Britain’s Investment Overseas on the Eve of the First World War: The Use and Abuse of Numbers

183 Pages·1986·9.246 MB·English

by  D. C. M. Platt (auth.)

BRITAIN'S INVESTMENT OVERSEAS ON THE
EVE OF THE FIRST WORLD WAR
Also by D. C. M. Platt
FINANCE, TRADE AND POLITICS IN BRITISH FOREIGN POLICY,
1815-1914
THE CINDERELLA SERVICE: British Consuls since 1825
LATIN AMERICA AND BRmSH TRADE, 1806-1914
FOREIGN FINANCE IN CONTINENTAL EUROPE AND THE USA, 1815-
1870
BUSINESS IMPERIALISM, 184(}-1930: An Inquiry based on British
Experience in Latin America (editor)
ARGENTINA, AUSTRALlA AND CANADA: Studies in Comparative
Development, 1870-1965 (editor with Guido di Tella)
THE POLITICAL ECONOMY OF ARGENTINA, 1880-1946 (editor with
Guido di Tella)
Britain's Investment
Overseas on the Eve
of the First W orld
War
Tbe Use and Abuse of Numbers
c.
D. M. Platt
palgrave
macmillan
ISBN 978-1-349-18256-5 ISBN 978-1-349-18254-1 (eBook)
DOI 10.1007/978-1-349-18254-1
© D. C. M. Platt, 1986
Softcover reprint of the hardcover 1s t edition 1986
All rights reserved. For information, write:
Scholarly & Reference Division,
St. Martin's Press, Inc., 175 Fifth Avenue, New York, NY 10010
First published in the United States of America in 1986
This book is printed on paper snitable for recycling and made from fully managed and
sustained forest sources. Logging, pulping and manufacturing processes are expected
to conform to the environmental regulations of the country of origin.
Library of Congress Cataloging-in-Publication Data
Platt, D. C. M. (Desmond Christopher Martin), 1934-
Britain's investment overseas on the eve of the
First World War.
Bibliography: p.
Includes index.
1. Investments, British-History. I. Title.
HG4538.P5 1986 332.6'7341 86--6506
ISBN 978-0-312-09673-1
But in case you should think my education was was ted
I hasten to explain
That having once been to the University of Oxford
Y ou can never really again
Believe anything that anyone says and that of course is an asset
In a world like ours;
Why bother to water a garden
That is planted with paper ftowers?
Louis MacNeice, Autumn Journal (London, 1939)
Contents
List o[ Tables ix
Rates o[ Exchange: March 1914 x
Abbreviations xi
Pre[ace and Acknowledgements xii
PART I INTRODUCTION
1 Approach and Methods 3
Definitions 4
The circulation of Sir George Paish's direct estimates 5
Paish's methods (1909 paper) 10
Paish's methods (1911 and 1914 papers) 13
Paish's successors and the 'direct' method 14
The 'indirect' (balance of payments) method 17
Conclusion 21
PART 11 THE DIRECT METHOD REASSESSED
2 The Stock of British Investment Overseas on the Eve of the
First World War: A Revised Estimate 31
Non-British purchases on the London Stock Exchange 31
The distribution of 'partials' 36
Exchange rates and ftuctuations in security prices 40
Amortisations and repayments 44
Defaults and losses 48
Investment on exchanges other than London's 49
The secondary market 53
'Direct' investment 54
Revisions and a new stock figure 57
3 Politics, Propaganda and Numbers 67
Tariff reform and the figures 68
Radicals, reformers and the figures 71
International rivalry, war propaganda and the figures 72
Conc1usion 74
vii
viii Contents
PART III IMPLICAT IONS AND CONCLUSIONS
4 Common Sense and the Numbers 79
Mickey Mouse numbers 80
Rates of return 82
5 Second Thoughts on the Geographical Distribution of
British Investment 87
The existing figures 87
British investors and foreign securities 90
British investors and empire securities 94
British investors and regions of recent settlement 100
6 Second Thoughts on the Distribution by Function of British
Investment 111
Published figures and their problems 111
British investors and the stock of US railway securities,
August 1914 116
Conclusions 126
7 Further Implications and Conclusions 131
France as an investor abroad in August 1914 131
Germany as an investor abroad in August 1914 134
Final conclusions 136
Appendixes
1 The Underwriting of Loans on the London Stock Exchange 141
2 The 'Income Tax Method' for the Computation of Britain's
Overseas Investment 147
- Income recorded by the Commissioners of Inland
Revenue 148
- Balance of income unrecorded for tax 151
Bibliography 155
Index 169
List of Tables
1.1 Paish's estimate of Britain's portfolio investment
abroad, 31 December 1913 6
2.1 'Partials' and the London market, 1905-14 39
2.2 Foreign security prices in London, 1904 and 1913 43
2.3 Britain's stock of investment overseas, 31 July 1914 60
5.1 Paish's geographical distribution of Britain's portfolio
investment abroad, 31 December 1913 88
5.2 Geographical distribution of new issues in London,
1908-13 89
6.1 Paish's distribution of Britain's portfolio investment
abroad, by function, 31 December 1913 112
6.2 Distribution by function of new issues in London,
1908-13 114
7.1 Existing estimates for French investment abroad before
the First World War 132
7.2 Existing estimates for German investment abroad
before the First World War 135
A.1 Issues left with their underwriters, 1908-14 142
ix
Rates of Exchange:
March 1914
=
(!1 sterling = 20 shillings 240 pence)
Shillings Pence
Argentina: peso (gold) 3 11
Austro-Hungary: krone 10
China: tael 2 41
Egypt: !E 20 6
France: franc 91
Germany: reichsmark IH
Holland: florin or gulden 1 8
Italy: lira 91
Russia: rouble 2 H
USA: dollar 4 H
Source: Stock Exchange Official Intelligencetor 1914 (London,
1914) p. 1715.
x