The Nobel Peace Prize, awarded by the Norwegian Nobel Committee, is no stranger to controversy. President Donald Trump’s claims that he deserves the honour are only the latest reminder of how politically charged the Prize can become. A century ago, a quieter dispute surrounded John Maynard Keynes. The publication of his book The Economic Consequences of the Peace made him internationally famous. As a consequence, Keynes was nominated for the Peace Prize three years in a row, formally evaluated, and placed on the Committee’s shortlist. Yet he did not win.

Although Keynes is one of the most influential economists in modern times, if not the most influential, the story of why he did not get the Prize has not been told before. This is surprising given the huge amount of research published on the life of Keynes. In Jonung (2022), I bring out previously unused archival material from the Nobel Committee in Oslo.

When Keynes published The Economic Consequences of the Peace in December 1919, he ignited a global debate. His scathing critique of the Versailles Treaty, particularly of the harsh reparations imposed on Germany, was not just an economic analysis; it was a warning that a punitive peace could sow the seeds of future conflict (Keynes 1919).

The book became an international bestseller, was translated into multiple languages, and turned Keynes into one of the most famous economists of his time. Today, the book stands out as one of the most important in the history of economic policies.

Keynes was nominated for the Nobel Peace Prize by a group of German economics professors in Munich three years in a row, in 1922, 1923, and 1924.
Their nomination letters praised Keynes for exposing the Versailles Treaty’s economic flaws with a “courageous and unbiased” analysis. They claimed that no other writer in recent years had done as much to shift opinion toward revising the Versailles Treaty. Keynes, they wrote, “has proved to the world that scientific research stands free from the interests of a single country and knows no boundaries in its search for truth”.

In response, the Nobel Committee commissioned an advisory report. The task to serve as appraiser (konsulent) fell in September 1923 to Wilhelm Keilhau, a young economist at the University of Kristiania (now Oslo). He was asked to assess Keynes’s contributions to peace and judge whether he merited the Prize.

The 1923 appraisal of Keynes

Keilhau’s ten-page appraisal dealt with The Economic Consequences of the Peace, its sequel A Revision of the Treaty (Keynes 1922), and Keynes’s writings in the press on reparations. It concluded with a page on Keynes’s view on the peace issue.

The appraisal began, “John Maynard Keynes is without a doubt the most prominent of younger English economists. He is an in-depth thinker with a comprehensive and open view, free from dogmas, of his tasks and duties.”

Keilhau retold Keynes’s experiences at the 1919 peace conference: his efforts to push for more realistic reparations, his warnings about Europe’s economic interdependence, and his eventual resignation when his arguments were ignored. That resignation, and what followed, formed the background of Keilhau’s report.

The Economic Consequences of the Peace was, according to Keilhau, “a completely overwhelmingly convincing critique of the economic provisions in the peace treaty”. More than that, its forecasts were being confirmed “to a rather tragic extent by recent events”.

The appraisal acknowledged the book’s controversial portraits of leaders like Woodrow Wilson, Lloyd George, and Georges Clemenceau. But to Keilhau, Keynes’s bluntness was part of the point: his writing was meant to wake the public and politicians from complacency.

Keynes was praised for demonstrating that peace in Europe must be based on “accurate economic knowledge”, thus “all work for peace in this time should aim at eliminating the economic origins of war”. Keilhau stated that France did not grasp this point of view.

While drafting his appraisal, Keilhau contacted Keynes to clarify whether he had indeed attended some key meetings at the peace conference in Versailles, a point raised by an American account critical of Keynes’s book. Keynes replied promptly and firmly: he had been present at several meetings, and the minutes proved it.

The appraisal by Keilhau was highly positive on Keynes’s contribution to a peaceful Europe. However, the report did not influence the Nobel Committee. It awarded no Prize in 1923.

After finishing his report, Keilhau wrote to Keynes in December 1923 using the letterhead of the Nobel Committee, informing him that he had been among the leading candidates for the Prize in 1923. This extraordinary disclosure was breaking the rules pertaining to the selection of the Nobel Prize.

The 1924 appraisal of Keynes

In 1924, Keynes was back on the shortlist, and Keilhau was asked to prepare a second report. It covered eight pages. The first three focused on Keynes’s activities after the 1923 appraisal. According to Keilhau, Keynes’s main recent contribution was his book A Tract on Monetary Reform (Keynes 1923). However, it did not deal with the peace issue. In addition, Keilhau was critical of Keynes’s rejection of the gold standard, as this arrangement promoted “peaceful” international trade.

The second part of the report, five pages, dealt with a public quarrel about Keynes’s participation at the Versailles conference. Following Woodrow Wilson’s death in 1924, historian Jacob Worm Müller – a fellow adviser to the Nobel Committee – published an article in the Oslo daily newspaper Dagbladet accusing Keynes of distorting Wilson’s role at Versailles in The Economic Consequences of the Peace. He called Keynes’s depiction “a lie”, charging that Keynes had never attended the meetings he claimed to describe. The attack was harsh and personal.

Keilhau responded in the same newspaper, defending Keynes point by point. Worm Müller shot back. Over the following weeks, the two advisers engaged in an acrimonious fight in the pages of Dagbladet, a spectacle involving two men who were supposed to be discreet, impartial advisers to the Nobel Committee.

