---
title: 'Migration of British Capital to 1875'
url: 'https://samisdat.in/books/migration-of-british-capital-to-1875-1926/read'
markdown: 'https://samisdat.in/books/migration-of-british-capital-to-1875-1926/read.md'
lang: eng
date: '1926-06-11'
description: 'CAZOI POLITICAL SCIENCE TEXTS N ENQUIRY CONCERNING POLITICAL JUSTICE by William Godwin\nedited by Raymond A. Preston FOREIGN TRADE AND WORLD POLITICS by Herbert F. Fraser GOVERNMENT OWNED CORPORATIONS by Harold A. Van Dorn THE PROBLEM OF GOVERNMENT by Chester C. Maxey CHINESE POLITICAL PHILOSOPHY\n…'
---

# CAZOI POLITICAL SCIENCE TEXTS

N ENQUIRY CONCERNING POLITICAL JUSTICE
by William Godwin\\nedited by Raymond A. Preston

FOREIGN TRADE AND WORLD POLITICS
by Herbert F. Fraser

GOVERNMENT OWNED CORPORATIONS
by Harold A. Van Dorn
THE PROBLEM OF GOVERNMENT
by Chester C. Maxey

CHINESE POLITICAL PHILOSOPHY\\nedited by William S. A. Pott
PARTY CAMPAIGN FUNDS
by James K. Pollock, Jr.
THE AMERICAN SENATE

![](https://samisdat.in/user/pages/03.books/1926%20-%20Migration%20of%20British%20Capital%20to%201875/read/_page_1_Figure_0.jpeg?g-16018011)

LELAND HAMILTON JENKS
Sometime Amberst Memorial Fellow

![](https://samisdat.in/user/pages/03.books/1926%20-%20Migration%20of%20British%20Capital%20to%201875/read/_page_1_Picture_2.jpeg?g-16018011)

### TO

### PREFACE

LELAND HAMILTON JENKS.

New York City June 1, 1926.

| OF THE EIGHTEENTH CENTURY |  |
|---|---|
| Sctting forth the Theme In Lieu of Definition Before the Pound was Sovereign The Money Market at London The Stimulus of War England Faces Outward | 10 10 16 22 |
| II - FOREIGN INVESTMENT AFTER WAR |  |
| The Post-War Depression Opportunity Financing the French Indemnity The Financier of Legitimacy Loan Managers and Revolution How the Philhellenes Helped the Greeks The Machine in Quest of Gold The Forcign Loan Mania Ends What the Money Accomplished | 25 29 31 40 44 50 52 57 58 |
| III — A CYCLE OF ANGLO-AMERICAN FINANCE |  |
| We Balance Merchandise with Securities Country Investors Desire Reproductive Investments British Capital in American Expansion How the Bonds were Marketed A Matter of Elation Crisis in Anglo-American Economy Financing a Cotton Boom with British Money | 65 70 73 77 81 85 88 |

| IV - MIGRATION OF CAPITAL AT A |  |
|---|---|
| STAND | - |
| Those Perfidious United States The Missing Dividends of Englishard States | 99 108 |
| Investors and the Foreign Cfice | 115 |
| V-THE RAILWAY REVOLUTION |  |
| Revival of Home Investmen's | 126 |
| The Transformed Money Market | 130 |
| The Regionings of Concession-Hunting | 134 |
| Analo-Belaian Railway Enterprise | 150 |
| The Railway Cycle Completes Itself | 152 |
| VI — COSMOPOLITAN ENTERPRISE |  |
| The Discoveries of Gold | 158 |
| "L'Empire c'est la Paix" | 163 |
| Concessions Everywhere Restrict Capital and Italian Livitar | 107 |
| The Export of Capital and Capital Cocks | 170 |
| British Capital in Continental Industry | 178 |
| Public Utilities and Mines | 185 |
| "Bills on London" | 188 |
| VII-THE STAKES OF EMPIRE |  |
| A Period of Painless Income | 193 |
| The Grand Trunk of Canada and Other Contracts | 198 |
| The Crosses Engages Princeto Entantoire | 206 |
| The Costs of Government by the Ouern | 214 |
| The "Economic Drain" | 225 |
| An Income of Imponderables | 230 |
| VIII — FROM BILL-BROKER TO FINANCE | ; |
| Stock-and - Road Capitalian |  |
| The Crédit-Mobilier Idea | 233 |
| The Banking Tradition at London | 240 |
| The Finance Companies | 248 |
|  | 440 |

| CONTENTS | хi |
|---|---|
| James McHenry's Railway The Failure of Overend, Gurney & Co. | 255 259 |
| IX-THE GOVERNMENT LOAN BUSINESS |  |
| Progress by Borrowing The Cosmopolitan Family Banking Firm Negotiating Loans in London Marketing the Loan The International Loan Market In Quantitative Terms Foreign Loans and Public Policy Organizing the Bondholders The Harvest of Insolvency | 263 267 272 276 278 280 283 288 291 |
| X—THE BANKRUPTCY OF THE NEAR EAST The Reformation of Turkey The High Road to India The Rise of the Ottoman Delt The Rise of the Egyptian Delt Disraeli Buys the Canal Shares | 294 300 305 311 320 |
| XI—AT THE END OF THE SURPLUS The Stock-and-Bond Aristocracy, The Revolution in Food Sufpiy In Lieu of Conclusion | 326 328 333 |
| BIBLIOGRAPHICAL NOTES | 339 |
| APPENDICES |  |
| A—List of the Foreign R.ilway and other Contracts under- taken by Thomas Brossey, 1034–70 B—Table Showing Values of Principal Items of Capital Goods, Produce of the U.K., exported, 18 6–76 c—Table of Government Issues in London, 1860 to 1866, | 419 420 |
| Inclusive D—Summary of Foreign Security Issues made in London, 1860-76 E—Securities of Private Companies Operating Abroad, Issued\\nin London, 1860-76 | 421 425 425 |
| INDEX | 427 |

"I reap where I sowed not, and gather where I did not scatter."

—Matthew, xxv, 26.

In the present volume we have sought to follow British capital for the fifty years during which it was transmitting the direct effects of the Industrial Revolution to the Con-

Mechanisms of finance, habitudes of business relationship, the spirit of enterprise and of venture upon alien soil—these all took form in the movement of British capital abroad. Once formed they became the carriers of activities which, achieving continuity, made the British Isles a part of an everwidening economic whole. Out of those activities there arose structures vital to the people of the British Isles, but with only casual relation to the political conglomeration of which those islands formed a part.

Thus it is not possible to view foreign investment merely as a factor in the national balance-sheet. It is not enough to speak of it as the use of purchasing power to procure an income from abroad.2 More too is involved than the distribution of capital goods and the classified lists of the Stock Exchange. There is implied the creation of property rights which may involve governments in action beyond their boundaries. And there are suggested sanctions and forms of social control which beneath the consciousness of law trans-

form economic processes and the very motivation of economic life. It is by investment, among other channels, that industrialism itself has been transmitted to distant parts of the world. Age-old systems of culture and reflection may at long last owe survival or decay to the manner in which the invested capital is applied. A civilization already old when England was a forest, may be altered or destroyed by the action of foreign capital at Shanghai. More distinctly than investments within the orbit of an accepted economic order, the migration of capital beyond its pale implies valuations not readily charted in a statistical scheme. Nor are such implications exhausted in a far land. Specialization and dependence are mutual qualities. The movements of capital which doom one people to the production of frozen beef and hard wheat if they will live, sentence another as certainly to export calico and to live in Bethnal Green. In ignorance or design the pecuniary reckonings which direct the migration of capital chart a course for modern history.

