Lords of Finance: The Bankers Who Broke the World

by Liaquat Ahamed

As the Peace Conference was winding to its end, Maynard Keynes, distressed at how the negotiations were going, decided on his own initiative to put together a comprehensive plan for the financial reconstruction of Europe. Reparations should be fixed at $5 billion, to be paid by Germany in the form of long-term bonds issued to the Allies, which they would in turn assign to pay their war debts to the U.S government. All other obligations were to be forgiven. It was a clever scheme. The U.S. government would be functionally lending Germany money, which in turn would go to pay reparations to the Allies, who in turn would use those proceeds to settle their loans. The money would start in a United States flush with gold, and eventually return there full circle. Keynes passed the plan on to the chancellor of the exchequer, Austen Chamberlain, who in turn recommended it to Lloyd George. The prime minister received Keynes’s plan just as he was beginning to realize the extent of his tactical errors over reparations and, in a short burst of enthusiasm, submitted it to President Wilson. It was rejected out of hand by the American delegates, who