The conventional narrative of the 1930s portrays international monetary cooperation as non-existent, disappearing with the collapse of the gold standard during the early years of the decade and reappearing only with World War II and Bretton Woods. I argue, in contrast, that the Western democracies – foremost Britain, France, and the United States – put an end to their monetary war and moved towards peace with the Tripartite Agreement of 1936, through which they agreed to consult on matters of mutual interest and work towards greater stability. To achieve these ends, they created reciprocal gold facilities that brought coherence to the international monetary system and enabled stabilizing exchange intervention. Exploring the operation of these facilities sheds light on the evolution of the international monetary system and the ability of technical cooperation to provide a foundation for broader collaboration.

Economic Consequences enjoyed an outright favourable reception in Turkey. This chapter illuminates the circumstances that made this possible. Of the Carthaginian peace-imposing treaties of the Paris Conference (1919), only the Treaty of Sèvres (1920) concerning the Ottoman Empire was annulled after a battleground victory (1922), and replaced by the Treaty of Lausanne (1923). An officer and a diplomat, Ali Fethi (Okyar), soon to become prime minister of Turkey, was a prisoner of war in Malta when he heard of Keynes’s book, acquired a copy, and translated it in 1920. Because the national leaders were anxious to know what awaited them in the peace talks, given the huge Ottoman debt they inherited, impending war reparations, and the discriminatory treatment they suspected, upon Ali Fethi’s release and return, the translation was published in 1922 by the official press in Ankara. It helped prepare the Turkish delegation to the Lausanne conference. This case provides us with an early example of Economic Consequences as a policy instrument in favour of a new international integration serviceable to peace and reconstruction in the face of an international conflict.

This chapter examines different styles and contents of attempts to revise the outcome of the Paris Peace Conference. It contrasts the devastating critique of the Economic Consequences, with specific proposals with which Keynes was involved that began in November 1919 with meetings in Amsterdam hosted by the Dutch banker Gerard Vissering, and involving a wide range of international bankers, including some influential Americans. The Amsterdam meeting suggested a plan for leveraging private U.S. finance for the sustainable reconstruction of Europe that anticipated some aspects of the 1924 Dawes Plan. Keynes found his role in the Amsterdam plan undermined by the notoriety of the Economic Consequences and the disapprobrium it attracted. How could he hope to persuade the U.S. government after the attack on Woodrow Wilson mounted in the Economic Consequences? There is a sharp contrast – even contradiction – between the Cambridge world of sharp analysis and polemic and the Amsterdam approach, where market-oriented people tried to devise a solution using financial products/financial engineering. And each of these approaches was also quite different from the diplomatic logic that had produced the Versailles Treaty.

This chapter discusses Keynes’s Economic Consequences of the Peace as a matrix for understanding the changing institutional landscape of international trade. In 1919, Keynes highlighted the perils of German participation and US non-participation in international politics, twin problems that continued to frame trade debates in the League of Nations for the remainder of the 1920s. Generally, German leaders supported the construction of an open and regulated world economy. Many internationalists were eager to lock Germany into a system of multilateral norms but also feared that integrating Germany into global markets would reinforce its dominance in key strategic sectors. In contrast, the United States remained aloof from League trade negotiations in the 1920s. Europeans were divided over whether to respond with universal trade rules that the United States might eventually be persuaded to follow or with a regionalist approach that would enable Europeans to negotiate directly with their Atlantic neighbour on a more equal footing. As Keynes saw clearly, both sets of concerns were exacerbated by the financial imbalances stemming from war debts and reparations.

Why didKeynes an exceedingly well connected young man with his feet very well planted in the English establishment,decide to take the risk of writing such an explosive book like The Economic Consequences of the Peace in 1919? After all, others had their doubts about Versailles; butnone went public;and ifor when theydid,it was certainly not to criticizethe peace settlementor the peacemakersin such a vitriolic fashion. SowhatledKeynes to write a book likeThe Economic Consequences of the Peace? What was his purpose in doing so? Who did he think he was writing it for?Was it his last word on the subjector was it – as Keynes believed at the time – merely the first step in a longer struggle to effectively render the economic parts of the Treaty invalid? Finally, why was the volumethe great success it turned out to be at the time, and whyis it still being debated today by both admirers and critics alike?

Even a century after a French translation of Consequences was published in 1920 by France’s foremost editor, the Nouvelle Revue française, there remains a myth that Keynes’s international bestseller was not only barely read in France but met with a homogeneously hostile reception. Recent historical discourse tends to overlook, however, how French reactions to Consequences mirrored France’s own internal political dissensions on the merits of the Treaty. Keynes, it turns out, was well in tune with predating and intellectually relevant French condemnations of the Versailles Peace.

