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Information and investment

Introduction

So far we have examined the overseas movement of British people and British goods. This chapter concerns itself with Britain’s other great export of the pre-First World War period: its capital. We seek to uncover the key relationships and mechanisms that made possible a massive and rapid movement of money across borders. For many scholars, it is this ‘runaway quality of global finance’ that lay at the very heart of the forces integrating the world economy in the nineteenth and twentieth centuries.1 Certainly, it had a profound and lasting effect, in its wake opening up new regions of the world, delivering efficiency gains from improved transport and communication, and widening the scope of the multi-lateral payments system.2 Britain’s imperial and financial pre-eminence are, moreover, traditionally understood to have been two sides of the same coin.

Yet appearances can be deceptive. While the empire was at times prized by British investors, these same investors also freely sank even larger sums of money outside it. ‘Imperial piety’ or ‘British traditions’, of themselves, could not and did not replace the profit motive. Rather, it was the attractions of the rapidly expanding temperate regions of recent settlement – political stability, economic security and protection within the law – that mattered. These attractions were not confined to the British World, even if they manifested themselves most strongly there. Argentina enjoyed a place in the affections of the British investor; for a relatively brief period before the war, in terms of portfolio investment, it may even have been ‘more popular with the British investor than Canada, itself the most popular of the British Dominions’.3

1 A. Appadurai, ‘Grassroots Globalisation and the Research Imagination’, in A. Appadurai

(ed.), Globalisation (Durham, NC: Duke Universitiy Press, 2001), pp. 1–21 (p. 4).

2 J. Darwin, ‘Globalism and Imperialism: The Global Context of British Power, 1830–1860’,

in S. Akita (ed.), Gentlemanly Capitalism: Imperialism and Global History (Basingstoke:

Palgrave Macmillan, 2002), p. 49.

3 D. C. M. Platt, ‘Canada and Argentina: The First Preference of the British Investor,

1904–14’, JICH 13 (1985), 77–92.

170 Information and investment On what basis, then, did British investors make their decisions? More particularly, how, if at all, did the ties of social interaction predispose them to provide greater support to investment projects within the British World than outside it? This question can be approached from several angles: by studying the coverage of investment opportunities as reported by the popular and financial presses, by exploring and detailing the rich social and financial networks that underpinned Britain’s capital markets, and by investigating the investment patterns of some of London’s leading financial institutions. We will see how dominion securities were indeed treated differently by British investors in the decades prior to the First World War, and, as a result, were usually financed in the City at lower rates of interest than similar assets from other nations. This situation stemmed not so much from ‘imperial piety’, as from the way the British World’s institutions,