185Information and investment For a while, then, imperial relations in the latter half of the nineteenth century acted to accentuate the perceived benefits of investing in the British World.

Investors and the press

So far we have established that information – its quality and supply – is central to decision-making and the efficient workings of financial markets.39 In the nineteenth century, that supply of information was, at least by today’s standards, limited. While technological change over the preceding century had already started to increase the speed and volume of international knowledge transfer, from many parts of the world the flow of information remained scarce and unreliable. Other than commodity prices, interest rates, exchange rates and some data on public debt, the nineteenth-century investor was still short of the knowledge required to discriminate between rival investments. Consequently, their attitudes to projects, indeed entire countries, was to a large extent inferred from whatever news was available to them either through the emerging mass media or direct personal contact and experience.40 And they could respond with alacrity. For example, reports of rising land prices in Argentina, a signal to many of good times, tended to encourage further investment; the slightest whiff of financial or political crisis engendered a flow of capital in the opposite direction.41 Precisely how information flowed to investors in the decades prior to the First World War was therefore a matter integral to the unfolding pattern of British overseas investment in this period.

Information reached investors from various sources, most obviously, the published media. Victorian daily newspapers devoted relatively little space to detailed financial analysis and comment. What we today might recognise as financial journalism only appeared in the years immediately prior to the First World War. This is not to say, of course, that financial matters were totally ignored by the mainstream press. From the 1890s, The Times regularly printed in its pages three financial columns: ‘Money Matters’, ‘Stocks and Shares’ and ‘Railway and Other Companies’.

39 As McMillan explains, ‘information is the lifeblood of markets. Knowledge of what is

available where, and who wants it, is crucial. A market works badly if information does

not flow through it.’ J. McMillan, Reinventing the Bazaar: A Natural History of Markets

(New York: Norton, 2002), p. 44. Information, of course, can be explicit or tacit. It is

also context-dependent. What is not said or known can often reveal as much as what is.

Thus, in certain circumstances, ignorance of a particular subject can in itself be a state

of affairs heavily laden with information. It may even be taken to imply the opposite of

ignorance: that there is in fact nothing more to be known.

40 N. Ferguson, ‘Political Risk and the International Bond Market between the 1848

Revolution and the Outbreak of the First World War’, EcHR 59 (2006), 70–112 (p. 79).

41 Ford, Gold Standard, pp. 129–31.

186As their headings suggest, these sections focused primarily on reporting broad economic and financial indicators, such as prevailing interest and exchange rates, the movements of share prices in the London Stock Exchange, and dividends paid out by public companies. Typically, this material was simply listed with little by way of comment. Since the intended readership was clearly the financially initiated, discussion and explanation of the data were deemed unnecessary.42

The broadsheets offered the growing number of investors in the latter half of the nineteenth century little direct information or advice on how best to utilise their savings. Nor can it be said that these news papers informed their readers particularly well of events taking place in the colonies. Indeed, prior to the South African War, coverage of imperial matters, relative to the space devoted to European and American news, was limited. Dominion news represented a small proportion of the cable news that appeared in the British press. While the South African War nurtured an interest in the empire among the British public that was actively exploited by propagandists within the press, everyday coverage of the dominions remained scant.43 Certainly, major events, such as the Québec Tercentenary celebrations in 1908, Indian protests in Natal in 1913 and gold discoveries in South Africa received significant attention. But once such events had ended, coverage of the region concerned rapidly returned to previous low levels. Between 9 and 14 March 1903, for example, only 2.9 per cent of the columns of cable news printed in the Daily Telegraph came from the dominions. By contrast, news from Europe and the United States accounted respectively for 57.6 and 25.7 per cent of all news reported during this period.44

Cable news data need to be read with caution, though. After all, the greater volume of cable news coming from Europe and the United States

42 O. R. Hobson, ‘The Financial Press’, Lloyd’s Bank Limited Monthly Review 5 (1934),

1–10 (p. 3); N. Grieser, ‘The British Investor and His Sources of Information’, unpub-

lished M.Sc. dissertation, University of London (1940), p. 93. Hobson described The

Times’ coverage of financial matters as ‘a medley of information without classification

and without cross-headings, the reader of which was given no visual help in selecting the

important events of the day, and very little help in the shape of editorial comment’.

