Keynes the Man.pdf - The Ludwig von Mises Institute

36 Keynes, the Manwas unable to convince the Royal Commission to come out in supportof a central bank, he was highly influential in its final report.The report included his central-bank view in an appendix, andKeynes also led the harsh cross-examination of pro-gold coin standardand anti-central bank witnesses. An interesting footnote tothe affair was the reaction to Keynes’s central-bank appendix by hisold teacher, Alfred Marshall. Marshall wrote Keynes that he was“entranced by it as a prodigy of constructive work” (ibid., p. 268).Keynes generally liked to tackle economic theory in order tosolve practical problems. His primary motivation for plunginginto the Indian currency question was to defend the record of hisfirst and most important political patron, Edwin Samuel Montagu,of the influential Montagu and Samuel families of Londoninternational banking. Montagu had been president of the CambridgeUnion, the university debating society, when Keynes wasan undergraduate, and Keynes had become a favorite of his. Inthe 1906 general elections, Keynes had campaigned for Montagu’ssuccessful bid for a Parliamentary seat as a Liberal.In late 1912, when Montagu was Undersecretary of State forIndia, a scandal developed in Indian finance. The Indian government,of which Montagu was second-in-command, had contractedsecretly with the banking firm of Samuel Montagu and Companyto purchase silver. It turned out that nepotism had figured stronglyin this contract. Lord Swaythling, a senior partner in the firm, wasthe father of undersecretary Edwin S. Montagu; another partner,Sir Stuart Samuel, was the brother of Herbert Samuel, postmastergeneral of the Asquith government (see Skidelsky 1983, p. 273).