204pressed by the outburst, demanded a prompt, direct and unreserved apology from Queensland’s Griffith government. When no such apology was forthcoming, Lidderdale wrote to Queensland’s Agent-General in London, with whom he had previously negotiated the disputed details of the loan, and informed him that ‘the relations between your Government and the Bank are at an end’. Lidderdale’s words impacted immediately on Queensland’s reputation. Concerned British investors began withdrawing capital from the colony, while the Queensland National Bank reported greater difficulty moving the colony’s Treasury Bills in the City. Common sense (and self interest) eventually prevailed. In April 1892, McIlwraith, by then elevated to the premiership of Queensland, provided the requisite apology, opening the way for a resumption of normal relations with the Bank, itself now under the new Governorship of David Powell. Financial calamity had been averted and a lesson learned.94
Social webs
Those directly connected to the financial sector were not the only parties to benefit from the workings of networks. The presence of significant numbers of colonials in nineteenth-century London – engaged both inside and outside the City – also had a role to play in augmenting the volume and quality of information about different parts of the empire that circulated through British society. This colonial presence mirrored
94 G. Blainey, Gold and Paper: A History of the National Bank of Australasia Limited
(Melbourne: Georgian House, 1958), pp. 208–11. The quotation comes from J. Clapham,
The Bank of England: A History, 2 vols., Vol. II: 1797–1914 (Cambridge: Cambridge
University Press, 1970), p. 400. See also Kynaston, City of London, Vol. II, pp. 48–9.
205Information and investment and reinforced the links that existed between London and the empire, particularly its self-governing components. Both sides benefited. The nexus was vital for the colonies, whose economies, lacking not just capital and labour but the specialised expertise necessary to marshal them, were reliant for their continued development on privileged access to the rich array of financial networks operating in Britain.95 From the British perspective, these connections offered the entrepreneur, the financier and the official regular opportunities to interact with prominent colo nials, who were not only well-informed about their homelands, but wellpractised in the ways of the City. It was a state of affairs that fostered mutual confidence and trust, reaffirming the belief in British minds that their investments were safe with their brethren in the colonies.96
The Canada Club in London was typical of the type of institution that promoted such social and economic links between British and colonial elites. Founded in 1810, the club provided a venue throughout the nineteenth century for prominent Canadians and British to meet and discuss the issues of the day, including those pertaining to finance. It was an important port-of-call for visiting Canadian dignitaries. Politicians passing through London often scheduled functions within its walls. At other times, local expatriates, involved in raising British capital for Canada, like Joseph Colmer, J. H. Dunn and Arthur Grenfell, entertained at the club. Having so many financially and politically connected Canadians in London proved advantageous in securing investment. As Michie observes, the result was that ‘both government and the railways could raise capital more easily and cheaply in London than in either Toronto or Montreal and, as the British investors’ knowledge of Canada continued to improve, so could increasingly smaller concerns’.97
Social contacts, sometimes far removed from the concerns of capital, could likewise provide an important source of information for investors. The power of gossip, word of mouth and personal experience in determining individual investment behaviour is easily overlooked. Yet its importance could be considerable, especially for the wealthy. Such individuals knew (or were related to) others who had first-hand experience of particular parts of the empire, or who had enjoyed success with a certain type of investment, or just had germane, ‘insider’ knowledge about the potential
95 On the theoretical importance of such connections between regional economies and the
metropolis, see Casson, ‘Economic Approach’, pp. 20, 40–1.
96 Dilley, ‘Gentlemanly Capitalism’, p. 168.
97 R. C. Michie, ‘The Canadian Securities Market, 1850–1914’, Business History Review 62
(1988), 35–73 (pp. 49–50). The Congress of Chambers of Commerce of the Empire, first
established in 1886, was another forum for the social interaction of British and colonial
businessman. For a discussion of the Congress, see Dilley, ‘Gentlemanly Capitalism’,
pp. 172–4.
