BRITISH INVESTMENTS.

Taranaki Daily News, Volume LIV, Issue 179, 27 January 1912, Page 4

BRITISH INVESTMENTS.

Evidences have lately accumulated to establish the difficulty ~ experienced in raising capital' for British home industries, a difficulty which greatly influences the prosperity iind employment of the working classes. Here is another phase of the subject equally worthy of the close attention of all economists. This refers to the direct influence of foreign investments, not only on trade at home, but particularly on the export of manufactures. That' these* investments in foreign undertakings are increasing is an undoubted fact. This is inevitable in the case of any nation possessing wealth, and we prefer for the present (says Engineering) not to consider the causes which may induce those possessing surplus capital to prefer foreign to home outlets for its employment. The effect is most marked, so far as British industries are concerned, because without adequate capital resource there cannot be expansion in manufactures or full play to initiation in design and workshop methods. As a direct consequence there must be retrogression in efficiency and economy relatively to other nations where those stimulating influences are present. The result is that labor suffers. Few recognise, however, the extent to which British capital is being invested abroad. A computation, based upon reliable data, shows that the total British investments abroad amounted, at the end of last year, to 3722 million sterling, and that the increase over a period of 14 years was at the average rate of 9iy 2 million sterling per annum. It is further concluded that these investments bring an annual income of 178 million sterling. Indeed, although only a part of this income can be brought within the wide net of the Income Tax Commissioners, their returns show that the tax is levied on £88,837,000 of income from investments abroad. At a time when contrast is made between the relative earnings of capital and labor, it is well incidentally to point out that such a large amount as 178 million sterling is received in this country without British labor in any way participating in its creation. The money thus invested is utilised either for the development of natural resources or for the establishment of industries. The former naturally includes agriculture, mineral working and transport, and collateral interests in foreign countries. So far as these are concerned, no direct injury may be experienced by British labor. On the other hand, they tend to augment the supply of food and of raw materials for manufactures, and may conduce to lower prices. But the establishment of

industries abroad must affect labor in all other countries, because so soon as the manufacturing plant is provided, the products of the works established enter into competition with the manufacture of other countries at least in the local market. These, however, are conditions that must be met with, and are sooner or later inevitable, even in new countries. The greater portion of the capital invested comes under the first category, and consequently the investments themselves tend to create a market for surplus productions of older countries. To this extent developments in foreign countries conduce also to increase employment for workers in other countries, and certainly profit those nations which have a large mercantile fleet, as is the case with Britain.