43 The Standard is a case in point. The politics of its editor (H. Gwynne) and the hope of

securing lucrative advertisements from dominion governments, banks, railways and land

companies encouraged it consciously to incorporate more colonial content in its news.

For more details, see S. J. Potter, ‘Nationalism, Imperialism and the Press in Britain and

the Dominions c. 1898–1914’, unpublished D.Phil. thesis, University of Oxford (2001),

pp. 200–7.

44 S. J. Potter, ‘Empire and the English Press, 1857–1914’, in Potter (ed.), Newspapers and

Empire in Ireland and Britain (Dublin: Four Courts Press, 2004a), pp. 39–61; and News and

the British World: The Emergence of an Imperial Press System, 1876–1922 (Oxford: Oxford

University Press, 2003), p. 111.

187Information and investment

Table 5.5. News coverage in The Times, selected countries, 1870–1913.

Average annual number of

Ratio of good to bad

news items (of all types)

economic news reported

Queensland

5.70

Canada

343

4.90

Sweden

3.66

Mexico

3.32

Turkey

517

2.53

Greece

148

2.37

Argentina

2.05

Brazil

1.98

Uruguay

1.91

Colombia

1.87

Hungary

1.67

Japan

1.66

Egypt

446

1.51

Chile

1.43

Costa Rica

1.28

China

193

1.17

Portugal

102

1.12

Russia

515

0.90

Note: Bad economic news includes not only adverse commentary on

commercial and business affairs but also reports of political instability,

violence and war.

Source: Data taken from P. Mauro, N. Sussman and Y. Yafeh, Emerging

Markets and Financial Globalization: Sovereign Bond Spreads in 1870–1913 and

Today (Oxford: Oxford University Press, 2006), p. 93.

might have simply reflected the fact that less of what was deemed of general interest to the reading public – wars, scandals, disasters and the like – occurred in the dominions. Indeed, from an investor’s perspective the absence of such cable news in itself may have spoken volumes. What really mattered to the investor was the volume of investment-related information available, not information per se. Since the dailies did not directly provide news on available investment projects in different countries, their influence on investors must have been primarily exerted through their coverage of other aspects of those countries’ experiences. The reporting of negative political news, in particular, appears to have shaped investment behaviour adversely.45

45 P. Mauro, N. Sussman and Y. Yafeh, Emerging Markets and Financial Globalization:

Sovereign Bond Spreads in 1870–1913 and Today (Oxford: Oxford University Press, 2006),

p. 61; Ferguson, ‘Political Risk’, p. 79.

188Table 5.5 provides an overview of The Times’ coverage of a selection of countries between 1870 and 1913. It shows how colonies such as Queensland received little mention – about twice a month on average – despite the fact that The Times had the most extensive network of correspondents in the empire of all British papers. Part of the problem, of course, was the expense of sending cables from such ‘remote’ parts of the world.46 Canada fared better in terms of coverage, but most of its 343 items occurred after 1900 when relatively dense cable networks with North America had already been laid. Even so, Turkey, Russia and Egypt were all seemingly regarded as more newsworthy, as indeed would have been the United States and most western European countries.

