In his Tract on Monetary Reform (JMK, vol. IV), Keynes stood well within the limits of the Cambridge orthodoxy of his day in his treatment of the internal value of money, where he used a variant of the real balances quantity equation developed by Pigou from Marshall's work, and in his discussion of the external value of money or purchasing-power parity. Similarly his discussion of price fluctuations in terms of changes in real balances was Marshallian, although his policy goals of price stability, erring if necessary towards slight inflation, his preference for national management and changes in exchange rates, and his emphasis on the short run were all at odds with the tempers of Marshall and Pigou. It was in his movement from the position of the Tract that he was to break new ground.

Soon after the publication of the Tract, however, Keynes began thinking about another work on monetary theory. He appears to have started work on the book in mid-July 1924, for as late as 6 July he reported to his mother that there were ‘various odds and ends which keep me from my new book which is annoying’.

From the early stages of his work on this new book, little survives beyond an extensive collection of draft tables of contents. The first of these was dated 14 July 1924.

14 July 1924

The Standard of Value

Part 1 Principles of thought

Chapter I The elements of the quantity theory defined with special reference to the U.K. and the U.S.