206of a particular stock or project. Thus, as early as 1824–5, on the basis of his brother-in-law, W. S. Davidson’s advice, the Aberdeenshire landowner, William Leslie, purchased shares in the Australian Agricultural Company. Davidson lived in London and had based his tip on his own interactions with the company.98 By the last quarter of the nineteenth century, these social links between the aristocracy and the big financiers had grown closer, as the landed interest sought higher yielding uses for their capital and as bankers in turn looked for ways to become more deeply integrated into Britain’s social elite.99 It was these ‘social webs’, to use Ranald Michie’s term, which often drew members of the aristocracy to particular financial opportunities. Investment advice could be imparted on the most inconspicuous of occasions such as during a hunting party, a family get-together or a society function. Public school and university networks were also potential sources of information, while personal travel and the emigration of family members sometimes provided the necessary stimulus for an investment plunge. Colonial correspondence with friends at home often became, as The Economist noted as early as 1860, ‘the channel through which British capital . . . more freely embarked in the colonies than in foreign countries’.100 Retired imperial officials could be a further source of information. Many ex-governors retained interest in the lands over which they had presided and could provide useful connections to aristocratic investors back in the UK. Victor Villiers, the Earl of Jersey and Governor of New South Wales between 1891 and 1893, for example, freely offered his services and City contacts to the state on raising a loan in 1904.101 Sir Albert Henry George Grey, the Fourth Earl of Grey, Administrator of Rhodesia (1896–7) and Governor of Canada (1904–11), was similarly active in promoting and investing in imperial projects. He held a diverse portfolio of assets, especially in Canada and Rhodesia. He was a consummate
98 Michie, ‘Social Web’, p. 163.
99 J. Harris and P. Thane, ‘British and European Bankers, 1880–1914: An Aristocratic
Bourgeoisie?’ in P. Thane, G. Crossick and R. Floud (eds.), The Power of the Past: Essays
for Eric Hobsbawm (Cambridge: Cambridge University Press, 1984), pp. 215–34 (pp.
221–7). For the preceding period, see, especially, Cain and Hopkins, British Imperialism,
pp. 105–202.
100 Quoted in H. J. Habakkuk, ‘Free Trade and Commercial Expansion, 1853–1870’, in J.
Holland Rose, A. P. Newton and E. A. Benians (eds.), The Cambridge History of the British
Empire, 5 vols., Vol. II: The Growth of the New Empire, 1783–1870 (Cambridge: Cambridge
University Press, 1940a), pp. 797–8. For more on the social webs of investment, see
Michie’s seminal article, ‘Social Web’, pp. 158–75. Grieser, ‘British Investor’, p. 30 also
discusses how educational networks were an important source of information (and
recruitment) for brokerage firms.
101 Dilley, ‘Gentlemanly Capitalism’, pp. 169–70.
207Information and investment networker, with an impressive array of well-placed family, business and governmental contacts that spanned the British World. In part, this was a product of extensive travel and work experience in the colonies, but intermarriages with the ‘right’ families played their role too. All of his sisters had married into the aristocracy; and his own daughters had wed the sons of two prominent City families. Thus he included among his friends and confidants the likes of Cecil Rhodes, Alfred Beit, Sir John Willoughby, the Duke of Abercorn, R. Maguire, H. W. Fox, S. Neumann, J. Werner, L. S. Jameson and L. L. Michell. Nor was he shy of using these connections to get or pass on investment-related information.102 The constant stream of information he received from these contacts clearly influenced his investment choices. A skilful statistical analysis of Grey’s southern African investment portfolio between 1885 and 1917 reveals that his share selection did not appear to have been made ‘at random . . . but on the basis of asymmetric information provided by his business and social connections whose judgement he trusted. His investments in the [gold] mania were broadly profitable as would be expected if someone had insider information.’103 Extended family was a fruitful source of ‘inside information’. Grey’s closest advisers, at least with respect to his investments, were two merchant bankers who also happened to be family members: R. H. Benson (his wife’s brother-in-law) and Arthur Grenfell (his son-in-law). Their opinions were highly regarded. In 1895, Grey acquired 400 shares in the Trust and Mortgage Company of Iowa on the strength of Benson’s advice alone. Similarly, he took heed of Grenfell when he told Grey in 1911 to replace some of his stock in Rand Mines and Rhodesian Railways with a selection of Canadian industrial and land companies.104
Grenfell’s information was derived from his own extensive networks. These intersected with the world of Robert Nivison, with whom Grenfell collaborated in floating western Canadian securities in the period between 1909 and 1914. Grenfell was the brother-in-law of Nivison’s business partner Guy St Aubyn (who also was related to Lord Galloway and Lord St Levan).105 Grenfell appears to have worked assiduously to
102 Michie ‘Social Web’, pp. 164–5; S. M. Nollan, ‘A Gentlemanly Capitalist at Home and
Abroad: The 4th Earl of Grey, 1885–1917’, unpublished M.A. thesis, University of
Durham (2004), pp. 11, 12, 52.