Yet, as mentioned before, from the investor’s perspective the type of news offered mattered just as much as, if not more than, the volume. Table 5.5 shows how the ratio of good to bad economic news varied significantly between countries. Russia, for example, received more negative press than positive, whereas Portugal and China furnished marginally more good economic news than bad. At the other extreme, Queensland, Canada and Sweden were very positively portrayed in Britain’s main daily newspaper.47 Not without reason could the Earl of Grey write with satisfaction to Moberly Bell in March 1910 that Canada’s advantages had been so well covered in the media that for the time being ‘she may count on remaining the Belle of the Ball in the London Stock Exchange without resorting to expensive advertisements’.48

The case of Queensland is also informative. What would a Timesreading investor have made of the paper’s coverage of this distant northern Australian colony? Presumably, he or she would have observed that Queensland was a place bothered by few dramatic, newsworthy events, untouched by war and serious political instability, and blessed by healthy economic prospects (since it received nearly six times as much good economic news as bad). In other words, Queensland would have seemed an attractive and safe place for investment, at least relative to other major capital-seeking locations, such as Chile, Brazil or even Argentina. While positive reporting of the dominions may have often simply reflected the reality that they were safe places to invest, the ‘imperial’ nature of information flows certainly reinforced this perception. Official mechanisms were often exploited to a colony’s advantage. Dominion

46 Potter, News and the British World, p. 111.

47 Sweden’s positive image is not surprising given its average debt per capita was just £3.38

and that from 1898 it was awarded the Credit Lyonnais highest credit rating. See Mauro,

Sussman and Yafeh, Emerging Markets, pp. 93, 99.

48 Quoted in Potter, News and the British World, p. 131.

189Information and investment agents in London, for example, were not averse to using their contacts in the City and the media to propagate information beneficial to their interests. Charles Mills, the Cape Colony’s agent in 1885, informed the Cape government that in regard to raising loans he had ‘personally seen the editors of the leading journals’ and that ‘the following papers will give us their unqualified support, whatever your course of action is decided on – The Times – Daily News – Morning Post – The Standard – Pall Mall Gazette – St James – The Economist – Statist – Money, and Railway Times . . . With such support we need not fear failure, in whatever steps you may choose to take.’49 With respect to cable news, meanwhile, what the British public read about the Empire was largely determined by a single agency, Reuters. Indeed, by the 1870s, Reuters had acquired a virtual news monopoly of the colonies and Far East, a state of affairs that, according to the news agency’s official historian, made it a ‘semi-official institution of the British Empire’.50 While Reuters asserted its independence, its stances, conscious or otherwise, were pro-British and, by extension, pro-British World. As the editor of The Nation rather frankly admitted to his readers on the occasion of the fiftieth anniversary of Reuters Company, at heart the agency ‘stood for British interests as the Foreign Office sees them, and in reporting the internal affairs of foreign countries, its bias was usually governmental . . . It was bound to reflect the views here of “official circles”, there of colonists’ clubs, and everywhere of the mercantile or governing class’.51 As a consequence, British colonies were likely to be presented more favourably in despatches than were foreign nations.

Such advantages were amplified by Reuters’ assessment of what news was fit to be telegraphed back to London. As an 1883 circular to agents and correspondents made clear, because of the ‘increased attention paid by London and English provincial press to disasters &c., of all kinds . . . all occurrences of the sort’ should be telegraphed ‘with the utmost promptitude’.52 The content of cable news was driven as much (or more)

49 Quoted in Purkis, ‘Politics’, p. 303. Colonial governments and companies were also

wont to supplement this behind-the-scenes influence with overt advertisement in the

press, publicity that it was felt would help to attract both capital and labour their way.

Twenty-one Australasian banks, thus, advertised their deposits in The Scotsman alone

in November 1890. See Potter, News and the British World, p. 107; Potter, ‘Nationalism’,

pp. 204–5; and J. D. Bailey, ‘Australian Company Borrowing, 1870–1893: A Study in British

Overseas Investment’, unpublished D.Phil. thesis, University of Oxford (1958), p. 123.

50 D. Read, The Power of News: The History of Reuters 1849–1989 (Oxford: Oxford University

Press, 1992), p. 49.

