This chapter argues that Chapter Two of the Economic Consequences contains a much more important piece of economic analysis than is generally recognized, namely the Ramsey model of economic growth. It is well known that Keynes helped Ramsey to explain that model in the Economic Journal in 1928. But I show here that Keynes had himself given an exposition of the model, nearly a decade earlier, in this chapter. What is more, Keynes then generalizes this model in order to help him think about Europe’s growth process within the global economy, and why it was so fragile. I claim that the analysis in this chapter provides the underpinning for Keynes’s famous criticism of the reparations imposed on Germany. The chapter also makes clear that Keynes is starting to realize what he will need to do to get to the General Theory in 1936. And there are the beginnings of the ideas which would lead to the Bretton Woods conference in 1944 and to the rebuilding of the international monetary system after World War II. Understanding these connections helps us to visualize the arc of Keynes’s discovery, one which stretched all the way from 1919 until his death in 1946.

The Bulgarian National Bank (BNB) was restructured repeatedly between 1926 and 1935, but these restructurings were superficial and incoherent, producing contradictory outcomes. The liberal spirit of the initial 1926-8 reforms dissolved with the onset of the Great Depression. Subsequently, the BNB was endowed with new instruments and tasked with carrying out the interventionist policies adopted in the 1930s, thus paving the way for the bank’s eventual role in the communist planned economy. This chapter focuses on the significance of BNB’s state ownership and on the tight economic conditionality attached to 1926 and 1928 loans sponsored by the League of Nations. By contrasting policies followed in Bulgaria and Greece during the Depression, it challenges Eichengreen’s hypothesis that heavy defaulters and countries leaving the gold exchange standard performed better relative to those that sought to maintain their reputations as decent debtors.