Letter from John Maynard Keynes on the economic situation to Prime Minister Ramsay MacDonald, 30th September, 1931 (PRO 30/69/1320)
Unpublished writings of J. M. Keynes, copyright The Provost and Scholars of King’s College Cambridge 2012
46, Gordon Square
30th September 1931.
Dear Prime Minister,
I wonder if those who are pressing you towards a General Election appreciate the rapid developments towards an unprecedented banking crisis which are proceeding in the rest of the world. It seems to me that there are now two alternative courses which events may take in the near future. The first would be for country after country to tumble off gold parity. The second would be a general banking moratorium outside this country, but including France and the U.S.A. I think the latter may be perhaps the more probable because, whereas in our case it was primarily a balance of payments crisis and not a banking crisis at all, elsewhere it is primarily a banking crisis. Further developments would necessarily lead up to a World Conference, in which we – almost alone in the world in having a solvent banking system -would hold the strong position.
The time factor is the most dangerous thing about which to prophesy. But these things might happen quickly. It seems to me that it would be too foolish to be caught by them in the middle of a General Election fought on largely irrelevant issues. Great events are pending, and we need to be thinking out with undivided attention various lines of policy which it is open to us to pursue. For the problems are largely new and very difficult.
I know that you are far from disagreeing from this sort of attitude to the surrounding problems, and I only write because, if one is to believe the newspapers, you need all the support you can get for putting first things first. In any case might it not be worthwhile to have the possible alternatives brought on to the tapis [carpet] and examined in a preliminary way by a small Joint Committee of the E.A.C., the Treasury and the Bank of England?
J M Keynes