John Maynard Keynes, Man or Myth? The Incident of the Spanish Pesetas

Abstract

John Maynard Keynes was and still is one of the world’s most famous economists. One of the most fascinating stories about Keynes appeared in his obituary in the 1946 Proceedings of the British Academy. The story stated that during World War I with minimal financial resources Keynes broke the Spanish-British foreign exchange market, a manipulation that is illegal today. This research investigates if the story is myth or truth. Archival materials suggest Keynes did manipulate this foreign exchange market in April of 1918 and he potentially earned £8 million on his trades.

Keywords: Exchange Rates, Keynes, Currency Markets, War, Market Manipulation

JEL Classification: B31, F31, N44, G15