#### BEFORE THE POUND WAS SOVEREIGN

To the age of Walpole and Chatham the picture of agriculturally dependent Britain employing a considerable portion of its wealth abroad, to ensure raw materials and subsistence and markets for its population and industries, would have seemed highly incongruous. Holland occupied in the seventeenth and eighteenth centuries preeminently this position. Unable to live on the produce of the land, the Dutch citizens had taken to sea. The profits of an immense carrying trade and the position of Amsterdam as the leading exchange in Europe brought surpluses to Holland which her merchants did not hesitate to lend to political and commercial rivals. Moreover, the religious liberty extended by the Dutch and the comparative freedom of the Amsterdam bourse drew heretic and Jewish capitalists from less tolerant communities. With them came the business of purveyance to the needs of impecunious sovereigns—a hazardous trade which Florence and Genoa, Augsburg and Antwerp had conducted in earlier gen-

erations. At Amsterdam it was reduced to order. By 1672 the Dutch were familiar with negotiable public securities binding not only upon a sovereign but upon his state.5 They had a market in which such instruments were actively bought and sold, with professional speculators ever ready to augment the supply of counters with which they played. England and Austria, France and the Continental Congress in turn sought Amsterdam with their public obligations. About 1760 the Dutch held in their own names some twenty million pounds in consols, besides shares in the stock of the Bank of England and the East India Company.6 This was approximately one-seventh of the National Debt. Contemporaries believed that much larger sums were normally advanced to British merchants and gentry upon the mortgage of consols and real property.7 Indeed in 1773 a special act of Parliament validated the claims of alien mortgagees in the West Indies, to enable sugar planters to borrow more extensively in Holland.8 The European world looked to Amsterdam as its financial metropolis.

land was affected largely by reason of these conditions it was by no means because her position was peculiar as compared with that of France. It was rather that having more money in their hands than they knew how to spend, the nabobs and the contractors and the opulescent classes generally placed it for safety and advantage with banks, whence it could be drawn to extend the operations of farmers and grain dealers, clothing factors and miners, merchants and shipbuilders,—of all whose undertakings promised to pay for its use. The eighteenth century was not preeminently a century of thrift and economy, if attention be directed to the principal cities. The age of rococo and baroque, of flamboyant fashion, of elaborate speech, could not be accused of miserliness.13 Nor will the candid historian insist that it was industrious. Yet under the fermenting influence of the newly discovered note and deposit system the capital resources of Great Britain grew by leaps and bounds during the closing decades of the century.

### THE MONEY MARKET AT LONDON

There were merchants too with branch houses in the "provinces,"—in commercial centers outside of London from which many of them had their rise, and with regular cor-

Mediating the transfers of public stocks and speculating heavily in their fluctuations in value, there were the brokers and jobbers of Jonathan's Coffee House—after 1773, of the Stock Exchange.21 They were not numerous, nor were they highly regarded socially before the Napoleonic wars brought them the business of a continent and shrined their labors in a classic temple. As the concern of London merchants was with foreign markets, theirs was with government credit. Their fortunes rose and fell with the political news rather than with the woolen market. From any important connection with the industrial life of Great Britain the stock market was entirely divorced. Canals and turnpikes and docks were promoted in the eighteenth century by joint-stock subscription, in spite of the fact that the companies could not limit the liability of their shareholders. But they were not floated in a public market before the "canal mania" of the early nineties. There was no market for the shares until the enterprises were well established and proprietors sought loans upon their property. In the first decade of the nineteenth century these stocks with those of some coal mining com-

I 5

### THE STIMULUS OF WAR

The loosely connected dealers in pecuniary wealth at London were transformed into a financial society, just as technique was altered, agriculture commercialized, and British economy made industrial, under the stimulus of war. Napoleon's continental system no less than the progress of French arms disrupted the trade in which the prosperity of old commercial centers consisted.27 English and American ships inherited that colonial trade for which two centuries of statesmen had schemed. England alone could supply the arms and military stores upon which continuance of the war depended. And if the purchasing power of the Continent was decimated, its demand was exclusively directed to the London market. England, untouched by invasion or blockade, undrained until 1808 even of human resources, became a closely integrated economic organism. Industry and agriculture were quickened by the demands which their government made upon them; their production was multiplied by increased application of capital and their reorganization under the enclosure movement and the factory system. The trade of the world revolved about London, and to its center

Yet every transaction involved a separate arrangement The activity of London was individual, not corporate. Sixty odd merchants and bankers competed in ever shifting combinations to derive their maximum advantage from the public needs. It was eloquent of the spirit of the time that they received a crown of civic virtue for their efforts. In the rapidly growing caste of "made men," bankers and brokers found themselves aristocrats. Politicians sought their favors and bestrewed them with honors. Great Whigs were complaining in 1798 of the rise of a "bourgeois upstart aristocracy." 2 In 1801 the active head of the leading firm of private bankers, William Smith, was elevated to the peerage as Lord Carrington. The Barings who had migrated from Germany two generations before blossomed into the baronetage with an Anglo-Saxon pedigree. And King George himself in a lucid moment with Charlotte his Queen, honored the Brothers Goldsmid with a call. Rentier and squire were assimilated to their financial intermediaries in a new social and political alignment. The City gave its complexion to the New Toryism. And policy which had guided the price of the funds now sought its orders from them.

# CHAPTER II

### FOREIGN INVESTMENT AFTER WAR

#### THE POST-WAR DEPRESSION

But the lapse of government contracts was not the only reason for the depression which followed the war. There was also a currency situation. Since 1798 England had been virtually upon a paper-money basis. The Bank of England had not been redeeming its notes in gold; and the figure of 211 in ratio to the price level of 1790 taken as 100, is a fair index of the degree to which the monetary circulation of the country had been inflated. A venturesome spirit may be a more essential factor in progressive business periods than the mere augmentation of media of exchange. But when men believe firmly that prices rise and fall in ratio with the quantity of money, such a belief is likely to control their adventure. Prices respond to anticipation as well as to demand. And since the war was at an end, it was anticipated that inflation would stop. The early resumption of specie payments by the Bank was promised by the government and insistently demanded by important elements of public opinion. Fundholders, who were nearly synonymous with the governing classes, could not be expected to oppose a step which it

was expected would add to the purchasing power of their incomes. Cobbett, "tribune of the people," was of one voice with the fundholders, though he joined with it a demand that all debts public and private be reduced by fifty per cent. The stockjobbers, headed by the Ricardos, who had been playing the market for a fall against firms more successful in securing government contracts, had long been for resumption. The Bullion Report of 1810, prepared, according to Siberling, under their auspices, furnished apparently scientific proof that the money market could be stabilized upon a gold basis; and economists broadcasted the demonstration. Resumption seemed inevitable, and with it contraction. And although the date was not set and specie payments were not actually resumed until 1821, deflation proceeded by anticipation and with cumulative velocity as it caught the country bankers who had issued the major part of the depreciated currency. Thus the fall of general commodity prices from an index number of 211 in the first quarter of 1814 to 130 in the third quarter of 1816 was an irrevocable one.

#### OPPORTUNITY

With these general economic conditions which underlay the activities of British investors from 1815 to 1850 there must be recalled the geographical distribution of economic opportunity. The outstanding circumstance was that the world was not equally commercialized. This was not in the early part of the nineteenth century so much a matter of different resources, as it was a difference in the degree to which capitalism, not to say industrial capitalism, was the prevailing mode of economic activity. "The rational exploitation of economically active men for the purpose of making as large a profit as possible" (paraphrasing Sombart), prevailed only sporadically outside the British Isles. Moreover there were wide differences in the degree of political stability, indeed of the entire orientation of political society with respect to business, with corresponding differences in status and freedom of investment. These were elements in an economic differentiation which were reflected tho not measured by interest premiums upon foreign investment.

The mass of Europe was in 1815 still prevailingly agricultural. Serfdom, feudal relations, self-sufficing estates, commercial and industrial mores of the gild type subsisted over wide areas—at least over those not conquered by Napoleon. In such regions there was no prospect of a sudden market, no leverage to economic endeavor other than the slowly rising consumption standards of the all-powerful baronage and the military aspirations of the more westernized rulers. Where Napoleon's arms had carried some of the social and legal consequences of the French Revolution, commerce and industry had been burdened with the costs of conquest, credit abused by forced loans. New life had been given to the authoritarian state, protector but even more regulator of business life in the interests of its own power. Mining codes regularized the conditions under which mineral deposits could be exploited, but compelled all who would mine, even upon their own land, to obtain special license and conform to the conditions of the government. Impulse to economic development in France and Spain and Holland, Italy and the Germanies could be imported only thru the governments of

There were finally the European settlements of the New World, experimenting with a variety of economic systems, from towns of seagoing freemen to slave-manned haciendas.

France was not lacking in resources. She emerged from

There seemed but one way to finance the reparation. That was for France to float a large foreign loan. It was reasoned that the mere flotation of such a loan would enhance French credit, cause rentes to rise, and ensure the success of the venture to those who undertook it. The evidence of French credit abroad would rouse capitalists at home from their lethargy and draw out the hoards of the bourgeoisie to share in the benefits of a rising market. Thus France could be brought to make the reparation which

she was abundantly qualified to do only by showing individual Frenchmen how they might gain important advantages over other Frenchmen in the process.