The Economic Consequences of the Peace was first published in 1919 and, since then, changed the economic discourse surrounding reparations and Carthaginian peace. This chapter specifies how three elements hinted at in the introduction of the Economic Consequences of the Peace – social classes, national sovereignty, and the international political system – can explain Keynes’ assessment of Carthaginian peace. The chapter analyses the optimality of reparations in the context of these three elements.

This chapter investigates the degree of pass-through from import prices and tariffs to wholesale prices in interwar Britain using a new high-frequency micro data set. The main results are: (i) Pass-through from import prices and tariffs to wholesale prices was economically and statistically significant. (ii) Despite devaluation, import prices exacerbated deflation in the early 1930s because of the global slump in export prices. (iii) Rising protection, however, was a mild stimulus to prices during the shift to inflation.

This chapter examines the response of five prominent Swedish economists, David Davidson, Gustav Cassel, Eli Heckscher, Knut Wicksell and Bertil Ohlin, to John Maynard Keynes’s The Economic Consequences of the Peace and to the German reparations in the 1920s. When Keynes’s book appeared, Davidson and Cassel strongly endorsed it. Heckscher also agreed with Keynes in a long review entitled “Too Bad to Be True”. Inspired by his Malthusian view, Wicksell found the reparations feasible if only German population growth was arrested. The contacts between the Swedes and Keynes became close after Keynes’s book, in particular between Cassel and Keynes. The exchange of views took a new turn when Bertil Ohlin responded to an article by Keynes in The Economic Journal in 1929 on the transfer problem. The famous Keynes–Ohlin discussion laid the foundation for the analysis of the transfer problem, bringing Ohlin international recognition. We also trace how Davidson, Cassel and Heckscher changed their appreciation of Keynes in the 1930s with the publication of the General Theory while Ohlin viewed the message of Keynes in the 1930s as consistent with the policy views of the Stockholm school of economics.

This chapter revisits the turning points in the evolution of the global economic system in the century since 1919, emphasizing the evolution of the international monetary system and policy cooperation/coordination. We identify four disruptions and examine how each prompted changes in the underlying ideology about how the international monetary system should be organized. First, the eruption of the First World War confirmed the end of the First Globalization. Second, the Second World War prompted the creation of a new managed system at Bretton Woods. Thirdly, in the 1970s the Bretton Woods consensus finally gave way to a new non-system dominated by floating exchange rates for the major world currencies and heralded the acceleration of financial integration of global markets. The final turning point is the 2007–8 global financial crisis, which has provoked an echo of the threats that Keynes identified for the global economy in 1919. Each turning point was characterized by different forms and motivation of cooperation, how rules (either implicit or explicit) were designed and implemented, and the crucial importance of the historical context. Finally, the chapter explores how the dominant interpretations of the past shaped policy reactions in the present and concludes with some lessons for today.

This chapter argues that Chapter Two of the Economic Consequences contains a much more important piece of economic analysis than is generally recognized, namely the Ramsey model of economic growth. It is well known that Keynes helped Ramsey to explain that model in the Economic Journal in 1928. But I show here that Keynes had himself given an exposition of the model, nearly a decade earlier, in this chapter. What is more, Keynes then generalizes this model in order to help him think about Europe’s growth process within the global economy, and why it was so fragile. I claim that the analysis in this chapter provides the underpinning for Keynes’s famous criticism of the reparations imposed on Germany. The chapter also makes clear that Keynes is starting to realize what he will need to do to get to the General Theory in 1936. And there are the beginnings of the ideas which would lead to the Bretton Woods conference in 1944 and to the rebuilding of the international monetary system after World War II. Understanding these connections helps us to visualize the arc of Keynes’s discovery, one which stretched all the way from 1919 until his death in 1946.

Just over a century old, John Maynard Keynes’s The Economic Consequences of the Peace (1919) remains a seminal document of the twentieth century. At the time, the book was a prescient analysis of political events to come. In the decades that followed, this still controversial text became an essential ingredient in the unfolding of history. In this essay, we review the arc of experience since 1919 from the perspective of Keynes’s influence and his changing understanding of economics, politics, and geopolitics. We identify how he, his ideas, and this text became key reference points during times of turbulence as actors sought to manage a range of shocks. Near the end of his life, Keynes would play a central role in planning the world economy’s reconstruction after World War II. We argue that the “global order” that evolved since then, marked by increasingly polarized societies, leaves the community of nations ill prepared to provide key global public goods or to counter critical collective threats.