BRITISH CAPITAL ABROAD

Otago Witness, Issue 2894, 25 August 1909, Page 11

BRITISH CAPITAL ABROAD

AN INTERESTING INVESTIGATION. THE COLONIES AND FOREIGN COUNTRIES. (Fboic Oue Own Cobrespondent.) LONDON, June 18. On© of the most interesting papers we have seen lately is that read at the Boyal Statistical Society on Tuesday by one of its Fellows, Mr George Paish., joint editor of the Statist, on the investment of British capital abroad. Referring to an im-estigation by the Commissioners of Inland Revenue, Mr Paish said they estimated the income of British investors from Government bonds as follows -.—lndian, £8,768,237; colonial, £13,933,722 ; ' foreign, £8,358,124 ;— a total of £31,039,083. The income from yiis source had rapidly expanded in Teoent years in consequence mainly of new loans to the dominions and to our ally Japan, and' though our .investments' in .the loans of Continental countries were tending to decline, this tendency might be checked if events caused 'the British market for capital to be again opened freely to Russian borrowings, as that country needed to' raise capital from year to year for the extension of its railway system. In addition to the income derived from these three sources, the commissioners also set out the income received from Indian, colonial, and foreign securities, £16,017,000; coupons, £13,767,000; railways out of the United Kingdom, £18,736,000; a total of £48,521,000, which, with that received from Government loans, amounted to £79,560,116. Now the income which the commissioners ear-marked as coming from abroad was that received from Indian, colonial, and foreign Government sfbeke, municipal securities, and railways, and the great additional income the country derived from its investments in a vast number of ] miscellaneous undertakings of all kinds was excluded. It was impossible for anyone to ascertain the income from the capital our merchants, manufacturers, and ' others had privately placed abroad. : There were several thousand public com- I panics operating abroad that had raised capital publicly in this country, and to amplify the statement of the commissioners he had obtained the reports of as many o f these companies as it was possible for a private person to secure, clabsifi«d them, and ascertained the amounts of them capital and their profits in the aggregate and by groups. He 'had ascertained th« income of 2172 of the miscellaneous companies of which the capital had been supplied by our investors, and he found that its income amounted to uearlv £58,000,000, obtained as follows:— Breweries and distilleries, £732,000 (an insignificant sum having regard to the amount of capital invested); canals and docks, £1,174,000; commercial and industrial companies, £5,000,000; electric lighting and power companies, £321,000; 8^ ' and companies, £6,000,000 (two-third* from the dominions and one-third from foreign countries) ; gas companies, £1,200,000; colliery and iron ore undertakings, £500,000; various mining enterprises, £26,000,000 f nitrate com- ' P *lt S A nn £1 - 600 000; oil companies, *>Md,000 ; rubber companies, £446 000 • tea and coffee plantations, £1,794,000 •' *%%£* ™£° mpanies and telephones, £2,000,000; tramways, £1,809,000; and waterworks, £400,000. Thus if the commissioners were to bring together all the income of companies trading abroad and distributing interest and profits in this S^JSa the total would ~1» about £140,000,000. This great sum did not includo the interest upon money deposited m Indian, colonial, and foreign banks by persons residing in this country, nor the I large amount of income derived from l capital privately placed abroad, though