But France was not the only European government in need

than British capitalists had contemplated at first. They had been invited to share in the Baring operations definitely as a speculation. As rentes advanced they sold out their purchases to the French. But the crisis of 1818 left them with stocks of a market value of over ten million pounds still in their hands. From 1819 this amount steadily increased.29 "Few gentlemen return from Paris," declared the merchant-banker Haldimand before a parliamentary committee, "without having made a small investment in French stock." Rentes paid better interest than consols, pointed out Nathan Rothschild, "besides its being a growing passion at the present time." 20 The alarm created by disorders in the industrial districts in the fall of 1819 rendered this passion more general. There never was a time, declared Baring in the House of Commons, when so much money was withdrawn from enterprise at home to invest in foreign funds. "There was a general sauve qui peut among monied men." 31

Colombia led the way in the settlement of her accounts. In June, 1820 her vice-president, Zea, appeared in London with powers as minister plenipotentiary. Castlereagh would have nothing to do with him officially. But the creditors to the number of two hundred were glad to make his acquaintance. He assured them that the dignity of his government would not permit it to look closely into the origin and nature of claims against it. With little question he consolidated all claims presented at their face value into debentures bearing interest at ten per cent. This interest was not paid, but in March, 1822 a formal loan of two million pounds was arranged in London thru Herring, Powles & Graham, a firm of merchants trading to the Caribbean. The debentures with interest due were accepted in part payment and when commissions and interest for two years in advance had been deducted from the proceeds of the loan, there were about

Other American republics were roused to emulation, hopeful that by engaging the Briton's money his political sympathies would be secured. In rapid succession Chile, Peru, Buenos Ayres, Mexico, Guatemala sought loans in London to supply their miniature armies with uniforms and ammunition and to secure a ship or so as an appropriate background for their respective admirals. Nor would a single loan suffice. The more a country borrowed the better its credit, it seemed. Colombia and Mexico borrowed twice, Peru three times, and the now independent monarchy of Brazil as many. The comedy turned burlesque when a loan was eagerly taken up for the "Kingdom of Poyais," a fictitious political entity on the Mosquito coast of which a Scotch officer had assumed the title of "Cazique." Within the three years 1823, 1824 and 1825, £\\$\\tilde{x}\\$,500,000 were actually paid in to contractors upon the securities of the new Latin American states.

pamphleteers were engaged to prepare elaborate studies of their resources, topography and customs. When a selected list of subscribers had been provided with portions of the loan, a day was set for its issue, a few shares were allotted to new applicants, and an announcement was made that the entire loan had been disposed of. Disappointed applicants found plenty of stock for sale upon the Exchange in a rapidly rising market, and their purchases at the enhanced price brought the chief profits to the contractor and his friends.

### HOW THE PHILHELLENES HELPED THE GREEKS

### THE MACHINE IN QUEST OF GOLD

The new countries displayed no reluctance to part with their treasures. Their agents in London profferred concessions with the loan contracts. Roving adventurers in the Andes were showered with leases from local authorities. Companies multiplied to exploit the grants and rival promoters quarrelled over the allotment of shares.

### THE FOREIGN LOAN MANIA ENDS

came to a sudden realization that the only interest they had received had come out of the principal of successive loans, that they were likely to obtain more only by advancing it. And the South American republics suddenly discovered that they had borrowed beyond their means, that they could expect no more assistance in the immediate future, and they faced their first lesson in public finance,—that while financiers can divest themselves of their obligations by bankruptcy, governments have no such refuge.

# WHAT THE MONEY ACCOMPLISHED

It would be agreeable to record that the early ventures abroad of the British investor proved as profitable to himself as to the plausible contractors; that they gave a profound stimulus to British trade and industry, improving employment and the standards of living; and that they promoted prosperity abroad and political well-being without compensating disadvantages for Great Britain. But such a record would bear little relation to the facts. Not only the South American mines proved a graveyard for British fortunes. Within two years of the panic of 1825, Spain, Portugal, Greece, and every country in South America to which money had been lent—except Brazil—were in default upon their interest payments. For thirty years their financial affairs were in hopeless confusion. An even longer period elapsed before some of these states approached solvency. Their stocks passed from the hands of the original purchasers at nominal prices, a shilling or two upon the pound, into the hands of professional speculators and were for half a century the football of the stock exchanges.

whether anticipations less dazzling would have aroused any comparable financial effort. Credit capital is not a fund, supplied by streams of calculable volume, exerting continuous pressure of the hydraulic type in search of the weakest outlet. It does not accumulate in proportion to disuse; it does not exist for all purposes alike. In some degree the hopes entertained with respect to South America created the resources with which it was sought to realize them. And it is by no means certain that more credit capital could have been found in 1825 for home development than was being extended to manufacturers by their banks, to a handful of sound transportation projects by retired manufacturers. A housing policy for industrial areas supported by public and parochial loans would have meant much to the well-being of the British population, and in the long run to the prosperity of her economy. But neither government nor bankers then conceived of their function in such positive terms. The theory of "the greatest good to the greatest number" did not prevail with respect to the employment of credit.

The effects upon South America, on the other hand, seem to have been vicious. The armaments secured for defense against a decadent mother country were turned to weapons of aggression against neighboring republics and weapons of partisan aggrandizement within the several states. The revolt from Spain had been in part a revolt of the mestizo against an alien culture. The activities of British merchants in support of politicians of unblemished descent seemed only to fasten in more plausible form the European ascendancy upon the native. Moreover the ample revenue which they could at any time secure in London tended to make the first revolutionary governments indifferent to the opinion of their people at the very time when it was of prime importance that they reflect it. It encouraged that unblushing confusion of the business of government with the promotion of private fortune which is a notable characteristic of undeveloped political societies. The violence, the corruption, the instability, the financial recklessness which characterized most of the South American republics during a large part of the century are in no small way attributable to the early laxity of the London money market. 61

Thus the migration of capital from Great Britain began as a function of the activity of a handful of merchant-bankers interested primarily in keeping alive the foreign connections

# CHAPTER III

# A CYCLE OF ANGLO-AMERICAN FINANCE

"What aristocratic privilege was ever equal to that of controlling the currency of seventeen millions of people, and making money plenty or scarce at pleasure?"

— \[llippis Sepate and House Reports (1842)\]

A more progressive movement set in after the war. In 1817 and 1818 temporary loans of bullion were made to the Second Bank of the United States. They became the basis of a permanent investment in the stock of that institution which in 1820 amounted to nearly three million dollars. Another million was added to this amount by 1828, and the total was doubled during the next three years. Out of 300,000 shares in private hands in July, 1831, 79,159 were held abroad by 466 shareholders, largely men who had invested more than ten thousand pounds apiece. Meanwhile part of the American public debt had returned abroad. Fourteen million dollars of it were owned by British investors in 1828, five millions by other European creditors. Beyond possibility of statistical appraisal were also lands in Maine and Pennsylvania and Virginia. There were properties such as Alexander Baring acquired during that sojourn in America that won him a wife and a mobile fortune. It had not been uncommon for wealthy aristocrats to ask such firms as Barings to invest some money for them in those uncultivated lands which the tide of westward migration seemed likely to appreciate. And the property of the Marquis of Caermarthen in the Man-

hattan Banking Company was doubtless not the only venture into business which had been made before 1830.8

In spite of political differences and tariff walls, the United States after their Independence were still the principal customers of Great Britain and looked to that country for their chief market. Thirty-six per cent of the domestic exports of the United States went to the British Isles between 1820 and 1830. Eighty per cent of the cotton supplies of Lancashire came from the South. Sixteen per cent of the domestic produce and manufactures of the United Kingdom between 1820 and 1830 were shipped to American ports; and this merchandise formed forty-three per cent in value of the total imports into the United States. For the first decade after the War of 1812 British manufacturers endeavored to drive this export trade upon their own account. They shipped directly to agents or customers on the Atlantic seaboard, dumped unassorted goods in New York to be sold at auction, paying import duties in advance and taking long bills for their sales, which they discounted with provincial bankers in England. For the sales which they discounted with provincial bankers in England.

A variety of circumstances broke down this system of trad-

62

ing which was, nevertheless, essentially that pursued recently in the Manchester trade with backward countries. Goods which were most in demand tended to be shipped to excess. Staple lines were wanting. The turnover of capital was slow. The general bankruptcy of American merchants in 1825 completed the wreck of the consignment system. It became the policy of English manufacturers to reduce their stocks, narrow the margin of trading, and shorten the period between production and sale. American bills disappeared from the market. Not only exchange but shipments came to be concentrated on either side of the Atlantic in the hands of a few banking and mercantile houses, having implicit confidence in one another, mainly interested in the cotton trade. On the American side the Bank of the United States became the dominant factor in the exchanges about 1826 thru its branch banking facilities. In London and Liverpool a group of eight houses, of which Baring Brothers and Brown Brothers were the most active, handled practically all of the exchange and credit relations with America.

