pay the debts thus incurred by exporting (visibly and invisibly) more than it imports, the balance is the other way, and there are considerable compensatory advantages in sterling being rated low as compared with other currencies. If sterling is depreciated, the temporary and immediate results are to stimulate exports, to retard imports and to render the burden of repaying the £200 million of foreign balances in London correspondingly less onerous.