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June 11, 19242. PBKSOHAL ATO CONFIDENTIAL My dear Senators Such vast events have washed over our little debate about debts and deficit spending — how puny they seea now ~ that nhat we said then will deserve the obscurity which I have no doubt it will achieve* Then, too, since then it has been ay good fortune to get to know you* not as well as I would likef but well enough to have the personal regard for you that our very different views on public fiscal policy cannot obscure* So it is in no mean spirit that I want to make sure you do not overlook the fact that John Keynard Keynes was the sole peer on the King's annual list of birthday honors, being elevated from a commoner to a Baron, a recognition of his many years of service to the Crown, including the very great contribution he has made to the intelligent and orderly financing of the British war effort as a chief adviser to the British Treasury and, incidentally, as a director of the Bank of England to whose Court he was elected some time ago* However much you belabor me for ay views, I feel that Keynes deserves to be exempted* On reading ofttiislatest honor bestowed upon him, I could not but recall your letter of January 11*, 1939, in the course of which you leveled some telling blows at the idea that under* spending and oversaving were the chief cause of the last depression and added, "That is also the doctrine and dogma of that erratic English economist, Dr* J* M. Keynes, who* though a prophet without honor in his own oountry, seems to have sold his seductive schemes of spending and borrowing to those vested with power and responsibility intillsoountry• England rejected his fantastic fallaoies of spending, borrowing and lending • * . * n Until comparatively recently, I had never met Keynes, nor had I ever, so far as I can recall, read or studied any of his works* We came out at about the same place in economic thought and policy ly very different roads, and we have had the conmon experience of being highly unpopular in orthodox circles* BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM MSE: Please note the attached clipping which should be read in conjunction with the following quotation from Senator Byrd's letter to you of January 14,1939: "I do not agree, as you maji, with William Trufant Foster when he said: "'In the future we must prevent the overss^ng and underspending #hich are the chief causes of the depression1. "That is also the doctrine and dogma of that erratic English economist, Dr.J.M.Keynes, who,though a prophet without honor in his own country,seems to have sold his seductive schemes of spending and borrowing to those vested with power and responsibility in this country. En gland rejected his fantastic fallacies of spending, borrowing and lending " 1? This article is protected by copyright and has been removed. The citation for the original is: New York Times, “Keynes Made Peer on Birthday List,” June 11, 1942. - 2 - flhen the war is over the debate no doubt will be resumed as to whether we can afford full production and full employment in peace as we do in war — whether we can manage it, as I believe we can, without continued deficits and growth of the public debt, though not without heavy taxation and government expenditures. That is the most diffioult task the democracies will have to perform. I suppose you and 1 will be friendly enemies again on oppo* site sides of that debate, and the temporary and comfortable cloak of orthodoxy which covers me now because I advocate saving in times like these will be snatched off and I shall be revealed in my true and awful colors, allied again with this now honored prophet* I do not expect you to spare me, but you might spare him. Time has a curious habit of justifying this man Keynes* Sincerely yours, (Signed) M. 3, Eggjgs Honorable Harry P. Byrd, United States Senate, Washington, D* 0. ET:b
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