### COUNTRY INVESTORS DESIRE REPRODUCTIVE INVESTMENTS

### BRITISH CAPITAL IN AMERICAN EXPANSION

The jealousy and envy of rival seaports knew no bounds. Before the Erie Canal was open for traffic Philadelphia and Baltimore were clamoring for state enterprise and foreign capital to construct similar routes to the interior. Washington and Richmond were not far behind. Unable to choose between the claims of the Chesapeake & Ohio Canal and the Baltimore & Ohio Railroad, Maryland blessed them both, and gave a rich dowry of bonds and guarantees to the private companies which undertook to build them. The enthusiasm for trans-Allegheny trade routes spread rapidly to other lines of communication. In the Middle West state canal systems on a comprehensive scale, supported by federal land grants, were planned in Ohio, Indiana, Illinois, Michigan and Kentucky. Along the coast private enterprise perfected a financial technique which was able to take advantage of state and municipal generosity without injury to the surplus profits. A series of railways extending from New York Harbor (Amboy) to the Delaware river at Camden and from Philadelphia to Baltimore, Wilmington and Richmond, thus came quickly into existence in the hands of private corporations, guaranteed against loss by public bounty. Two canal companies which

With these industrial developments British capital had little directly to do. It is perhaps not surprising that merchant-bankers whose principal business was to export British manufactures to the United States should not display zeal to develop in that country industries which would be competitive. Nor is it surprising that the stocks of no American manufacturing concern were publicly on sale in London, for scarcely any British industries were financed in that manner, or indeed bore the aspect of joint-stock enterprise at all. Nevertheless the British capital which promoted transportation and westward expansion indirectly financed industry as well. American merchants and banks could draw credits for objects unspecified, and these were available in the United States for the expansion of industry. It is certainly to this relation that a contemporary newspaper refers in declaring that "millions of foreign capital are invested in manufactures in this country." 30 Public securities apart, a few railway undertakings in the East, private banks in New York and New Orleans, and a few mining enterprises were the objects of specific English investment. 31

#### HOW THE BONDS WERE MARKETED

But it must be understood that for the average investor who thus financed American expansion, the details of these

termed "productive purposes." They bade fair to pay for themselves. Most of them were for the building of canals, a form of enterprise that had been immensely profitable in England. But the purposes were not all being pursued so wisely nor was the accomplishment likely to be so remunerative as the Erie Canal. The canal and railway enterprises of Pennsylvania and Maryland presented special engineering difficulties; and precisely those states were most swayed by the pressure of local interests in the survey and organization of their respective systems. The consequence was that construction proceeded irregularly, and the building of branches and transshipment centers was preferred to the early completion of a lucrative main line. Few states followed the prudent example of New York in assigning definite funds to meet interest charges during the construction period; and as dividend payments became due it was found necessary to borrow new money to meet the interest upon the old. The investments, in a word, became less productive and more usurious the longer the movement continued.

### A MATTER OF ELATION

Between the third quarter of 1832 and the second quarter of 1836 the prices of a selected group of commodities rose in the ratio of 93 to 116 according to Silberling's index. A thirty per cent increase in the capital invested in textile machinery alone took place during the three years 1835, 1836 and 1837.40 A thousand new mills had been opened and sixty-eight thousand persons given employment. The success of the Liverpool & Manchester Railway was flooding the market with railway projects. In 1836 Parliament authorized the raising of £22,874,998 for railway purposes; in the following year £13,521,799. The fifteen millions authorized between 1830 and 1835 were permeating the industrial districts and binding London to Manchester and Birmingham by rail.41 In the shipping industry, company after company was formed to operate steamship lines across the Atlantic and around the Cape. Stimulated by demand from these directions the coal and iron industries began to assume large proportions. Seventy-two joint-stock banks, a type of credit organization first made possible by Parliament in 1826, involving an unlimited number of shareholders in unlimited liability, re-

### CRISIS IN ANGLO-AMERICAN ECONOMY

The crisis of 1837 in the United States and England was

In school histories Nicholas Biddle peers out of dark corners as a venomous ogre from whose wiles the American people were providentially preserved by the fortitude of

To further his operations Biddle found it advisable to have a London financial agent more completely under his control

Trust Company handled some of the more questionable stocks. Massachusetts dealt directly with Baring Brothers. The old East India house of which J. Horsley Palmer, a personage in the Bank of England parlors, was the head, floated sterling loans for South Carolina, Florida and other states, thus financing American imports of Chinese tea and silk. American agents began to appear directly in London to solicit funds. George Peabody founded in 1837 the banking house now known as Morgan, Grenfell & Eo., and organized a market for Maryland securities. Generals, congressmen and canal commissioners roved from London to Paris, and from Paris to Amsterdam and Hamburg, leaving neat packages of engraved paper in their wake, and accepting handsome emoluments from grateful clients on their return. "This is the time for Virginia to make a loan for the purposes of internal improvements," wrote the American minister near the court of St. James's. "I can make any loan for the State, to the amount of five or ten millions, that she may want, irredeemable or not, for fifty years. Rely on it, she will never have so good a chance. It will not be necessary to send out an agent. Why not let me negotiate for them, before I return?" 71

year and the one succeeding of ten million pounds for foreign grain. The came time the new textile industries of Belgium, Prussia and Saxony reached a crisis in their development which curtailed their demand for English yarn. The consequent strain upon the resources of the Bank of England was only partly relieved by large gold borrowings from the Bank of France. The stoppage of the Bank of Belgium in December, 1838, was an early symptom of acute financial malaise throughout western Europe. The political news from all parts of the world was of the most unsettling nature. In the Near East a major European crisis was brewing over the pretensions of Mehemet Ali. In Asia the Afghan border seethed with intrigue and unrest. In China the dispute over the opium traffic was sundering a highly important link in the foreign trade system both of Great Britain and of the United States. There was a French blockade at Buenos Ayres, destroying trade to protect the merchants. At home the Chartist movement was alarming to fundholders, while the periodic flare-ups over the Maine boundary were causing private investors to turn a deaf ear to the blandishments of American securities.

The Wilder speculation began auspiciously. Cotton recovered in price for a few weeks, but then sank rapidly as the spinners held together and the rising discount rate of the Bank of England discouraged fresh enterprise. Jaudon was called upon to meet the Humphries & Biddle bills as they came due, and he circulated post-notes industriously. But the limit had been reached. England would buy neither cotton nor securities. With a million pounds of notes maturing in the autumn and its safe full of unsaleable stocks and bonds, Jaudon's agency found itself in an impossible position. It was enabled to go on for a month by drafts upon Hottinguers. But at the beginning of September Jaudon was compelled to announce defeat and the Biddle system collapsed. The interest of the European shareholders in the Bank of the United States brought them to the defense of its maturing notes. No less than £800,000 were raised among these friends upon a two-year loan for the Bank. Three months later the balance of the Bank's obligations abroad were covered by loans from the Paris Rothschilds and Hope & Co., secured by an apparently ample margin of bonds of Mississippi, Illinois, Indiana and Pennsylvania. But the cotton at Liverpool had to be released for what it would bring.

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In the summer of 1842, agents of the United States Treasury appeared in London soliciting a loan to cover the shortage which the decline of the import trade was causing in the customs receipts. They met a cold reception. "The people of the United States may be fully persuaded," thundered the Times, "that there is a certain class of securities to which no abundance of money, however great, can give value; and that in this class their own securities stand preeminent." Bankers echoed the refrain. "You may tell your government," said the Paris Rothschild to Duff Green, "that you have seen the man who is at the head of the finances of Europe, and that he has told you that they cannot borrow a dollar, not a dollar." The difficulty, as Overend, Gurney & Co. explained to the commissioners, was that American credit stood too low. Nevertheless that credit could be enhanced. If the federal government assumed the debts of the defaulting states, or of all of the states, bankers would be appeased. 18

The Congress was deaf to the reiterated suggestion. A report favorable to assumption was drawn up by a House committee and presented on the last day of Tyler's first congress too late to be acted upon. In the interminable

squabbles of the sessions which succeeded it, the proposal became lost to view entirely.19 And meanwhile reviving trade in the United States had made it possible for the Treasury to borrow money in New York.20 The London boycott crumbled. New methods for causing dividends to flourish must be employed.

