Hawtrey and Keynes I: Before the General Theory

Personal friendship predated the first ventures of Hawtrey and Keynes into economics.1 Hawtrey, four years older, preceded Keynes through Eton, Cambridge and the Apostles. This common ground no doubt encouraged the close intellectual connection between them, in particular the striking resemblance of ideas that each held during the twenties concerning monetary economics. The essential bond was their mutual identification of monetary phenomena as the source of macroeconomic problems and of monetary management as part of the cure. There are numerous instances, notably in the writings of conservative British economists, of Hawtrey and Keynes being twinned by their contemporaries as proponents of equivalent positions.2 What is more, Keynes, like Hawtrey, saw Bank rate as an effective instrument of economic management. On the other hand, there is no evidence that Keynes ever accepted the specifics of Hawtrey’s account of the workings of Bank rate or his diagnosis of the mechanism of monetary disturbances. The scope of their agreement is important, but Schumpeter’s claim that Keynes ‘from the Tract to the Treatise…was a Hawtreyean’ is exaggerated.3