J. M. Keynes and the Visible Hands

This is the first installment of a six-part Public Books series on how the 1919 Treaty of Versailles shaped our present age. Read series editor Joanne Randa Nucho’s introduction here.

“I’ve never been so miserable as for the last two or three weeks,” wrote John Maynard Keynes to his mother in 1919. “The Peace is outrageous and impossible and can bring nothing but misfortune behind it. … Well, I suppose I’ve been an accomplice in all this wickedness and folly, but the end is now at hand.”¹ When Keynes returned sick and tired from Paris, where he had represented the British Treasury at the Versailles Peace Conference, he was looking for a way to register his deep mortification with the treaty and the events that had led to it. Sharing some of his reservations, Undersecretary of State for Foreign Affairs Lord Robert Cecil encouraged him to write something up: “If you had the time to write a brilliant article exposing from a strictly economic point of view the dangers of the Treaty, it might do a great deal of good.”² Doing a great deal more than that, Keynes sat down and wrote The Economic Consequences of the Peace.

Published in December 1919, Keynes’s book was a sensation. Running quickly into several editions in Britain and America, the book caught fire not only as a wickedly smart condensation of the political and economic doubts that had been forming on both sides of the Atlantic but also—maybe even more so—for its ruthlessly personal depictions of Lloyd George, Georges Clemenceau, and Woodrow Wilson. After all, where else could one read about the thickness of Clemenceau’s boots or the shape of Wilson’s hands (figure 1)?

Even more than its acerbic caricatures, Keynes’s harrowing characterization of Versailles as a “Carthaginian peace” meant to destroy Germany’s economic future struck a deep chord in Europe and America. Indeed, his idea became a kind of received wisdom about what went wrong in 1919. Even critics of the book’s tone or its politics had to more or less accept its economic argument: “Very few,” wrote Étienne Mantoux in the immediate wake of the Second World War, “attempted to criticize in any detail Mr. Keynes’s findings on the economic side of the Peace Treaty.”³ After all, how could they criticize those findings when it was Keynes—the brilliant, urgent, stylish, polymathic Keynes—who had found them?

Although Keynes’s idea of a Carthaginian peace has held on to its status as a powerfully persuasive kind of common sense, some critics—beginning with Mantoux in 1946—have pointed out that, in the long run, Keynes actually got a lot wrong. The most obvious example: Keynes dangerously underestimated Germany’s economic capacity to bear the cost of war reparations; as a result, those predicting again and again Germany’s economic collapse were caught off guard when the country proved able not only to withstand the terms of the treaty but also to thrive during a decade of military and industrial development. As A. J. P. Taylor puts it in The Origins of the Second World War, “Setting one thing against another, the only economic effect of reparations was to give employment to a large number of bookkeepers.”⁴

The limits of Keynes’s predictions become all the more striking when we see how elements of his analysis were later put to blunt use as military propaganda. Leaning on a crude version of the story that Keynes had told, Hitler vilified the “ridiculous, monstrous, infamous, indefensible” terms of the treaty, and used that language as an excuse to rile his base and to move his new army into Poland, Czechoslovakia, France, and beyond.⁵