### THE MISSING DIVIDENDS OF BACKWARD STATES

It is to be considered that it was not innate depravity which underlay the failure of the American states to pay their debts. They could not do so until their citizens had written down their hopes of sudden gain, and until the movements of trade gave value to the goods they were able to supply. It had been easy for England to export merchandise and defer payments by means of a credit transaction. What was difficult was to get the investment of capital to produce means of its repayment. What was difficult was to stir backward regions by its application to produce a surplus of goods for export. That the American South was doing. It was the result more of a highly concentrated market for its goods than of British investments during the twenties and thirties. The nascent economic nationalism of the United States collapsed with the Bank; its revival in more complicated form came slowly. It awaited an open British grain market, the completion of transportation systems into the Middle West, and the movements of population from Ireland and the Germanies.

It is amazing that foreign bondholders got anything out of Mexico at all. Under terror at a possible Spanish invasion the new republic floated two usurious loans in London in 1824 and 1825 for a total nominal sum of £6,400,000. A little more than eleven million dollars was actually placed at the disposal of the Mexican treasury.29 The original

Indeed no part of the conversion scheme brought dividends. There was a French blockade of Vera Cruz in 1838 and a campaign which Mexicans refer to as the "pastry war." This cut off trade, and revenues dependent on it. There were fresh revolutions. The first dividends came in 1842 with the triumph of Santa Anna. Mexican stock rose rapidly in value, but within a year dividends began to be dilatory. Controversy developed between bondholders' committees and the Mexican agents, which swelled into open scandal in 1844 when Lizardis connived at the seizure of the assigned portion of the customs from the hands of the vice-consuls. About the same time the Stock Exchange discovered that it was dealing in securities which bore higher numbers than were supposed to be in existence; and it came out that on the rising market Lizardi & Co. had secretly floated more than a million and a half pounds of wholly new Mexican bonds, the proceeds of which had gone in large part to pay their 7½% commission upon the face value of the entire converted debt. Thus the nominal total of Mexico's debt had been raised to £11,000,000, upon an original advance of as many dollars.

Mexico and her finances did not constitute a horrible example. Between 1826 and 1850 the dividends paid upon the securities of Spanish-speaking countries were negligible and the prospect of ultimate redemption grew more hopeless with each of the incessant conversion schemes which gave constant employment to many London financiers. For whatever the economic potentialities of the population, their energies were exhausted in political turmoil. Factions and particularism were rampant in South America. Colombia and Guatemala had broken up into half a dozen quarrelling republics, and the division of their common liabilities to foreign creditors was an opportunity for dissension which they did not neglect. Only such military dictators as Rosas in Buenos Ayres and Francia in Paraguay maintained a semblance of political authority, and their régimes subsisted in part by abetting suspicion of European relations. Fear of Spain as an engine of government was succeeded by enmity of neighboring republics; and intermittent war went on between adjacent states when revolution did not occupy them internally. In the mother kingdoms of Spain and Portugal

# INVESTORS AND THE FOREIGN OFFICE

To Castlereagh, who was Foreign Secretary from 1812 to 1822 when the foreign loan business began, the matter was highly embarrassing. He was engaged in extricating his government from a situation in which it had been financing half of the governments of Europe by means of subsidies and guaranteed loans which were only subsidies in disguise. And when loan-agents sought to entice him into declarations which would encourage the market for their offerings, they were sharply rebuffed. Castlereagh feared that in some way his government might be involved in financial responsibility, and that at best its diplomacy might be involved in matters of irrelevant concern. For the profitable investment of money abroad was not regarded as an interest of the United Kingdom. And protection of investment, it was felt, would be required only if in some specific way the government stood sponsor for a loan. British diplomats were not tender-minded on the matter of intervention. The restored regime in Europe, of which Castlereagh was a chief architect, rested upon a general policy of intervention. But the interests for which the British were ready to intervene were mainly political. The balance of power, the independence of the Low Countries and of the Spanish peninsula, the freedom

Certainly Canning did not achieve his popularity with commercial men in his own time and since by the closeness with which he timed his foreign policy to the movements of the markets. Few British statesmen have held more rigorously aloof from speculative contacts. He curbed the mercantile activities of British consular agents. And he censored those of foreign representatives in London. He refused to negotiate thru agents who were in a position to profit from diplomatic confidences. His foreign policies tended to promote British trade. But it was the trade which meant political prestige and was measured in the statistical summaries, not shipments of Manchester goods to Callao, which engaged his attention. The development of his South American policy is to be accounted for chiefly in terms of political relations with Europe and the United States. But Canning was not all-powerful in his government, nor were all of his colleagues so scrupulous. Some of them were investors in South American mining companies. And when the time came for Canning's diplomacy to culminate in the

But Palmerston performed none of his celebrated interventions on behalf of bondholders, or for investors of any kind who were not personally on the ground. He successfully blocked efforts of the Greek national assembly in 1833 to make provision for the loans the Philhellenes had floated.43 And so far from being influenced by foreign investors in his eastern policy, Palmerston signed the four-power pact against Mehemet Ali in 1840 expressly against the protests of the City.43a

eign Office representations would be of little avail.44 The *Times* declared on another occasion that the government would "depart from every profession which it has made . . . if it hazarded an hour of national peace, or wasted a shilling of public money, to secure the fulfilment of contracts which it neither invited nor guaranteed." 45

That it was a stirring speech, all were agreed; bondholders felt with some justice that it was nearly as impressive as an actual gun-boat. And at the beginning of 1848, the diplomatic mail-bags carried a circular letter which brought definitely to the attention of the governments concerned the stand which the Foreign Office had assumed.51 It considered foreign loans undesirable, and had thought that the losses of the imprudent would prove a salutary warning to others. But the loss might become so great "that it would be too high a price for the nation to pay for such a warning as to the future, and in such a state of things it might become the duty of the British Government to make these matters the subject of diplomatic negotiations." What had been an embarrassment to Castlereagh, a subject to be virtuously shunned for Canning, was appearing to Palmerston as an opportunity and as a right to be employed with discretion, and was foreshadowed as a possible national duty.

#### REVIVAL OF HOME INVESTMENTS

were believed to constitute the annual British surplus seeking investment, it tended to deter the movement of British capital abroad.¹ But it also brought into existence promoting and constructing organizations whose energy could not be restrained by political accidents and which were loath to cease activity when domestic opportunities became more restricted when competition reduced the profits. Free trade, some of its advocates contended, would also check the export of British capital. By enabling England to take foodstuffs and raw materials in payment for exported manufactures it would remove the necessity of financing exports with loans. Employment would be found for increasing amounts of capital at home; money would be cheaper for farmer and trader. In the long run, however, free trade was also to have the opposite effect. As England found herself increasingly dependent upon imported supplies, her capitalists found increasing profits in the business of procuring these supplies, and invested money accordingly. Thus a transformation of market relations as complete as the changes in production of the preceding generations, and more rapid, distracted the England of "the young Queen and the old Constitution."

What stirred new life in the capital markets and relieved the social pressure was the discovery that despite the depression some of the undertakings of the enthusiastic thirties had brought success. That the railway lines built without great stir by provincial capitalists were not only meeting expenses but declaring dividends was an event which challenged emulation. With mills closed down, commodity markets dull, discounts dragging, the London & Birmingham, the Liverpool & Manchester, the Grand Junction, the York & North Midland companies steadily paid dividends of ten per cent and more. A dozen other railways were earning six and seven per cent in 1842.4 There was an increment in land values along these railway lines which overbore the prejudice originally entertained by country gentry. Towns which were brought into rail communication throve to the envy of potential rivals. And these circumstances, with the complaisance of a Parliament largely composed of probable beneficiaries, furnished ingredients for a boom which between

1844 and 1847 assumed colossal dimensions. Prior to 1842 Parliament had authorized companies with limited liability to raise about fifty-five million pounds for the construction of railways. In that year five million more were authorized, in 1843 three million. In succeeding years the acceleration of railway construction may be indicated by the following table: 5

| Year | Acts of Parl. for ry. construction | Capital authorized (000,000's) | Total Actual Capitalization (000,000's) | Miles in operation• |
|---|---|---|---|---|
| 1844 | 48 | £ 17.8 | £ 72.3 | 2148 |
| 1845 | 120 | 60.8 | 88.4 | 2441 |
| 1846 | 270 | 136.0 | 126.1 | 3036 |
| 1847 | 190 | 40.3 | 166.8 | 3945 |
| 1848 | 85 | 4.6 | 200.4 | 5127 |
| 1849 | 34 | 3.1 | 230.0 | бозі |

