"Maynard would not have wished"?: Second-Guessing the Author of "The Balance of Payments of the United States"

The recent opening of the Royal Economic Society's archive in the British Library of Political and Economic Science (BLPES) at LSE has thrown new light on an old puzzle.¹

During the Anglo-American loan negotiations in the autumn of 1945, there had naturally been discussions of Britain's capacity to service its new American debt. As a part of these discussions, in collaboration with two economists, Frederic Harmer of the British Treasury and David McCurrach of the permanent U.K. Treasury Delegation in Washington, John Maynard Keynes prepared a paper, “Will the Dollar Be Scarce?” which he sent to London on 25 October.² The paper concluded as follows:

It is a safe rule that the contingency against which all of us are most concerned to guard is almost certain not to occur. Too many people expect the dollar to be scarce for it to be at all likely that this will really happen. If it does there will have been few examples in the history of the world when so many people have been so right. Hoping that this does not detract from the force of our conclusion we may add that we believe the U.S. Treasury experts who have been working at this subject have come to the same conclusion as we have.

Thus we shall be wise not to fear the future too much. Preserving all due caution so far as we ourselves are concerned, the job is to get through the next five years in circumstances which will be favourable and not unfavourable to the restoration of our full efficiency. We cannot easily be jeopardising our future by doing that.

Recuperating at Tilton over the Christmas holidays after the loan negotiations ended and Parliament had approved the loan agreement on 18 December 1945, Keynes decided to work the October paper up for publication in the Economic Journal. He told Roy Harrod, who had succeeded him as editor of that journal the previous April, of his intention on 4 January 1946. He sent a first draft of “The Balance of Payments of the United States” to Harrod on 25 January.³ He received Treasury approval for the publication of the article on 2 February (Keynes 1946a). The same day R. H. Brand, the head of the U.K. Treasury Delegation in Washington, advised Keynes that the article should not appear until the loan agreement was through Congress—that is, given the existing timetable, not before June 1946. Keynes agreed. As he telegraphed Brand,

When originally sending my article to the Editors of the Economic Journal I stipulated that it should not appear until after Congress had passed the Loan. At that time it looked as if this would be safely compatible with the next issue of the Journal. This now seems less likely. I have, therefore, written again [Keynes 1946b] calling their attention to this and asking them to hold the article back for the following issue, if the position is still uncertain, when the last date arrives for making their decision. (Rowe-Dutton 1946)

The day he received Treasury approval Keynes delivered a version of the paper in Cambridge to a meeting of the Political Economy Club.⁴

The delay in publication turned out to be fortunate: it gave Keynes an opportunity to get his statistical material updated and vetted in Washington during his visit to the United States for the inaugural meetings at Savannah, Georgia, of the International Monetary Fund and International Bank for Reconstruction and Development. He gave galley proofs of the article to several people there, including Graham Towers, the governor of the Bank of Canada, and Harry White of the U.S. Treasury. The last letter Keynes received from White, dated 27 March, returned his galley proofs with the comment...