How a German bomb thrust Keynes into the international economic history books
Were it not for a German bomb, there’s a very real chance John Maynard Keynes would never have become involved in one of the biggest economic achievements of his life – Bretton Woods.
In the early 1940s, by far and away the most likely person to have led the negotiations with the Americans over the future of the world economy was not Keynes but Josiah Stamp, an economist and policymaker who helped negotiate the Dawes plan which attempted to revive the German economy in the wake of the Great War. Lord Stamp, who happened to be a great friend of Keynes’s (Mervyn King quoted from one of their radio broadcasts in a speech a couple of years back), was a close advisor to Chamberlain and had plenty of links with the United States. Keynes, on the other hand, was hotheaded and prone to outbursts, particularly at Americans.
However, on the night of 16 April 1941, a German bomb fell directly on the air raid shelter of Stamp’s home in Shortlands, in the suburbs of London. All the occupants, including Stamp, his wife and his son, were killed. According to rescuers who found his body, “he had tried to shield his wife. He was crouching as though to give protection above the camp bed on which his wife lay in their smashed shelter” [The Argus, Melbourne, Victoria, 17 April 1941.]
Lord Stamp’s death opened up a seat on the Bank of England’s Court – the board of directors at the central bank. Keynes was his replacement (a slightly controversial one). Today the Bank released a host of newly-digitised records, including its annual lists of directors and you can see Keynes’s addition on this page for 1941 (Keynes is at the bottom; click on the image for a bigger picture).
Stamp’s death also made the decision about who to send to the United States for the forthcoming negotiations over plans for the post-war settlement easier. Keynes was dispatched to Washington within weeks. The discussions that followed led, in due course, to the Bretton Woods settlement – the system of international monetary rules which presided over the world economy until the 1970s. The messy breakdown of the system is blamed by some for the recent economic crisis.
Keynes would, of course, have been remembered for his academic work, the General Theory, and The Economic Consequences of the Peace. But had he not been so involved in Bretton Woods, his hallmark would not have been imprinted on history in quite the same way. After all, his bust still sits in the boardroom of the International Monetary Fund, one of the institutions he helped create at Bretton Woods.
Anyway, this anecdote is just one very small one of many in my forthcoming book on Bretton Woods – a page-turning narrative about arguably the most important single moment in international economics in the past century. It’s amazing how many of the stories have remained untold until today. The book is out in May but you already pre-order it on Amazon. End of plug.