Read Lords of Finance: 1929, the Great Depression, and the Bankers Who Broke the World for Free Online Page B

syndicated around the world, including in the U.S. weekly the
New Republic
. And he began making his fortune as a currency speculator.
    In 1919, it was a novel way of making money. Before 1914, currencies had been fixed, and opportunities to profit from the instability of exchange rates had been almost nonexistent. In the aftermath of the war, as exchange rates of the major currencies lurched up and down, it became possible tomake large returns—and also lose equally large amounts—by betting on the direction of such moves. In the latter half of 1919 236 , convinced that the inflationary consequences of the war would undermine the currencies of the main belligerents, Keynes went short on the French franc, the German Reichsmark, and the Italian lira, buying the currencies of countries that had sat out most of the war: the Norwegian and the Danish kroner, the U.S. dollar, and interestingly enough, the Indian rupee. He made $30,000 in the first few months. In early 1920, he set up a syndicate, with his brother, some of the Bloomsbury circle, and a financier friend from the City of London. By the end of April 1920, they had made a further $80,000. Then suddenly, in the space of four weeks, a spasm of optimism about Germany briefly drove the declining European currencies back up, wiping out their entire capital. Keynes found himself on the verge of bankruptcy and had to be bailed out by his tolerant father. Nevertheless, propped up by his indulgent family and by a loan from the coolly acute financier Sir Ernest Cassel, he persevered in his speculations—built for the most part around the view that the German and Central European currencies were headed for disaster. By the end of 1922, he had amassed a modest nest egg of close to $120,000.
    But by far the most important development in his life was that he had fallen in love—this time with a woman, Lydia Lopokova, a married Russian émigrée ballerina, no less. The daughter of a Russian father, an usher at the Imperial Alexandrinsky Theater, and a Scottish-German mother, Lydia came from a family of dancers—her two brothers and a sister had also gone to the Imperial Ballet School in St. Petersburg. When Maynard met her in 1918, she was traveling with the Diaghilev Ballet, having spent seven years in the United States as a cabaret artist, model, and vaudeville performer, and was married to the business manager of the company, Randolfo Barrochi. After her marriage broke down, she disappeared into Russia, then in the thick of civil war, with a mysterious White Russian general, but reappeared in Keynes’s life at the end of 1921.
    Though they would not get married until 1925 when her divorce finally came through, they began living together in 1923. They made an unlikelycouple—he a brilliant and all too cerebral intellectual with a genius for exposition, she an unpredictable artist with a risqué past, a flighty and vivacious chatterbox with an equal skill for stumbling into the most memorable malapropisms. She once complained that she “disliked being in the country 237 in August, because my legs get so bitten by barristers.” On another occasion, after visiting an aviary, she remarked on her hostess’s “ovary 238 .” And though the rest of Bloomsbury looked down on her, Keynes was to remain completely enchanted with her for the rest of his life.
    In December 1923, Keynes published a short monograph,
A Tract on Monetary Reform,
much of which had already appeared as a series of articles in the
Manchester Guardian
during 1922 and early 1923—his first systematic attempt to unravel the sources and consequences of the chronic monetary instability that plagued the postwar world. Like his earlier book,
A Tract
was a strange hybrid, this time a half-theoretical treatise—with sections on “The Theory of Purchasing Power Parity” and “The Forward Market in Exchanges” and half pamphlet for the laity. It was, however, very different in tone from
The Economic