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The Political Economy of British Imperialism: Measures of Benefits and Support

Published online by Cambridge University Press:  03 March 2009

Lance E. Davis  and
Robert A. Huttenback
Lance E. Davis
Affiliation:
Professor of Economics at California Institute of Technology, Pasadena, California 91125.
Robert A. Huttenback
Affiliation:
Chancellor of the University of Californiaat Santa Barbara, California 93106.
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Abstract

The paper provides new evidence on the debate over the decision of the British to invest in empire in the period of 1860–1914. An examination of the flow of symbolic capital indicates that the Empire was not a major recipient until the end of the period. The largest transfers went to the “rest of the world” although a surprisingly large fraction was absorbed domestically.A study of the profits of British firms operating at home, in the Empire, and abroad shows that while the Empire was relatively very profitable in the years before 1880, domestic returns were higher from that date until the end of the Boer War. Moreover, those domestic returns were also higher than foreign from the mid-1870s to the mid-1880s and again throughout the 1890s. Finally, the evidence indicates that empire returns were as high as they were only because of substantial social subsidies from the British. The imperial experience could therefore be viewed more as a redistribution of income within the United Kingdom than as a transfer from the empire to the mother country.

Type
Papers Presented at the Forty-First Annual Meeting of the Economic History Association
Information
The Journal of Economic History , Volume 42 , Issue 1 , March 1982 , pp. 119 - 130
Copyright
Copyright © The Economic History Association 1982

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References

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5 The data presented in this section are based on the records of a group of 447 British firms that operated in the United Kingdom, the empire, and abroad. Of that total, 205 are from a random sample of corporations whose shares were traded on the London Stock Exchange sometime between 1882 and 1912. For these firms the original data are from the financial reports filed with the stock exchange. The remaining 242 include partnerships and sole proprietorships as well as corporations. They are more temporally balanced as between pre– and post–1882; but the firms are included on no other basis than that their records exist. For this latter group, the data were constructed from firm ledgers and other primary financial documents. The estimates so constructed were compared with the firms published financial records. To the extent that these comparisons indicated systematic differences, they were used to adjust the data for the 205.Google Scholar

6 Commerce and manufacturing includes (1) brewing and distilling, (2) commercial and industrial, and (3) iron, coal, and steel. Finance encompasses (1) commercial banks, (2) land, mortgage, and investment companies, (3) financial trusts, and (4) insurance companies. Public utilities include (1) gas and light companies, (2) telephone and telegraph companies, and (3) water works. The transport sector is an agglomeration of (1) canals and docks, (2) railroads, (3) shipping, and (4) tramways and omnibusses.Google Scholar

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9 In this exercise we have used the figure £968 million as an estimate of the average amount of British capital invested overseas. That figure is an average of Paish's 1911 estimate of £3,500 and Cairncross's estimate of an 1870 figure of £785 million adjusted by a factor of.45 to estimate the empire's share (a number close to the figures cited by Cairncross (.41), Lehfeldt(.46), and Segal and Simon (.46). See note 3).Google Scholar