51 Quoted in ibid., p. 94.

52 The circular went on to list the types of events that should be brought to London’s

notice: ‘fires, floods, inundations, railway accidents, destructive storms, earthquakes,

shipwrecks attended with loss of life, accidents to British and American war vessels and

190by the desire to provide sensational, entertaining news that might boost newspaper circulation (and hence demand for their cables) than by a desire to help the British investor make their investment decisions.53 Given such priorities, it is hardly surprising that increasingly prosperous, growing and politically stable colonies such as Victoria, New South Wales and South Australia failed to generate much cable traffic for most of the nineteenth century. Other than the escapades of bush-rangers, which might have temporarily titillated the British public, and tours by English cricket teams, Reuters’ correspondents in these locations typically had little material that their editors back in London would have deemed worthy of telegraphic transmission.54 From the perspective of the investor, of course, no such news is in fact good news.

Reuters also provided an additional service that facilitated the spread of information within the empire: the private telegram. Established in 1871, this service was subsequently extended to include the Far East, Australasia and South Africa. Its users were wealthy individuals and companies, and by 1881 Reuters had established standard codes aimed to reduce wordage. Single word codes for common phrases such as ‘market rising’ or ‘market falling’ betray the fact that the service was heavily used for commercial purposes. Of all of the lines on offer, the most popular service was the Eastern Private Telegram, which linked Britain to the merchants and businessmen of India and the Far East. In 1875, approximately 4,000 telegrams were being sent on these lines; by 1912, this number had risen to 276,195.55 The daily newspapers, of course, were not the only source of investment-related news. Around the turn of the century, a number of period icals were established that focused on imperial issues, such as The Empire Review (founded 1901), Colonial Quarterly (1906), Standard of Empire (1908) and Round Table (1910). These journals complemented a series of other publications, which appeared from the 1880s, and whose subject matter related exclusively to one specific colony.56 Typical of these was the British Australasian, the creation of the eminent London banker, R. H. Inglis Palgrave, and the financial journalist, Robert Lucas Nash.

to mail steamers, street riots of a grave character, disturbances arising from strikes, duels

between, and suicides of persons of note, social or political, and murders of a sensational

or atrocious character’. See Read, The Power of News, p. 106.

53 For the contrary (unsubstantiated) view that newspapers were primarily catering for the

interests of the investors, see Mauro, Sussman and Yafeh, Emerging Markets, p. 18.

54 Read, The Power of News, p. 102. It is worth noting in this regard that the onset of depres-

sion and the growth of a strong labour movement in Australia from the end of the nine-

teenth century attracted adverse press coverage that undermined its reputation as a ‘safe

haven’ for investors for a while. See Hall, London Capital Market, pp. 190–1.

55 Read, The Power of News, pp. 79–80.

56 Potter, News and the British World, pp. 107–8; and ‘Nationalism’, pp. 202–7.

191Information and investment Both men had had prior editorial experience at The Economist, and, when the first edition of the newspaper appeared in October 1884, Nash assumed its editorship. In 1888 the paper merged with the Anglo-New Zealander and Australian Times, which had been founded in August 1884 by a London-based Argus employee, Charles Short.57 Its immediate competitor was the Australian Trading World (founded 1886). Although the British Australasian acted as a general storehouse of information on Britain’s antipodean colonies and, as such, provided much news on sporting, social and political events, not to mention colonial gossip, it also explicitly projected itself as ‘A Newspaper for Merchants, Shareholders, Land Selectors, and Emigrants’.58 Through its pages, readers could familiarise themselves with the great land companies of Australia, the state of the New South Wales wool industry, the capital requirements of Melbourne’s metropolitan tramways and the promising mining opportunities in Western Australia, as well as more mundane information on prevailing prices, dividends and shipping to and from Australasia. At times, the newspaper felt confident enough to counsel its readers on which Australian stocks were worth holding on to and which should be liquidated. From the early 1900s, the paper operated a bookshop and information centre in central London, ‘The Rendezvous’, in which interested parties could buy or simply browse through materials and government publications pertaining to Australia and New Zealand.59

