2 - HOW TO PAY FOR THE WAR

Summary

Although in his letter to Professor Hicks of 7 October Keynes had not yet made up his mind completely as to the best way of obtaining real resources for war, he was moving quickly toward a solution. On 20 October he gave a lecture to the Marshall Society, the undergraduate economics society at Cambridge, entitled ‘War Potential and War Finance’. In the days following, he worked it up for publication in The Times under the title ‘The Limitation of Purchasing Power: High Prices, Taxation and Compulsory Savings’. Keynes sent copies of the draft to Sir John Simon, Mr Attlee, Lord Stamp, R. H. Brand, and H. D. Henderson (who was a member of the Stamp Survey of Economic and Financial Plans) for comment on 24 October, as well as offering it to The Times, whose editor agreed to print it after Keynes had completed his initial discussions. He also spoke on the subject to a dinner of officials, Ministers and M.P.s on 27 October.

Initial reactions proved encouraging. As Keynes told Geoffrey Dawson on 4 November:

The result of my correspondence with eminent persons has been reasonably encouraging. Stamp is enthusiastic and says that it fits in extremely well with the recommendations he will be making himself. The Chancellor of the Exchequer is, of course, as guarded as usual. But I have had a long talk with Hopkins about it, who is sending the scheme to Inland Revenue to be considered from their point of view. […]