Published by EH.NET

(November 1999)

Irving Stone, The Global Export of Capital from Great Britain, 1865-1914:

A Statistical Survey. New York: St. Martin’s Press, 1999. xii + 430 pp.

$75.00 (hardback). ISBN: 0-312-21845-1.

Reviewed for EH.NET by Michael Edelstein, Department of Economics, Queens

College and the Graduate School, City University of New York.

This volume makes available one of the most important data sets for nineteenth-

and early twentieth-century world economic history-the annual money calls for

overseas securities issued in Great Britain, aggregated and cross-tabulated by

receiving country, sector of borrower, and type of security. This new data set

provides significant new quantitative information regarding the financial

development, national capital formation, industrial development, and balance

of payments for the principal capital importers of this era. Displayed in

sixty-seven tables,

the production of these data combine the successive efforts of Leland Jenks,

Matthew Simon and

the present author, Irving Stone, Professor of Finance at Baruch College, City

University of New York.

To date, students of the massive long-term capital outflow from Great Britain

in the late-nineteenth and early-twentieth century have had to rely on a

diverse and incomplete set of sources. Building on the work started in the

1930s by Leland Jenks, Matthew Simon published in the late 1960s the first

comprehensive annual time series of British new issue calls for overseas

securities, 1865-1914. Specifically, Simon supplied annual time series for (a)

the total of British money calls for overseas securities,

with breakdowns by (b) continent, (c) political status (independent vs.

British Empire), (d) climate and ethnic group (regions of recent settlement

, tropics, others), (e) sector of issuer (social overhead,

extractive, manufacturing), and (f) type of issuer (private, mixed,

government). Before his untimely death in 1967, the only national annual time

series to emerge from Simon’s research efforts was

a brief study of British new issues on behalf of long-term Canadian borrowers.

The value of Simon’s contribution rested on his efforts to surmount important

analytical and data problems. In particular, Simon decided to collect data on

money calls, whenever they occurred, not the nominal totals announced at the

date of first issue. Thus, he produced time series that were consistent with

the flow-of-funds methodology. Second, although the principal source of British

new issue data, The Investors’ Monthly

Manual, was thoroughly mined, the IMM was subject to reporting

errors and incomplete coverage. By consulting a much wider set of periodical

and other sources, Simon and his assistant, Harvey Segal, were able to correct

and substantially augment Jenks’

s original efforts. Third, he offered a more comprehensive treatment of

conversions, including only the “export conversions,” the conversions that

involved new money called for overseas borrowers.

The situation improved dramatically when Lance E. Davis and Robert A.

Huttenback (hereafter D&H) published Mammon and the Pursuit of Empire: The

Political Economy of British Imperialism, 1860-1912 (New York, 1986).

Starting with many of the same primary sources as Jenks and Simon, D&H produced

a new data set

covering both home and overseas new issues in Great Britain, 1865-1914.

Their tables displayed the total capital called up, as well as the book’s

principal political divisions (home, empire,

foreign), the empire (responsible governments, dependent colonies, India),

and each of these divisions by private vs. government issuers. D&H also

presented breakdowns by industry and type of government issuer, and industry

and continent. The advantage of the D&H data over the Jenks-Simon data was

their parallel construction of home and overseas new issue data.

They were also able to revise and correct the Jenks-Simon first pass at the

primary sources. Finally, the D&H data were grouped so that questions of

political economy and empire might be raised. Notably, D&H

presented this data in five-year periods, 1860-1864, 1865-1869, …. ,


1910-1914. While quinquenial totals and averages are a good means to present

longer term trends, the absence of annual data meant it was not possible

to investigate longer

term trends with other statistical methods or shorter term (e.g., business

cycle) fluctuations, a fundamental characteristic of home and overseas new

issue behavior. Perhaps just as importantly, the D&H volume did not present

data by country.

The significant contribution of the statistical compendia under review here is

to present annual, country-specific money call data for the twenty-five

principal borrowing nations. Furthermore, the data are broken down by industry,

political status, climate and ethnic group, type of issuer, and type of

security. In an introductory essay Stone provides essential information on the

data sources and an excellent summary of the main patterns of money calls for

overseas borrowers. An appendix reprints Simon’s description of the key

analytical decisions that guided the data collection and aggregation procedures

employed by both Simon and Stone.

Note that the Jenks-Simon-Stone primary data sources have weaknesses-weaknesses

which Stone discusses in his highly useful survey of the rate and direction of

money raised for overseas borrowers. First, these data do not estimate the

amount of direct investment through retained earnings. Thus, only part of

overseas long-term financing is covered by the Jenks-Simon-Stone estimate s.

While this was not a major source of overseas funding for railroads and

utilities, it was not a trivial source of funding for foreign investment

businesses engaged in manufacturing, distribution,

finance, and other service sectors. Second, while these

data are an excellent estimate of monies raised from issuing securities, these

data do not give a precise estimate of the net value transferred abroad. Some

of the money raised stayed in Britain with vendors or the London accounts of

the borrowers. To date, in nearly all cases where independent balance of

payment data exist, the older Simon money call times series demonstrate similar

patterns in level and timing with estimates of net capital outflows derived

from the balance of payment data. Only research

with these new comprehensive Stone estimates will settle the extent of this


It is my belief that many economic and financial historians of the late

nineteenth and early twentieth century will find this volume highly useful.

Historians of each

nation now have comprehensive, consistent, and comparative data on the

character and extent of long-term international finance raised in Great

Britain. It is also my strongly felt belief that with so much information on so

many nations, this statistical survey will probably disappear from libraries

very quickly unless reference librarians are alerted and told to place it in

their non-circulating reference collection.

Michael Edelstein is author of Overseas Investment in the Age of High

Imperialism. The

United Kingdom, 1850-1914 (New York, 1982) and “Foreign Investment and

Accumulation, 1860-1914,” in R. C. Floud and D.N. McCloskey

(eds.), The Economic History of Britain since 1700. Vol. 2: 1860-1939,

Second Edition (Cambridge, 1994).