on the other hand, it was essential to recollect that foreign investors drew a good deal of income from capital placed in British companies of one kind and another, and in balancing the account it >vas essential not to omit this irrportaht offset. . Having thu* *diawn up the .'ncome, Mr Paish proceeded to discuss the amount of capital which the British people had o laced in other countries to yield them so great a result, and he estimated it afc £2,700,000,000, which was obtaining an ailround return of 5.2 per cent. Of that Bum nearly £1,700,000.000 had been expended upcn railway construction. The capital had been supplied in about equal portions to the countries beyond the seas within, i the British Empire and to foreign countries. Only a small part of the great amount of capital with which they had supplied other nations in the last two years was included, and before the close of the present year the total would probably exceed- £3,000,000.000. He further estimated that a total of no less than £290,000,000 has been subscribed in the last two years, and that Canada was the country in which the largest gmount of capital had been, placed abroad in the period from July 1, 1908, to June 15, 1909. -For a period of en-terpiise similar to that through which the country was now passing he referred to the later eighties, when vast sums were invested in th© Australasian colonies, in the United States, in Argentina, in India, in Canada, and in other lands. At that time the c country was not nearly as wealthy, nor were its annual savings available for investment in securities nearly as great. Nevertheless, in the seven years from 1884 to 1890 inclusive,' -Great" Britain placed abroad over £400,000,000 of capital. In the peven years from 1898 to 1904 — a period of extravagance and war expenditure in this country— the investments in other lands were not much over £100.000,000. Sine* 190$ there had been an endeavour to make up for lost time, and in 4£ years Great Britain had placed no less than £400,000,000 of new savings in profitable Indian, colonial, and foreign securities. There were good prospects that in the eeven years from 1905 to 1911 inclusive they would place new capital in other f lands to the extent of at least' £700,000,000, or an average of about £100,000,000 a year. In conclusion, Mr Paish directed attention to what he called, the immense advantages to this country of the investments in other lands. The investments in the last 60 years ot about £2.500,000,000 of British capital had occurred simultaneously with an immense growth of British trade and prosperity, and, in his opinion, this growth of trade and prosperity was .largely the result of the investment of British capital in other countries. By building railways for the world, and especially for the young countries, Great Britain had enabled the world to increase its production of wealth at a rate never previously witnessed, and to produce those things which this country was epec!ally desirous of purchasing — food sv.ifs and raw materials. The large sums of capital which Great Britain was now supplying to other lands would ensure greatly increased incom-^tc her own people of all ranks and classes, would widen the Indian, colonial, and foreign markets for the goods she manufactured, and would provide her dense and constantly growing population with plentiful supplies of foodstuffs and of raw materials. * - i¥ 1 ' -k; Crammond, in the discussion that tollowed, pointed out that a large part of our investments abroad never returned to this country. Was it reinvested in tlv» place from which its income was derived? A mo*t important fact about the investment of capital abroad was the purclnsimpower v-hich it gave to foreign countri«£ and the colonies in our maikets. If we : -lopped thos*- investment*. ' our exports i would be reduced by a fourth. Following is Mr Paish's table :

> iiiu m 3")m 3 ") r wi.MUllig IS All* XT tX hp&'s table :—: — Description. Governmoju loans Municipal stocks Railways Banks " . ... I".' '"■ Breweries, etc. Canals ar.d decks Commercial, etc. - * Electric liglit and power Finance, l^nd, etc Gas .. Mines — Goal and irpn ... * Copper "... Diamond, etc Gold Silver, lead, and zinc Tin. etc Nitrate Oil •• .' Rubber ... .... Tea and coffee .. - Telegraph, etc Tramways Water works Investments Abroad (End 1907). India and the Foreign Colonies Countries. . ... £531,659 000 ... £167.000,000 34,367,000 ... 24.514,000 312,291,000 886,700,000 33,621, COO ... 20,480,000 3,955,000 13.250,000 — • 100,000 ... 5,874,000 27,526;000 ... 50,084,000 6,461,0:0 ... 1,225,000 126 040,000 60 957 000 3,234,030 13,185,000 8.552,000 ... 4,424.000 10,781,0 JO ... 27 744,0C0 14,023,000 . 620 000 144,008,000 . 17 170 000 5.031,000 . 5 432 COO 2,334,000 . 3,234.000 — 10.903. C03 3,704,000 ... IUSC4 0./) 3,104,000 ... 2,3k9 COO 20.765.003 634 00J 7,371,000 ... 20.E6; 000 11,780 000 23.509 000 l."92,000 ... 4.E60.000 Total. £693.559.000 58.901,000 1,192,891,000 54,101,000 17,205,000 5,974,000 77.610, 0C0 7,676,000 187,027,000 16,419,000 12.956;000 38,525,000 14,646.000 161.178.0C0 10,513.000 5,568.000 10,903,000 1* 26°. 000 5.433,0C0 21,399 000 34,235.000 35.209.C00 6,352 OjO Total . . .-.- £1.312,152.000 .'.' £1.381 .SPfinnn -PO AQ2 770 i~r-.i>