To settle the matter for his 1924 report, Keilhau did something unusual: he sought evidence directly from two of the participants at Versailles, one who had served as a secretary and one as an interpreter, as well as from a meeting with Keynes in September 1924 in London. Keilhau concluded that while Keynes had perhaps overstated the regularity of his attendance, he had not fabricated his presence.

Keilhau’s 1924 appraisal remained broadly positive. He renewed his plea for Keynes, but it was to no avail. Once again, no Prize was awarded in 1924. Keynes was not nominated again.

Why was Keynes not awarded the Prize?

If the advisory reports were so glowing, what went wrong? The archives provide no direct answers. In particular, there are no minutes of the decisive deliberations of the Nobel Committee. Even so, it is possible to identify several obstacles that Keynes’s nomination encountered.

In the 1920s, the Peace Prizes typically went to politicians, diplomats, and champions of the League of Nations. Keynes was an outsider, a critic, an economist turning against the Versailles Treaty with arguments taken from economic analysis.
The members of the Nobel Committee all had backgrounds in politics, which likely made it difficult for them to fully appreciate Keynes’s argument for economic considerations. In addition, Keynes paid scant attention to the League of Nations in his writings.

Woodrow Wilson had already been awarded the Nobel Peace Prize. Keynes’s portrayal of him as an idealistic but ineffective negotiator posed most likely a difficult contradiction for the Committee. So did his less than flattering portrait of Lloyd George, who had been nominated for the Prize as well.

In addition, Keynes’s book was applauded in Germany but condemned in France. Awarding him with a Prize following the crisis caused by the 1923 occupation of the Ruhr region by France and Belgium would have been interpreted as political support for Germany, a step that the Committee most likely wished to avoid. Moreover, the vicious public dispute between Worm Müller and Keilhau made Keynes’s candidacy a liability, showing that Keynes’s nomination was highly contentious.

The Committee withheld the Peace Prize more than 20 times in the 20th century (Lundestad 2019). When members disagreed or circumstances were too politically sensitive, they preferred silence. Keynes, praised by experts, admired internationally, yet politically controversial, fell most likely into this category.

Still, the fact that Keynes was placed on the shortlist for the Prize twice reveals the profound impact that The Economic Consequences of the Peace and his subsequent work on reparations exerted in the 1920s.

Postscript: Keynes, Keilhau, and Bretton Woods, 1944

The story has a final twist. About 20 years after the Nobel appraisals, Keynes and Keilhau met again, this time onboard the Queen Mary in 1944, sailing to the Bretton Woods conference that would design the post-World War II economic order.

Keilhau, living in London, exiled from German-occupied Norway, headed his country’s delegation. Keynes led the British team. The two men, once bound by their Nobel connection, now found themselves debating the architecture of the world’s future monetary system, crossing the Atlantic on the way to New York. The British delegation valued Keilhau’s contributions. Lionel Robbins, one of the British economists present, remarked in his diary that Keilhau was the only European expert “who lived up to expectations”.

Keilhau was most active at the Bretton Woods conference, offering constructive advice. As a gesture of appreciation for his contribution, Keilhau was invited by the American hosts to speak at the closing session, following Keynes. On this occasion, Keilhau began by reflecting on the Versailles Treaty and “the disasters of the post-war period after 1918”. In his view, these resulted from politicians pursuing narrow national interests while ignoring the economic interdependence of nations.

Echoing his assessments of Keynes for the Nobel Committee, Keilhau concluded,

I feel certain that if we do not succeed in creating something new and unique, the next post-war period will bring us back to that economic chaos which we experienced in the early 1920’s, and I have no doubt that it would inspire my world-famous friend Lord Keynes to a second brilliant volume of The Economic Consequences of the Peace.

After World War II, Keilhau extended an invitation to Keynes to visit Oslo. Keynes kindly accepted, but his death in 1946 prevented the trip from taking place.

References

Carlson, B and L Jonung (2023), “Too bad to be true. Swedish economists on Keynes’s The Economic Consequences of the Peace, 1919–29”, in P Clavin, G Corsetti, M Obstfeld, A Tooze, and C Piner (eds), Keynes’s Economic Consequences of the Peace After 100 Years, Cambridge University Press.

Clavin, P, G Corsetti, M Obstfeld, A Tooze, and C Piner (eds) (2023), Keynes’s Economic Consequences of the Peace after 100 Years, Cambridge University Press.

Jonung, L (2022), “Why was Keynes not awarded the Nobel Peace Prize after writing The Economic Consequences of the Peace?”, Scandinavian Journal of Economics 124(2): 396–419.

Keynes, J M (1919), The economic consequences of the peace, Macmillan.

Keynes, J M (1922), A revision of the treaty, Macmillan.

Keynes, J M (1923), A tract on monetary reform, Macmillan.

Lundestad, G (2019), The world’s most prestigious prize: The inside story of the Nobel Peace Prize, Oxford University Press.

Sandmo, A (2007), “Retrospectives. Léon Walras and the Nobel Peace Prize”, Journal of Economic Perspectives 21(4): 217–28.