Australia and New Zealand were by no means unique in having such publications. The Canadian Mail (founded 1909) aimed to keep the British investor informed of developments and investment opportunities, whereas British interests in southern Africa were ably advertised in London by Edward P. Mathers’ South Africa.60 Mathers provides an excellent example of an individual whose imperial connections acted to tie the British press to its colonies.61 Born in Edinburgh, Mathers worked as a journalist on several provincial papers before heading off to South Africa in 1878. He settled in Durban, where he founded the Natal Caledonian Society, covered the Zulu War of 1879 for the Scotsman and other papers, and later became editor of the Natal Advertiser. Fascinated by the discovery of gold in the 1880s, he made numerous treks through South Africa and Rhodesia, journeys that he subsequently recounted in a series of

57 S. Sleight, ‘Reading the British Australasian Community in London, 1884–1924’,

mimeo of paper delivered at the Australian diaspora conference held at the Menzies

Research Centre, University of London, 2005, p. 2.

58 Ibid., pp. 6–7.

59 Ibid., pp. 3, 6–8, 18–19.

60 Potter, News and the British World, p. 108.

61 See especially anon., The Story of South Africa Newspaper and Its Founder (Edward P.

Mathers): Told by Others (London, 1903).

192popular travel books, such as A Trip to Moodie’s and Zambesia. These treks also led him to be recognised as an early authority on the subject of the Witwatersrand goldfields. Author of several standard works – including Golden South Africa, A Glimpse of the Goldfields and Goldfields Revisited – he was reputed to be a shrewd judge of the economic potential of South Africa, and an independent commentator on its political situation. Thus while generally supportive of the claims of the Uitlanders, and critical of Kruger for ‘dragging his country through the mire of misery and possible bankruptcy’, he nonetheless took Rhodes to task in 1898–9 for putting his friendship to Jameson above his patriotic duty towards South Africa.

In 1889, Mathers returned to London determined to provide better news coverage of South Africa, which he described as the ‘Cinderella of the Empire’. He set up a journal to promote British trade with and investment in the region, and to report on its general progress. Published weekly, and copiously illustrated, South Africa described itself as a ‘Home- Colonial’ journal ‘for all those interested in South African affairs’. The diamond and gold mining industries were particularly well covered, but agriculture, commerce, politics and social affairs also received attention. The paper was very much aligned to the cause of promoting ‘British freedom in South Africa’, yet did its best to eschew party politics. As a prominent daily London newspaper claimed in 1889, ‘Journals like South Africa play an important part in strengthening the federal bond between various portions of the Empire by diffusing a knowledge of their requirements, achievements, aims, purposes, and progress throughout the lands occupied by teeming millions of English-speaking people.’

South Africa was a commercial success, building up a buoyant advertising income from South African companies, and widely (and favourably) quoted in the provincial and national British press. Its offices were situated in the City close to the Stock Exchange and Bank of England. To raise its profile, interviews were secured with notable figures in South African society – in addition to Kruger and Rhodes, Alfred Beit, Lionel Phillips, Abe Bailey and George Farrar from the mining industry, and John Merriman, James Rose Innes, Henry Loch, Alfred Milner, Jan Smuts and Gordon Sprigg from the world of government and politics. Special supplements (for example, on emigration) were also issued from time to time.

Mathers was acutely aware of the number of fraudulent companies pushing puffed-up prospectuses at British investors in the 1890s, and the damage they were inflicting on the reputation of South Africa in the London money market. Hence he did not shrink from exposing bogus firms trying to float themselves in the City, and, to this end, enlisted the help of the Chambers of Mining and Commerce on the Rand. Some Information and investment members of the Chambers were supportive of his move, while others proved reluctant to break with the practice of not commenting on such matters. Mathers also organised the annual South African dinner for South Africans living in or visiting the UK. The first occasion in 1889 was chaired by the shipping magnate, Sir Donald Currie, and attended by prominent business and financial interests. It aimed to foster public awareness and interest in South Africa.62

