Saturday, July 30, 2011

DeLong shares an exchange between Keynes and Acheson

Here. It's very interesting. They're discussing lend-lease agreements in 1941. It seems to me to be pretty typical of Keynes - there's always a lot of thinking going on underneath the surface that doesn't get revealed unless you push a little deeper. Keynes is hesistant here because there's no naivete on his part about what certain statesmen can do in the interest of nationalism with ostensibly liberalized policies. Acheson acknowledges this further down in the passage. You can also clearly see Keynes's thought processes on the post-war international monetary system at this early stage. He seems primarily concerns that claims about non-discrimination won't stand in the way of his bancor and trade stabilization plans.

UPDATE: And I don't want to be exclusively positive. This is always a real liability for Keynes too. There is a much deeper argument behind things like "burying banknotes" that a lot of people miss because he either says things cryptically or he just has outbursts like the one with Acheson. Sometimes the outbursts get fleshed out in more detail later... but if they don't it can really obstruct peoples' understanding of what he's saying.


  1. Why should we take Acheson's word for it exactly?

  2. If you look at how the GATT worked it was a bunch of piecemeal, almost ad hoc agreements over the course of a couple of decades, much of it bilateral in nature, and in the process that ended up creating I would say a strong enough system of trade liberality that for the most part we've seen nothing like retrenchment on the issue even during the current economic slowdown.

    They actually tried to create what Keynes wanted to create apparently and it came nothing besides the very weak GATT. That ought not be surprising I guess. It took the experience of GATT - the learning by doing - the emergent processes out of GATT - to create the WTO. In fact, much of what the WTO consists of his basically a codification of what was sussed out over time via parties involved in the GATT.

    So that's my reaction to it. Keynes seems to be wrong in apparently claiming that the MFN type treaties can't lead to something far broader and encompassing in scope.

  3. Daniel,

    BTW, it isn't surprising that they inserted this language in the Lend-Lease material; the Roosevelt administration spent a lot of time creating individual deals with other nations to undue the damage of the 1930 tariff law (Smoot-Hawley) - so this was part of really a general broader policy (the thinking being that given all the tariff laws Smoot-Hawley had inspired it was useless just to get rid of the original law). I don't recall them trying to tackle empire preferences in the past - but I wouldn't be surprised (especially with the importance of Canada).

  4. Daniel,

    Some time ago you attacked my use of the personal remembrance of a historical figure. I was making light of that.

  5. Well if you've come around to the view that we shouldn't take remembrance as gospel truth that's good. I seem to recall I just disputed your reliance on a single person's remembrance - and if I recall there was good reason to question it in that case.

    Am I doing that here? I don't think I am.

  6. That's the wrong way for me to put it - you likely always were of that view, I just didn't think you applied it in that case. Am I not applying it here? I don't think any of what I'm saying turns on Acheson's recollection - particularly dubious recollections.

  7. Daniel,

    You certainly do make me laugh. :)

    And of course I did not rely on it exclusively or view it as gospel truth just because an intimate of FDR said it; I gave my reasons for taking the comment as true (within in any reasonable sense of the term as far as history is concerned).

    Whenever I think of Smoot-Hawley I think of this poem by Ogden Nash (it is in reference to Smoot's effort to place a ban on "smutty books"):

    Senator Smoot (Republican, Ut.)
    Is planning a ban on smut.
    Oh rooti-ti-toot for Smoot of Ut.
    And his reverend occiput.
    Smite, Smoot, smite for Ut.,
    Grit your molars and do your dut.,
    Gird up your l__ns,
    Smite h_p and th_gh,
    We'll all be Kansas
    By and by.

    Smite, Smoot, for the Watch and Ward,
    For Hiram Johnson and Henry Ford,
    For Bishop Cannon and John D., Junior,
    For ex-Gov. Pinchot of Pennsylvunia,
    For John S. Sumner and Elder Hays
    And possibly Edward L. Bernays,
    For Orville Poland and Ella Boole,
    For Mother Machree and the Shelton pool.
    When smut's to be smitten
    Smoot will smite
    For G-d, for country,
    And Fahrenheit.

    Senator Smoot is an institute
    Not to be bribed with pelf;
    He guards our homes from erotic tomes
    By reading them all himself.
    Smite, Smoot, smite for Ut.,
    They're smuggling smut from Balt. to Butte!
    Strongest and sternest
    Of your s_x
    Scatter the scoundrels
    From Can. to Mex!

    Smite, Smoot, for Smedley Butler,
    For any good man by the name of Cutler,
    Smite for the W.C.T.U,
    For Rockne's team and for Leader's crew,
    For Florence Coolidge and Admiral Byrd,
    For Billy Sunday and John D., Third,
    For Grantland Rice and for Albie Booth,
    For the Woman's Auxiliary of Duluth,
    Smite, Smoot,
    Be rugged and rough,
    Smut if smitten
    Is front-page stuff.


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