### THE TRANSFORMED MONEY MARKET

A transformation of the investment market was not the least important aspect of the railway revolution. "What is remarkable in this vast movement," comments Disraeli in his Endymion, "is, that the great leaders of the financial world took no part in it. The mighty loanmongers, on whose fiat the fate of kings and empires sometimes depended, seemed like men who, witnessing some eccentricity of nature, watch it with mixed feelings of curiosity and alarm. Even Lombard Street, which never was more wanted, was inactive, and it was only by the irresistible pressure of circumstances that a banking firm, \[Glyn, Halifax, Mills & Co.\] which had an extensive country connection was ultimately forced to take the leading part that was required. All seemed to come from the provinces, and from unknown people in the provinces." The names of Rothschild, Baring and Ricardo loom large in the annals of financial London. But they will not be remembered as having inspired or encouraged the domestic railway movement. Nor did the leading bankers, Lord Overstone of

With the new leadership and orientation and its expanded scope came democratization to the money market. The bulk of the middle classes were now embraced in its clientele. For the railway system was made by an outpouring of mass invest-

But the widening of participation in the profits of business did not mean its democratic control. In theory the jointstock companies commissioned to build railways echoed the democratic constitution of their Jacobean precursors. To

#### THE RAILWAY CONTRACTOR

As master of a craft, the assembly of factors of production upon a scale not hitherto known in modern times, the contractor acquired a dignity and prestige independent of the companies that employed him. Even to undertake his responsibility he needed connections with important dealers in railway materials, contact with sources of labor supply, his own credit arrangements with bankers. And such relations once established became a permanent part of his stock-intrade. They enhanced his reliability and his usefulness. They also compelled him to continuous activity if they were to be retained. And the investment of fixed capital required to carry on even a single contract operated to the same end. "Hundreds of earth-waggons and horses, scores of miles of rails and sleepers for 'temporary way,' several locomotive and several stationary engines, tools of countless numbers and endless variety—these, in addition to enormous accumulations of timbers, brick, stone, rails and a host of other materials, all vociferously call for more employment. And although mere 'hands'—the Titanic 'navvies'—can be grad-

#### THE BEGINNINGS OF CONCESSION-HUNTING

travel between London and Paris. As early as 1836 the directors of the London & Southeastern Railway were promoting a company, which embraced any number of eminent Whigs, proposing to build a railway from Boulogne to Paris, to connect with boats from Folkestone.29 But it was not possible to obtain approval from the Chamber of Deputies so long as the more important seaports of Havre and Rouen were still unconnected with Paris by rail. Hence the first Paris connection was developed by the London & Southampton company, which was interested in the route by way of Havre. The initiative seems to have been taken by Edward Blount, a young Irishman who after a season in the diplomatic service had set up a banking business in Paris in 1831, warmly supported by numerous members of the British aristocracy residing upon the Continent. Despite the threatening state of Anglo-French relations he procured a concession in his own name in 1840 on behalf of the London & Southampton directors to build a railway from Paris to Rouen. And this grant was completed two years later by the fresh award of a concession to build from Rouen to Havre.30

The Paris-Rouen railway was the first conspicuous effort of British construction enterprise abroad. It made the reputations of the contractors and the engineer. It also opened a period of Anglo-French cooperation in railway building which continued, with interruptions, for nearly twenty years. And its success encouraged the French government to formulate plans for a national railway system, consisting of lines radiating from Paris to the several frontiers, for which it announced in 1842 its readiness to grant concessions. The same success no less than the generous terms of the concessions attracted other British capitalists to enter competition for the privileged routes. It seemed possible to build railways in France for one-half the cost of English roads to the shareholders, and with little less certainty of a large traffic. Moreover there was the chance of disposing of the railways when built to French investors at a profit. Not more than three or four hundred thousand pounds had been employed at any one time in building the Paris-Rouen railway, and it was

believed that the promoters had realized a profit of two millions.32

If this delay did not kindle affection, it at least assured the construction of main radial lines as rapidly as the scruples of politicians could be adjusted. One company might have

### ANGLO-BELGIAN RAILWAY ENTERPRISE

It was zeal for the profits of promotion that led to the activities of the railway-makers in France. And the same fine emotion brought into the London money market in 1845 and 1846 companies designed to construct railways in every part of western Europe and the British Empire. Most of them had no serious consequence beyond the traffic in premiums, and the fees of solicitors, prospectus-makers, financial editors and purveyors of office furniture. One railway was brought to successful completion in Jamaica at this time by persons connected with the sugar trade. It seems to have been the first colonial railway (or public utility company of any kind in the colonies) to be financed through the London stock market. There was a short railway in Tuscany, from Florence to Pistoja, built by William Jackson as contractor-concessionaire. One large London house is said to have put up the money outright for a small line from Duesseldorf to Cologne. And English engineers were everywhere in consultation over plans, in Sardinia, in Austria, in Switzerland.

### THE RAILWAY CYCLE COMPLETES ITSELF

the equilibrium of trade and shook the exchanges. Great Britain required grain at a moment when the United States was at war with Mexico and when France had a short crop, and it was not possible to pay for a great proportion of the needs of the country in augmented exports of merchandise. Large shipments of gold were made in the first instance, which placed the English credit system in its precarious condition. But as securities payable in francs and rubles and dollars came into the market for sale it was more advantageous to ship them for sale to the country from which they originated than to ship gold. This situation rendered virtually impossible the remittance of fresh capital for investment in Europe. And if these considerations were especially true of foreign government securities, such as those of France, Russia, Holland, and the newly solvent American states, which could be sold without serious loss, they effectively ended British enthusiasm for continental railway projects for a time.

# CHAPTER VI

-Macaulay, History of England, c. 19.

How closely financial England steered to the cataract in 1847 and 1848, her economists and public men never fully realized. They were impressed by the fact that a Bank Act, the sum of available financial wisdom, had to be suspended within three years of its enactment. They were uneasy that government must borrow ten million pounds, when railway kings spoke still grandiosely, for the relief of starving Ireland. And they suspected dimly that railways were being constructed extravagantly and beyond proportion. But the successive removal of duties on corn, raw cotton, raw wool and timber, and the final repeal of the Navigation Acts in 1849 had roused their enthusiasm, and made them confident that England's economic future was assured. Only in the United States has a vivid impression of that crisis survived, in the memory of Irish immigrants whose earliest recollection is of an eviction. In Great Britain free trade became a fetish, to whose potency the burst of business prosperity after 1850 was ascribed; a political abracadabra, whose frequent repetition shut off the past in soothing oblivion.

France and the United States brought relief in the early

stages of the crisis of 1847 by repurchasing some of their securities. The United States after the Walker tariff of 1846 was a good market for a judicious amount of "dumping." But England was not alone in feeling the dearth of bullion. France was more than any other commercial country dependent upon specie for internal trade. In coming to the relief of the West with gold from his reserves, the Czar of Russia in 1847 purchased rentes as well as consols. And the stringency in France was one element in the general discontent which burst into revolution in February, 1848. As that upheaval spread in concentric circles over the Continent, it sent successive waves of emigrés scurrying to London with their savings and mobile property. The accumulations of the thrifty Orleanists and their followers preceded the salvage of liberals from France and the Germanies fleeing the subsequent reaction. And once again England profited from the shelter which her political stability afforded.

westward migration to engage in sheep-raising in Mexican California, found gold in his mill-sluice.1

Between 1811 and 1840, it has been computed, the total production of gold and silver in the world was worth about one billion dollars. All of this and more was drained off immediately to the Far East or to the more remote agricultural areas of Europe and withdrawn from commercial circulation. The opening of mines in the Ural Mountains increased the stock of gold between 1837 and 1848 by about four or five per cent. The average annual production of gold during the forties has been estimated at \\$36,393,000. But in the five years after 1850 the average output soared to \\$132,513,000. The stock of money in circulation began to increase at nearly the rate per year which had formerly required twelve. In the two decades from 1850 to 1870 more gold was brought into the markets of the commercial world than the mines of New Spain combined had furnished since the days of Cortez and Pizarro. And for the economic and business history of those decades the augmenting gold supply forms the basic fact. Without it free trade would at that time probably have encountered grave difficulties.

Thus there was no trace of imperialism or of trust-building in the activity of British contractors and capitalists in France. It was the emperor who threatened the concessions of branch or parallel lines to rival groups, and compelled companies in

### CONCESSIONS EVERYWHERE

privilege of disposing of mineral resources beneath the surface of their land.