193Another source of published news for investors was the growing number of specialist journals and newspapers concerning themselves with financial matters. A burgeoning financial press had its origins in the investor’s hunger for more information on the plethora of shares that appeared on the market during the great railway speculations of the 1840s. By 1845, in excess of twenty papers and periodicals, such as the Quarterly Railway Intelligence and The Daily Railway Share List, had emerged.63 From the 1870s, these industry-specific publications were joined by a raft of papers and journals devoted exclusively to questions of investment. The most notable of these were The Financier (founded March 1870) and The Financial and Mining News (founded January 1884). Unlike the financial sections of mainstream dailies, these publications did not target the initiated, seasoned investor with a sophisticated understanding of financial markets, but the emerging market of small-scale, middle-class and relatively uninformed investors. These ‘new’ investors sought easily intelligible information on investment prospects, as well as editorial opinion and guidance. Journals and newspapers such as the Daily Stock Exchange, The Money Market Review and the Investor’s Gazette and numerous others arose to cater precisely for their demands.64

The information and advice proffered by such publications was not always accurate, nor indeed well intentioned. The practice of ‘puffing’ – the advertising and fraudulent endorsement of doubtful investments – was a problem that troubled the financial press. Ostensibly reputable publications were created by promoters in a thinly veiled attempt to lend respectability to dubious projects they were pushing, while the placement of prominent advertisements for an investment alongside an editorial that brazenly sung its praise (often secretly written and paid for by its promoter) was commonplace. These practices were felt to be sufficiently

62 E. Rosenthal (ed.), Southern African Dictionary of National Biography (n.p., 1966), p. 243.

63 A. Preda, ‘The Rise of the Popular Investor: Financial Knowledge and Investing in

England and France, 1840–1880’, Sociological Quarterly 42 (Sociological Quarterly

2001), 205–32 (p. 212).

64 Hall, London Capital Market, pp. 46–7; Hobson, ‘Financial Press’, p. 6; Preda, ‘Rise of

the Popular Investor’, p. 212; Grieser, ‘British Investor’, pp. 119–25.

194widespread for The Statist to openly condemn them in an article published on 9 April 1887 entitled ‘The Sham Financial Press’.65

The quality and reliability of the information supplied aside – and it must not be forgotten that much of the financial press was bona fide – these publications indubitably influenced the investment choice of many in the latter half of the century. The precise extent to which they mattered is, of course, hard to establish. It clearly varied considerably between individuals and different classes of investors. Nonetheless, in Hall’s view there could be ‘little doubt that by making information simultaneously available to a wider public, it [the specialised financial press] magnified any trends that did occur’ both in terms of the ‘short-term speculative movements’ and ‘longer-term biases favouring investment in a particular area that were . . . a feature of this period’.66

How far did the financial press really engender such alleged investment biases? The range and type of information published in The Economist (founded 1844) and the Investor’s Monthly Manual (hereafter IMM) between 1880 and 1905 support Hall’s claim. Both papers were well-respected, and not vulnerable to the blatant manipulation of some of their lesser regarded competitors. The IMM, a monthly supplement produced by The Economist, enjoyed that publication’s high esteem.67 Table 5.6 provides an overview of their geographical coverage towards the end of the nineteenth century. Observed and expected68 frequencies of coverage of various parts of the world are presented. The figures from The Economist relate to the number and percentage of articles on a particular region that appeared in that period. More information, however, can be gleaned from the IMM. In addition to the usual listing of share prices and dividends and reporting of AGMs, it published two sections entitled ‘Notes upon Investments’ and ‘Incidents Tending to Affect the

65 Examples and discussions of such deceptions can be found in Hall, London Capital

Market, p. 77; Hobson, ‘Financial Press’, p. 4; Grieser, ‘British Investor’, pp. 126–9;

C. C. Spence and M. Casson, British Investments and the American Mining Frontier,

1860–1901 (Ithaca, NY: Taylor and Francis, 2000), pp. 17–18. Another source of a

successful ‘puff’ was the swindler like Horatio Bottomley, Whitaker Wright or Perry

Tarbutt, who seemed to have the charisma to induce many a naïve investor to sink his

or her capital into the most suspicious of ventures. For examples of such scams, see

J. Mouat and I. Phimister, ‘Mining, Engineers and Risk Management: British Overseas

Investment, 1894–1914’, SAHJ 49 (2003), 5–18; and R. P. T. Davenport-Hines and

J. J. Van Helten, ‘Edgar Vincent, Viscount D’Abernon, and the Eastern Investment

Company in London, Constantinople and Johannesburg’, in R. P. T. Davenport-Hines

(ed.), Speculators and Patriots: Essays in Business Biography (London: Routledge, 1986),

pp. 35–62 (p. 35).

