Published by EH.NET (September 2005)

Mario Tiberi, The Accounts of the British Empire: Capital Flows from 1799 to 1914. Aldershot, UK: Ashgate Publishing, 2005. ix + 183 pp. $99.95 (hardcover), ISBN: 0-7546-3916-9.

Reviewed for EH.NET by Elise S. Brezis, Department of Economics, KNU (Korea) and BIU (Israel).

This book presents a synthesis of research on the quantitative estimates of the foreign investments of Great Britain during the nineteenth century. Given the limited data available on stocks and flows of capital during the nineteenth century, the various scholars who have focused their attention on this topic have reconstructed either the balance of payments or the annual income earned overseas. Aptly covering the principal results of those who have researched the subject, Accounts of the British Empire is an important compilation of the work done in this field.

Mario Tiberi has done a remarkable job of collecting the various studies and presenting the various methods used by the researchers. The book emphasizes the three main methods of estimating capital flows. The first, the indirect method, measures the various elements of the balance of payments, and capital flows are obtained as a residual. The second method makes use of the capitalization of annual income earned from British financial and real investment abroad. The third method does not properly estimate capital flows, but rather concentrates on finding information on foreign assets owned by British citizens.

Accounts of the British Empire is divided into four chapters. The first chapter presents the research of those who have used the indirect method; the second chapter presents the other two methods; the third chapter presents critiques on the various methods; and chapter four is a summary.

The first chapter presents the works of Seyd, Shaw-Lefevre, Hobson, Schooling, Jenks, Caincross, Feinstein, myself, and of course Imlah, all of whom use the indirect method, i.e., they measure the various elements of the balance of payments. As Tiberi reminds us, this method can be fraught with errors regarding each of the various elements.

The second chapter is devoted to researchers who have used the two other methods. Those who use the capitalization method, particularly Giffen, Hirst, Crammond, and Paish, start by identifying the flows of various types of income (profits, dividends, interest, and rent) that can accrue from capital invested overseas. With some guesses regarding the year of purchases of the various components, it is possible to capitalize these flows and to estimate the stock of capital invested overseas.

The third method is based on the collection of information on foreign assets, both financial and real, owned by British residents overseas. This method consists of identifying, from all available sources, the flows of financial assets purchased by residents of Great Britain as investments abroad. This method is called the direct method, and was mainly used by Nash, Harris, Ayres, and Simon, but also by Crammond and Paish.

The third chapter focuses on scholars who have criticized the research presented in the two previous chapters. These critiques, particularly those of Arnd and Platt, focus on the general characteristics of the direct method. They claim that information on the financial market regarding so-called portfolio investments cannot accurately represent the wealth accumulated abroad by U.K. residents. They also suggest downward revisions of the values attributed to the flows and stock of Britain’s foreign investment proposed by Imlah and Paish.

The final and most interesting chapter is a summary of the aforementioned studies. Since pre-1870 estimates are particularly problematic, Tiberi divides his critiques into two periods: pre-1870, and 1870-1914. On the one hand, this chapter is an objective summary of all of the research; in it, Tiberi summarizes all of the estimates in one table (table 4.1, pp. 158-159), which allows us to compare the various results, making it a very useful table. On the other hand, he finally permits himself to be subjective and tells us which research and which estimates he prefers. It seems that his preference tends toward the capitalization method; despite the fact that in Chapter 3 he defended Imlah, in this chapter he raises some reservations regarding the indirect method.

However, it is clear that Tiberi’s preference is related to the objective of the research. For Tiberi, foreign investments are related to power and prestige, and therefore he does not place much importance on flows, but rather on the stocks of overseas capital. My own preference, of course, is the indirect method, since by checking the balance of payments, I could prove that foreign capital inflows from overseas were almost as important as savings in paving the way to the Industrial Revolution. It can therefore be stated that preferences are actually related to goals. On the whole, Accounts of the British Empire presents the research objectively.

My main critique of this book is that Tiberi is himself not critical enough, though he is critical of the critics. Defending Imlah, he writes, “Unless an author can be proved unreliable, any attempt on his part to verify the quality of his own work through comparisons of hypotheses, methods and results of other scholars should be considered positively” (p. 128). Yet he states, “Every method of evaluation of the flows and stock of foreign investments needs both reliable data and plausible assumptions in order to obtain empirical results that are sufficiently representative of the real facts” (p. 99).

Since Accounts of the British Empire is about the estimation of capital flows, I would like to have seen more on the problem of evaluation. When one considers Tiberi’s summary in table 4.1, what is striking is that the estimates, using quite different methods, yield very similar results. For example, the results of the indirect method (?1,190 million for Imlah) and the direct method (?1,250 million for Nash) for the year 1880 are incredibly close. This is even truer for the year 1913, where the difference between Paish and Imlah is negligible. Except for the first guess at the beginning of the nineteenth century (where Imlah has a preference for ?10 million and Beeke and Seyd for ?100 million), the differences are small during the rest of the period.

Does this similarity mean that the probability that the “true” data is not far from these estimates is almost one? It would be if all of the various studies were independent, but the similarity of the estimates is also due to the fact that the studies are interrelated. For instance, Imlah quotes most of the works written before him, particularly Jenks and Seyd. So in formulating his own data, he incorporates the previous estimates, which is why the data do not differ widely. This phenomenon points to a comment of mine on Maddison (2000), suggesting that creating data for the first time has a strong impact:

“The theoretical question that should be asked [regarding estimation] is: Does the first move, i.e., the first estimate, influence the entire ensuing quest for the ‘true’ data? In other words, does the first guess influence the data estimated even after many corrections? If the first guess can affect the ensuing research, then despite the fact that Maddison is the best candidate for ‘casting the die and creating’ the data, then — like every monopoly — this one is also undesirable” (Brezis, 2001).

Probably, Tiberi should have raised more questions regarding the estimates, emphasizing which are the outcomes of the creation of new data and which are improvements on previous work. Yet for scholars researching the balance of payments of the U.K., Accounts of the British Empire is a must: a formidable synthesis of all that has been done in this field.


Elise S. Brezis, “Review of Angus Maddison The World Economy: A Millennial Perspective” Economic History Services, Nov 26, 2001,

Angus Maddison, The World Economy: A Millennial Perspective (OECD, 2000).

Elise S. Brezis is editor (with Peter Temin) of Elites, Minorities and Economic Growth (Elsevier, 1999) and author of “Mercantilism” in The Oxford Encyclopedia of Economic History (2003) and “The Role of Higher Education Institutions: Recruitment of Elites and Economic Growth” (with Francois Crouzet) in T. Eicher, ed., Institutions and Economic Growth (MIT Press, forthcoming). She will contribute on “elites and economic outcomes” in the New Palgrave Dictionary of Economics (forthcoming).