John Maynard Keynes, Vol. II: The Economist as Saviour 19201937
by Robert Skidelsky
Viking, 731 pp., $37.50
The second volume of Robert Skidelsky’s remarkable biography of John Maynard Keynes opens in 1921 with Keynes in Cambridge reading an after-dinner speech at a meeting of the Apostles, the select society of Cambridge of which at age thirty-eight he was president. The speech describes the career of one of its members, J.E. Moulton, who had recently died. Moulton had been a brilliant mathematician and then Fellow of Christ’s Church, but he had forsaken scholarship to go in for money-making, at which he had been very successful. Keynes defends his actions as an exercise, not a betrayal, of his best abilities:
In the stir and bustle of the world, pitting his wits, at a price, against all comers, an honourable servant of those who employed him, exercising a variety of conjoined gifts in the quarters of phenomenal existence [Apostle slang for the affairs of the world]…Moulton may have come, as near as he was capable…to the satisfactions of the artist.
Keynes is ostensibly talking about Moulton, but, as Skidelsky writes,
It is easy to imagine that he is talking about himself—discussing, perhaps justifying, his life choices before the jury of his peers. He too had spent much of his early adulthood in the cloister, scribbling away on his theory of probability. As his father noted at the time, he had returned to Cambridge in 1908 to resume “a student’s life.” But as he worked on probability he came to realise that the achievements of a Moore or a Russell were beyond him. His inclinations and capacities were activist, not reclusive.
Keynes did indeed follow Moulton’s footsteps in becoming actively interested in money-making, but his early, highly speculative ventures were near-disasters. In May 1920 Keynes could have been forced into insolvency had not his family and his Bloomsbury friends stood behind him, convinced that in the end they would get their money back. They were right. By the end of the year his debts were paid off, and within two years Keynes was comfortably off with capital of between £25,000 and £30,000. His real financial success came later. In 1929, the value of his Wall Street holdings came to £7,815; by 1936 it had grown to £506,522. From D.E. Moggridge’s recent compendious biography simply (and undeservedly in any absolute sense) comes rolling in.” At its peak in 1936, his portfolio also carried loans of nearly £300,000, which exposed him to serious risk. The risk was realized in the collapse of 1937, when Keynes lost over half his capital. Nonetheless, by the mid 1940s, his assets had risen to over £400,000, worth easily twenty times that today.
I begin with Keynes the moneymaker, because, as Skidelsky emphasizes, it is hard …