66 Hall, London Capital Market, p. 47. For another favourable assessment of the role of the

press in providing information, see Potter, ‘Nationalism’, p. 41.

67 Grieser, ‘British Investor’, p. 144; Preda, ‘Rise of the Popular Investor’, p. 212.

68 On the basis of investment shares.

219(based on its

frequency of

1880, 1890 and 1900 as well as in the ‘Notes upon investments’ (‘Notes’) and ‘Incidents tending to affect the money market’ (‘Incidents’)

in the IMM

‘incidents’

coverage a region attracted was proportional to the share of British overseas investment it received (or, in the case of the last column, its

sections of the IMM in 1881, 1885, 1890, 1895, 1900 and 1905. Expected frequency is calculated on the assumption that the amount of

Expected

Notes: This table gives the number of articles on each of these regions that appeared in the ‘Business Notes’ section of The Economist in

share of

in IMM

‘Notes’)

reports

Table 5.6. Observed and expected geographical coverage of The Economist and the Investor’s Monthly Manual,

184.3

75.7

13.2

62.5

26.4

125.0

148.1

0.0

(based on its

frequency of

in the IMM

investment

‘incidents’

Expected

Sources: The Economist and the Investor’s Monthly Manual. Investment data come from Stone, Global Export of Capital.

share)

174.3

54.0

30.9

59.2

87.4

154.1

134.2

‘incidents’ in

frequency of

70 (11.0)

24 (3.8)

102 (16.1)

17 (2.7)

16 (2.5)

255 (40.2)

55 (8.7)

96 (15.1)

Observed

the IMM

IMM ‘Notes’

(based on its

of reports in

investment

frequency

Expected

share)

46.8

40.8

18.0

53.0

16.4

9.4

18.0

26.6

share of coverage in the ‘Notes’ section of the IMM) in those same years.

IMM ‘Notes’

of reports in

frequency

Observed

56 (29.0)

23 (11.9)

4 (2.1)

19 (9.8)

8 (4.2)

38 (19.7)

45 (23.3)

0 (0.0)

The Economist

(based on its

1880–1905 (percentage of total in brackets).

frequency of

coverage in

investment

Expected

share)

49.0

28.1

53.7

79.3

139.7

121.7

158.1

The Economist

frequency of

coverage in

152 (26.4)

65 (11.3)

18 (3.1)

141 (24.5)

26 (4.5)

49 (8.5)

125 (21.7)

0 (0.0)

Observed

Latin America

Dependent

Dominions

colonies

Europe

Other

India

USA

Asia

196Money Market’ (hereafter referred to as ‘Notes’ and ‘Incidents’ respectively). The monthly ‘Notes’ section appeared at the front of the publication and consisted of what was perceived to be the most important news and developments from the world of investment. The returns and pro spects of specific investment projects (or types of investment) were discussed, and an editorial opinion frequently offered. The ‘Notes’ section therefore was the part of the publication where true financial journalism was practised. By contrast, the ‘Incidents’ section, which appeared in each December edition, carried no analysis or discussion, but merely listed in tabular form international and domestic events that over the past year had impacted on the money market. For example, in 1890, incidents such as four days of rioting in Buenos Aires, the financial crisis in Uruguay, the course of a US Tariff Bill, the illness of the infant King of Spain and the partial outbreak of a London dock strike merited mention. The information presented thus sheds light on contemporaneous perceptions of the relative uncertainties of investing in different locations. It seems reasonable to presume that such perceptions, as they appeared in the IMM, true or otherwise, provided much of the information available to the less informed British investor.69 Statistical analysis of Table 5.6 confirms that these two sections of the IMM imparted different types of information: the ‘Notes’ section informed readers of current developments and opportunities, whereas ‘Incidents’ warned them, albeit indirectly and possibly unintentionally, of societies where the safety of their capital was more likely to be put in jeopardy. Overall, the geographical spread of The Economist’s news coverage was different from Britain’s pattern of overseas investment over the corresponding period.70 Nor did the pattern of reporting in the ‘Notes’ and ‘Incidents’ sections conform to that which one might expect on the basis of investment shares.71 Moreover, the regional coverage of the IMM’s ‘Incident’ section differed statistically from the patterns observed in its ‘Notes’ section.72 An important implication of each of these findings

