BRITISH OVERSEAS LOAN

Nelson Evening Mail, Volume LXIV, 9 January 1931, Page 5

BRITISH OVERSEAS LOAN

There has recently been discussion in Britain regarding the relation between income from existing foreign investments estimated at £285,000,000 annually, and' new investments of capitalabroad, estimated at £151,000,000 in 1929, and the argument has been advanced that if fresh investments had been equal to the total income, imports would have been reduced by £134,000,000 and domestic employment would _ have been increased to supply the deficiency. This view has been challenged by the “Economist,” which contends that tho amount invested abroad annually is part of the savings of individuals and concerns in Britain, even if part of it comes from foreign interest, and depends on total savings, that is the surplus of national income from all sources over consumption ; and the proportion of this surplus invested at home. “If an additional £134,000,000 is to be added to our foreign investments it must be saved by somebody, i.e., consumption must be reduced, unless we can.continue to invest overseas Ibis additional amount of. our existing sayings,” says the “Economist.” “If by reducing consumption, savings are increased and invested abroad, the country goes without the imports which it formerly consumed —it does not replace them by home-produced goods.” The journal also contradicts a statement that before the war the new investments abroad exceeded foreign interest. “This is not the case,” it adds. “In only three years between 1880 and 1914 did we invest abroad more than our foreign interest. What has happened is that since the war, with reduced savings and a larger need for capital at home, our foreign investments have recently amounted to about half our foreign interest, wliereas during the thirty or forty years before the war, we normally reinvested abroad 62 per cent, of our foreign interest.”