France and Belgium were no longer the only countries with a welcome for British contractors. Their enterprise was simultaneously engaged in Piedmont and in Switzerland. Austria, Spain, and after the Crimean War, Russia and Turkey displayed concessions for the bids of foreign capitalists.20 By the end of the fifties the railway epidemic was spreading to the outskirts of the European world. Brassey's fellows were building lines in Asia Minor, Algiers, Portugal and Brazil. In Denmark and her Scandinavian neighbors, Sir Morton Peto had something of a monopoly of railway construction. He carried thru successive projects which had a bearing upon the supply of Swedish iron and Danish butter to the English market. And his Schleswig Railway was no doubt one of the aspects of the Schleswig-Holstein question which it is said only Prince Albert, Lord Palmerston and one other ever thoroughly understood.21 Thru British contractors and without their intervention in some cases the London money market had acquired a heavy stake in the railways of the United States, Canada, British India and Australia.

cessionaires. More often there was a kilometric or mileage guarantee of income upon the capital invested. Rarely was there demur to the great principle that private enterprise should be rewarded with the profits; and rarely was that enterprise suffered to sustain the loss, if government had anything to do with the matter. Hence there was a curious tendency for railways which had lofty national purposes in view to be constructed with great rapidity, while important commercial transportation lines might linger.

Certainly the perception of the identity of railways with politics did not need to be imported from Europe into the North American world. The United States provided its own enterprise, its own contractors, its own happy coincidences of private profit with objects of public concern. It even exported them to some extent to Canada. But railway iron and working capital America could not provide as rapidly as its development required. And Frankfurt and London thus made the acquaintance of a wide selection of bonds, without having much of anything to do with railway management and promotion in the United States. The bulk of the shares as well as the bonds were owned by Englishmen in the New York & Erie, the Illinois Central, the Philadelphia & Reading, and the lines from Marietta to St. Louis that later were merged into the Baltimore & Ohio. The pick of the mortgage bonds of the railways in Ohio were purchased by Germans in the Rhineland. Only the Atlantic & Great Western, absorbed after much travail in the Erie, required the talents of a British contracting organization. And that is in itself a story.

### BRITISH CAPITAL AND ITALIAN UNITY

France under the Second Empire called the tune to which politics and economy in Europe danced for two decades. But for the little kingdom of Sardinia-Piedmont, the example of Napoleon and of Leopold of the Belgians was not needed. A native nobleman who had travelled widely and considered deeply, was already by 1850 organizing banks and railway companies, importing guano and agricultural implements, stirring the enterprise of his countrymen, when the revolutions of 1848 gave his nation the leadership of the liberal movement in Italy. And when Count Cavour entered the ministry in 1851, it was to turn the energy of the Sardinian government to the promotion of the objects which had concerned him in private life. His published correspondence reveals him fresh from conferences with concession-hunter and financier, fascinated with their personalities, enthusiastic for their views.24 Now he is drawing Brassey or the Pickering Brothers into construction work, now arranging for contracts and credits for shipments of iron from Wales, now endorsing plans to rebuild the port of Genoa to fan the re-

lishmen who were among the concessionaires. Toward the end of 1858 this company bought from the Austrian government the South Austrian railway, partly built from Vienna to Trieste. The funds about to be received in payment added to the lightheartedness with which Austria went to war in 1859. But the railway, incomplete as it was, was still further incapacitated for service by the fact that it was administered by Frenchmen and consequently fell into chaos when Napoleon entered the war. The bearing of this upon the Peace of Villafranca deserves inquiry. But as Cavour foresaw, the fact of railway connections between the different Italian states worked strongly for Italian unity, whatever the interests of the railway proprietors. Pio Nono, who had yielded to the persistence of French and English promoters, united the north to the south of Italy by rail and thus helped to overthrow his temporal power. But the Savoyard railway, completed from the side of France and broken at the Mont Cenis passage, nourished commercial relations which were an important factor in the overwhelming preference of Savoy to be united to France in 1860.

#### THE EXPORT OF CAPITAL AND CAPITAL GOODS

One feature of the activity of British contractors in Europe and elsewhere was the marked increase of the export from

\*For the data upon which these statements rest, see Appendix, for Table showing Values of Principal Items of Capital Goods, Produce of the United Kingdom, exported from 1846 to 1877.

closely drawn. It was most exact perhaps in the case of India, for whose railways all of the iron material was imported from England. Approximately one-third of the capital cost of her railways may be accounted for by these purchases. American railways in the fifties, and again after the Civil War, required a good deal of railway iron and issued bonds in payment. But the bulk of the investment which ultimately found its way into American railway securities was not directly related to such transactions. Moreover no relation can be traced between the destination of exported capital goods and the apparent field of activity of British investment. In the fifties, for example, Spain was the leading European country in its absorption of machinery and railway iron, but it was not conspicuous as an investment field. Speaking more generally, the export of producer's goods of all kinds from Great Britain tended to be in excess of the net export of surplus capital; while the movement of railway iron was a great deal less than the usual amount of the capital surplus.\*

Indeed, however much the contractors who secured con-

\*See note 5, chapter X, for detailed discussion of the capital surplus from \*1854 to 1880.

There was no attempt either to give a national character to the work which British enterprise performed. In the formation of syndicates there was if anything a preference for international combinations. Considerations of policy had brought about Anglo-French promoting cooperation in France. And this cooperation led to permanent alliances of financial groups for concession-seeking all over Europe. Capital sailed under whatever color was convenient. The Crédit Mobilier, most dazzling of the financial institutions born of the Second Empire, enjoyed British participation from the outset.37 Brassey and Buddicom were silent partners in the private bank which Edward Blount conducted at Paris.38 Thomson, Bonar & Co., joined with Bischoffsheim & Goldschmidt of Brussels, Paris and Frankfurt to form a bank of industrial and commercial credit at Paris in 1859.39 And continental capital in turn sought the opportunities of the English money market. London was the continual resort of financiers the exact nationality of whose resources it is out of the question to determine.

This cosmopolitanism pervaded every phase of continental

So far as possible the undertakings of the contractors were thus not national but cosmopolitan. Instead of being the activities of strongly nationalized groups operating beyond clearly envisaged national frontiers, they were operations of cosmopolitan groups, acting in a cosmopolitan field. It is only in terms of national balance sheets that the "export of capital" is of importance in these transactions. The sale of railway materials did usually mean a purchase of railway securities. That was a prevalent feature of railway finance. And the terms of the concessions frequently stipulated that contractors might import their materials duty-free. But their work may be more properly thought of as a migration of enterprise and labor and capital from one part to another of a commercial area conceived as an expanding economic whole. And the income derived by British nationals from their endeavors consisted even more in the profits of enterprise than in interest, large as the French dividends were.

#### BRITISH CAPITAL IN CONTINENTAL INDIISTRY

Equally unrelated to an "export of capital" and equally cosmopolitan was a great deal of the direct impetus given by Englishmen to industry upon the continent. It is impossible to make any sort of a quantitative statement of the volume of British capital which at various times engaged directly in the development of manufactures upon the Continent. The scattering instances which can be assembled do not exhaust its scope, we may be sure. It is preeminently the joint-stock form of enterprise which secures

Survivals of mercantilist legislation were to a great extent responsible for the establishment of English factories in Belgium, France, the Germanies and Russia. On the one hand there were tariffs imposed by these countries against British goods, often with the intention of promoting domestic industry. On the other a British embargo on the export of machinery, in the vain attempt to limit the knowledge of technical improvements to the Isles, compelled British manufacturers of engines and machines to procure patents and erect factories abroad to forestall pirating of their products. For there was no effective way of preventing the smuggling of designs and of machines in parts. And those Englishmen or others who were willing to connive at violations of the law smuggled both machinery and workmen out of the country during the stormy decade after Waterloo. By 1824 the movement had become so noticeable as to call for parliamentary inquiry; and voluminous reports detail the nature of the migration and the speculations of witnesses as to its consequences. The lace trade of St. Pierre-les-Calais furnishes an illustration. The state of St. Pierre-les-Calais furnishes an illustration.