103 Nollan, ‘Gentlemanly Capitalist’, p. 56.
104 Of course, information flowed both ways. Grey, using knowledge acquired in his role as
a director of the British South Africa Company (1898–1904), advised his uncle, Lord
Wantage, in 1899 to buy certain southern African mining and railway securities with
which he was familiar. Wantage complied. See Michie, ‘Social Web’, pp. 7–10.
105 Nivison had his own social web that complemented his City networks. See Davenport-
Hines, ‘Lord Glendyne’, pp. 191, 194.
208keep Grey and others informed of developments in Canada. As his letter to Grey of 8 August 1906 states, he saw himself as ‘an information bureau – distributing such information as I receive from Canada to the London and especially provincial newspapers’.106
Another financial promoter who effectively exploited these social webs of investment was Edgar Vincent, the first Viscount D’Abernon. A protégé of the Gladstone family and of George Goschen, his gregarious nature endeared him to many. His range of influential friends and acquaintances – including the Marchioness of Crewe, Arthur Balfour and the South African mining magnate Sir Julius Wernher (many of whom he could call on for capital) – was his greatest asset. Indeed, his biographer observes that ‘as a financier he had little intrinsic ability, but through his cosmopolitan connections [he] was able to carry a glittering range of investors in sometimes bizarre schemes’.107 First-rate establishment links were to bring him early career success. He became the financial adviser to the Khedive of Egypt (1883–9), and then Director General of the Imperial Ottoman Bank (1889–97), at the young ages of 26 and 32 respectively. In the 1890s, he was involved through the auspices of the Eastern Investment Company in southern African mining ventures. Such stock operated at the highly speculative end of the market, notorious for its potential for manipulation and overblown claims. While on paper the stock promised high rates of return, the prudent investor tended to stay clear. Yet, drawing upon his network of influential people in London, Johannesburg and Paris, Vincent was able to sell his securities with relative ease, even to the more cautious investor like the German-Jewish banking family, the von Bleichroeders. More than anything else, it was the eminence of the people in his network that lent him the credibility and stamp of trustworthiness he required.108
While opportunities for profitable networking were greater among the wealthy and privileged, the elite were not the only segment of British society who could avail themselves of its benefits. Investment-related networks could equally be erected upon ethnic or cultural foundations. Schmitz, for example, has neatly demonstrated how the choice of nineteenth-century Scottish investors could be informed, and hence influenced, by ‘the strong cultural and commercial bonds which seemingly linked the capital markets of Edinburgh, Glasgow, Dundee and Aberdeen with a farflung network of expatriate Scots around the globe’: a series of personal
106 Quoted in Davis and Gallman, Evolving Financial Markets, p. 767.
107 Davenport-Hines and Van Helten, ‘Edgar Vincent’, p. 56.
108 Ibid., pp. 35–61; and Kynaston, City of London, Vol. II, pp. 106–9.
209Information and investment connections that worked to identify and unlock ‘a host of foreign investment opportunities’.109 Similarly, skilled migrant workers were also at the cutting edge of private information flows. Often the information flowing homeward pertained to job opportunities and the potential for immigration. But investment-relevant news could be – and was – transmitted along these trans-national lines of communication. A case in point is the growing British community located in the American West during the late nineteenth century. Most of this community had been attracted to the West by its burgeoning mining industry. Between 1860 and 1890, the number of British-born residents in the West rose from 10,391 to 84,652, with Colorado witnessing the most spectacular growth. Despite their distance from the UK, many of these skilled British migrants retained close ties with friends and associates back home. Their experience and observations often eventually made their way, either in print or by word of mouth, into the public domain and did much to alert British investors to the great mining potential of the American West.110 Moreton Frewen, a visitor to the United States in 1899, for example, wrote back to the Earl of Grey from Denver informing him that ‘times are very good here and there is lots of money to be made’. He promised to find profitable assets with which they could both make money. True to his words, he returned