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WRITING OF THE BOOK Keynes left Cambridge University to work at Treasury in 1915. He worked daily on financing the war effort during World War I. This disturbed many of the pacifist members of the Bloomsbury Group of which Keynes was a member. Lytton Strachey sent him a note in 1916 asking Keynes why he was still working at Treasury. Keynes quickly established a reputation as one of the Treasury's most able men and travelled to the Versailles Conference as an advisor to the British Government. In preparation for the conference, he argued that there should be no Reparations or that, at worst, German reparations should be limited to £2,000 million. He considered that there should be a general forgiveness of war debts which he considered would benefit Britain. Lastly, Keynes wanted the US Government to launch a vast credit program to restore Europe to prosperity as soon as possible. Keynes general concern was that the Versailles conference should set the conditions for economic recovery. However, the conference focussed on borders and national security. Reparations were set at a level that Keynes perceived would ruin Europe, Woodrow Wilson refused to countenance forgiveness of war debts and Wilson would not even let the US Treasury officials discuss the credit program. While Keynes' proposals were far sighted, few others at the Versailles Conference understood their importance and Keynes' proposals would have been controversial in nations such as France, Britain and the US. During the conference, Keynes' health deteriorated and he resigned in frustration from his position on 26 May, 1919. He retired to Cambridge and wrote ''The Economic Consequences of the Peace'' over two months in the English summer. SUCCESS The book was released in late 1919 and became an immediate bestseller on both sides of the Atlantic: it was released in the US in 1920. The scathing sketches of Wilson, Lloyd George and Clemenceau proved to be very popular and the work established Keynes' reputation with the public as a leading economist. By 1924, the book had sold 140,000 copies with translations into 11 languages. It restored Keynes' reputation with the Bloomsbury Group which had been tarnished by his work for the treasury during war time. Keynes returned to Cambridge to work as an economist where he was regarded as the leading student of Alfred Marshall . IMPACT ON AMERICAN PARTICIPATION IN THE LEAGUE OF NATIONS As well as being highly successful in commercial terms in the US, the book proved to be highly influential. The book was released just before the US Senate considered the Treaty of Versailles and confirmed the beliefs of the Isolationists or irreconcilables that American participation in world politics was not wise. As well, the book also heightened the doubts of the "reservationists" led by Henry Cabot Lodge over the terms of the treaty and created doubts in the minds of Wilson's supporters. Lodge, the Republican Senate Leader, shared Keynes' concerns about the severity of the Treaty on Germany and believed that it would have to be renegotiated in the future. The Economic Consequences of the Peace played a critical role in turning American public opinion against the Treaty of Versailles and the League of Nations although it was Wilson's poor management of the issue due to a number of strokes that would eventually ensure that America would not participate in the League of Nations. IMPACT ON BRITISH PUBLIC SUPPORT FOR THE TREATY OF VERSAILLES Keynes' portrayal of the Treaty of Versailles as a '' Cathaginian Peace '' quickly became the orthodoxy in academic circles and was a common opinion amongst the British public. It was widely believed in Britain that the terms of the Versailles Treaty were unfair. This in turn was influential in determining a response to the attempts by Adolf Hitler to overturn the Versailles Treaty especially in the period leading up to the Munich Agreement . In Germany, Keynes work confirmed what the overwhelming majority of the people already believed: that is, that the Versailles Treaty was unfair. France was reluctant to use armed force to enforce the Versailles Treaty without the support of the British Government. Prior to late 1938, the strength of public opposition to prospective involvement in another war meant that British support for the French position was unreliable. '' Reflections On The Revolution In France '' because of the immediate influence on public opinions. During the 1930's, Keynes was an early advocate of rearmament to deter what he referred to as the ''brigand powers'' of Germany, Japan and Italy. In July 1936, Keynes sent a letter to the editor to the '' New Statesman '' saying ''a state of inadequate armament on our part can only encourage the brigand powers who know no argument but force, and will play, in the long run, into the hands of those who would like us to acquiesce by inaction in these powers doing pretty much what they like in the world''. POST WAR SETTLEMENT Keynes was a highly influential adviser to the British Government during the Second World War. He was head of the British negotiating team that negotiated the Bretton Woods Agreement with the American team led by Harry Dexter White . In general, the Bretton Woods Agreement suggested a monetary system similar to that proposed by Keynes in ''The Economic Consequences of the Peace''. Keynes' proposal for an International Clearing Union formed the basis of proposals for the International Monetary Fund and the International Bank For Reconstruction And Development (later the World Bank and Bank For International Settlements ). However, the operation of these institutions was not as liberal as Keynes would have wished. The extension of credit to Europe by the US through the Marshall Plan was along the lines proposed by Keynes during Versailles. Keynes was also responsible for negotiating financial support for Britain during the Second World War. While Britain struggled to afford the terms offered during the war, the credit offered by the US was much more generous. Furthermore , the Western powers did not ask for reparations from the defeated powers although the Soviet Union did charge reparations from East Germany . As Keynes predicted, reparations and war debts were paid for by loans from the US leaving no-one better off. The postwar system led to the greatest general increase in prosperity in human history. During the period 1948-1971, world trade increased by an average annual rate of 7.27% and industrial production grew by an average of 5.6%. This contrasts with the pre-war period where world trade actually fell in the 1930s and world industrial production grew fitfully in the 1920s and was hit by the depression. FURTHER READING AND REFERENCE
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