69 Such an interpretation of the IMM ‘Incidents’ section is also employed by Mauro,

Sussman and Yafeh, Emerging Markets, p. 28.

70 More formally expressed, the chi-squared statistic of 300.197, generated by a compari-

son of the first two columns, allows us with 99 per cent confidence to reject the hypoth-

esis that the observed regional coverage did not differ significantly from that expected on

the basis of investment share. For details of the chi-square test, see M. Hamburg, Basic

Statistics (London: R. D. Irwin, 1985), pp. 233–60.

71 The chi-squared statistics of 57.3 and 826.6 respectively for the ‘Notes’ and ‘Incidents’

comparisons permits us with 99 per cent confidence to reject the hypothesis that the

observed coverage did not differ significantly from that expected on the basis of invest-

ment share.

72 The chi-squared statistic of 749.7 generated permits us with 99 per cent confidence to

reject the null hypothesis that the ‘Incidents’ section’s observed coverage did not differ

significantly from that expected on the basis of the ‘Notes’ section’s coverage.

197Information and investment is that the pattern of reporting in both publications did not merely reflect Britain’s current investment behaviour. Rather, other factors, such as opinion, conjecture and actual on-the-ground developments, shaped the density of information flows. Of further note is the fact that the IMM’s coverage of financially significant events was independent not only of prevailing investment patterns, but of the periodical’s own policies as to what was newsworthy enough to cover in its ‘Notes’ section.

Table 5.6 also reveals significant variation between regions in terms of the different types of information reported. The dominions enjoyed a high level of coverage (over a quarter of all articles published) consistent with their importance as major recipients of British capital, whilst receiving relatively few reported episodes (about 16 per cent) that threatened capital. Like Table 5.5, this finding again highlights the perception of safety that the press coverage of the dominions projected to British investors. Thus The Economist’s 1880–1 survey of Britain’s colonies could confidently conclude: ‘we regard these possessions of ours as a first-rate field, if properly cultivated, for the utilisation of British surplus capital and population, and it is the main object of these comments to direct both where they may be employed to their best advantage’.73 Over the coming years, the paper’s coverage of dominion affairs expanded markedly to include accounts of speeches by leading colonials visiting London and even the placement of their own correspondents in a number of colonies.74 What of the coverage of Britain’s other colonies? India tended to be over-reported and the dependencies under-reported in the news. Like the dominions, though, all these colonies were significantly under-represented in the ‘Incidents’ section of the IMM. For one reason or another, membership of the empire appeared to coincide with lower investment uncertainty. Such security, however, was not a uniquely imperial experience. The British financial press coverage of the USA closely paralleled that of the dominions, namely a large allocation of space, as consistent with its share of British investment, and relatively few reports of events that might have upset the money markets. In marked contrast, Europe was heavily reported, and a more uncertain prospect for investors. Given that much of what was reported about Europe concerned war, political instability or scandal, such a pairing of characteristics is hardly surprising. Comparatively speaking, news from Asia (other than India) tended to be ignored, even though it endured only marginally more worrying ‘Incidents’ than might have

73 ‘Our Colonial Possessions’, The Economist, 1881, p. 1075.

74 For examples, see Hall, London Capital Market, pp. 162–3.