After the Treaty of Paris in 1815 a smuggling trade sprang up between Dover and Calais, spirits being brought to England in return for textiles. Of these, machine-made lace was seizable wherever found in France as obviously smuggled over a prohibitive tariff; so a few machines were

carried over and put to work at Calais to cover the smuggled imports. The manufacture was found to be profitable, and the number of machines increased so much that they had to be set up in the near-by hamlet of St. Pierre, which came to be in some respects the Nottingham of France. Lace manufacture at Lille and St. Quentin and also the linen and other textile trades of those towns, and of Dunkirk, Armentières and Amiens, similarly originated with English machines, English workmen and English capital. The development of the district created a demand for machine-shops, and Englishmen established these, too. The first French factory for linen manufacture, promoted in 1838 by the North country banker, John Maberly, engaged a British engineer to build its machinery for it at Amiens. Reports from British consuls in 1842 indicate that there were four lace factories, a flax factory and a large foundry in English hands near Calais; there were five factories at Caen, and four foundries at Rouen besides the plant of Buddicom & Co., builders of locomotives. And there seems to have been no enterprising journalist to feature this "English conquest of Normandy."

works at Charenton, pat iron steamboats upon every navigable river in France, remodelled the rolling-mills at Creusot (which have since become the leading center of French steel manufacture), undertook to manufacture tobacco for the government, and returned to England at the age of twenty-five, to continue there in the iron business and engineering. The Creusot enterprise was in financial difficulties in 1834 and the Manbys later disposed of their property to the creditors. But there were other British machinists to develop other iron works, usually in connection with specific construction projects. In the fifties there were the Taylors building iron steamboats at Marseilles; 55 John Masterman and his contractor George Wythes had a coal and iron company at Aubin in south central France; 56 a Devaux group was developing the Carmeaux district in the Dordogne. 57 But the French machine industry at large was now being carried on by domestic enterprise and capital. The English cooperation in docks and warehouses and land and building companies, while profitable to the investors, mainly Englishmen concerned in railways, was no longer important to France.

Cockerills flourished. The King of the Netherlands went into partnership with John in 1817 and granted him the château of the Prince-Bishop of Liege at Seraing, as a seat for his machine-works. Cockerill expanded his activities to control every process from the securing of raw materials to the exploitation of his own machines. The Belgian revolution of 1830 gave him entire proprietorship of his concern. And by the late thirties he had developed Seraing to the largest establishment of its kind in the world, employing 2500 men and turning out machines with 1800 horsepower a year. At Liege his machine-works engaged 800 more. He had cotton, woolen and linen factories, a paper mill, zinc mines at Stolberg, spinning mills in Saxony and Silesia and at Berlin, forges in Languedoc, a clothing mill in Poland, a sugar plant in Surinam, a cotton mill at Barcelona, and was interested in four coal-mines, a gun-factory and several rolling-mills. He was the leading spirit in the industrial movement which stirred Belgium from 1834 to 1838, and his name survives in the corporate designation of outstanding Belgian enterprises of the present day. 59

the government. And they sought as much to find a market in the overland trade to Asia as in the limited demand of the city-dwellers.

Around St. Petersburg this textile manufacture was carried on directly by British factories, with British machines and British supervising staff, founded in large part by surviving firms of the old Russia Company. Wilson, Hubbard, Thornton, Wright and Shaw were leading names among their number. Their spinning-mills developed in the late thirties and early forties, especially after the suspension of the embargo on machinery permitted the direct purchase of the best English models. In 1852 Egerton, Hubbard & Co., with the Petrovsky mills and in 1866 Thornton & Co., secured incorporation under Russian law, but there was no appeal to the English investing public. There was no object in publishing knowledge of possibly generous profits to a community full of potential rivals. One mill which earned profits below the average, paid 270% in dividends upon an original capital of a million silver rubles between 1836 and 1860, besides expanding its plant sixteen times out of undivided profits. Even mills which were not nominally English, depended upon English management and upon English merchants for credit.

#### PUBLIC UTILITIES AND MINES

dustry and English c2pital." 78 It seems more certainly to illustrate the un-national love for things Italian which many Englishmen possessed.

Thus Great Britain stood in much the same relation to most of the regions of Europe around 1850 that Europe and the United States bore to the Orient and South America a

# "BILLS ON LONDON"

The Germanies outside the Rhine provinces were especially stirred by the stimulus of London credit. There was considerable vigor and independence in the economic relations that were developing around Frankfurt-on-the-Main, Mannheim and Cologne. Industrially self-sufficient, the Rhinelands were already exporting capital. But their relations were more intimate with Brussels and Cincinnati than with London and New York. The bulk of German commerce still moved by way of the Hanse towns rather than the Rhine, and it moved with the support of English connections. Along historic lines of communication capitalistic activity of a curiously artificial sort developed in the fifties, sustained by bills on London. Every little German state must have its bank of issue, its investment bank, its mortgage institution. The Bank of the Principality of Schwarzburg-Sonderhausen, for instance, a state with a population of 60,000 inhabiting an area of 17½ German square miles, had a capital of three million rixthalers, about \\$2,500,000. The Duchy of Saxe-Coburg-Gotha, with 150,000 inhabitants, boasted a bank with a twelve million dollar capitalization. All issued paper

Thus in another way the cycle of Anglo-American finance was repeated in Germany, and to a certain extent it terminated in a similar revulsion. A gloom settled down over most of the Germanies which increased rather than diminished as the political struggles of the sixties developed. But it freed that country from the excessive drafts upon the future that were to be a handicap to the rest of Europe at the moment when the German Empire was ready to commence its triumphant industrial career.

But it signalized at least one important shift in its direction. It quickened the movement of investment to India. And it gave an opportunity to French and Belgian iron manufacturers and associated groups, which were scarcely affected by the crisis at all, to enter the foreign field in sharper competition with British ironmasters. In 1859 a Belgian syndicate wrested an important rail contract in Spain from the British, with the aid of generous financing from the Société Générale de Belgique. In subsequent years Switzerland and Holland fell under the dominance of Belgian ironmasters. And Russia sought her locomotives in Belgium and at Berlin. And while the Belgian output was entirely inadequate to be a formidable contestant in many quarters at once, and while, financially, concession-hunting continued to be carried on by international groups, it was startling for Great Britain to be unable to command any market open to foreign competition which she chose to supply.

### A PERIOD OF PAINLESS INCOME

terest had become axioms of policy in Lombard Street and Whitehall.

In fact British capital was not allured by distant undertakings which involved the element of continuous control, if commerce with its turnover annually or more often be excepted. British enterprise built railways in western Europe

The effects of the Industrial Revolution were thus communicated to countries in which railways needed to be operated as well as built by aliens. For not all agricultural areas were so free from traditional mores as the United States then were, or as adept at using borrowed money to suit themselves.

same time we can witness the first widespread concern for the employment of British capital in the development of British possessions. The migration of British capital did not suddenly cease in 1857 to be cosmopolitan and become at once imperialistic. A considerable part of British investments abroad never took on imperialistic traits, never involved the direct control from England by economic or political means

The real question in control is not the matter of dependence for markets or sources of supply. It is the center of enterprise. In this sense there is no Egyptian, Argentinian, almost no Indian or South African, certainly no Cuban or Peruvian economic system. The economic activities of these regions are all functions of a spirit of enterprise manifested either in the British Isles or at New York. They form organic portions of a British or of an American economic system. It is this expansive power of enterprise which gives rise to economic imperialism, as the term is here employed.

### THE GRAND TRUNK OF CANADA AND OTHER CONTRACTS

Canada, at least, had not been unmoved by the clamor of railway building in the mother country and across her southern boundary.3 There were plans for railway systems as early as 1836, and they may have had some remote connection with contemporary troubles with the United States. The company stage was reached in the early forties. With the encouragement of various land companies a number of projects were launched during the mania of 1845 and enabled to fly the colors of a London board of directors. Only one line was actually begun, however. This was the first international railway in the world, the Atlantic and St. Lawrence, running from Montreal to Portland, Maine. Construction was slow. But the urgency of an American promoter, John Poor, the interest of the British-American Land Company, thru whose territories the railway ran, and the fitful support of the London money market brought the Atlantic and St. Lawrence under Canadian management safely through the crisis of 1847. And in the early fifties it was looking for more capital to complete its line.

By this time Canadians had discovered that there were important connections between railways and politics. It was not necessary to import this folkway from Europe. "Railways are my politics," is the slogan under which Sir Allan

the Great Western, amounted to more than seventy million dollars.

and sixties prior to the formation of the Dominion in 1867.

London was also called upon for capital in the fifties for railways and docks and municipal works in the Australian colonies, at the Cape and in the West Indies. In 1858, Victoria, new-born of the gold discoveries, commenced an eight million pound construction program. Morton Peto and Thomas Brassey undertook railway contracts at the antipodes. The Australian colonies did not encourage the amphibious finance in which Canada became involved. They had been equally ready to negotiate an imperial guarantee to help them float their own bonds, and some of the crown colonies received it for small loans. But after 1857 they found that they could borrow money on their unaided credit for the purpose as rapidly as they wished to build their own public utilities. There was opportunity for fortune and achievement in Australia for those who wished to make their homes there. But it was not thither that most enterprising business men about 1857 were directing their hopes.

# CARRYING CIVILIZATION TO INDIA

been exposed to hidden perils in a rebellious land. Here was not merely a continent of land, but people, with an established economic life and a civilization—which the Victorians referred to as "superstitious practices." It would not only mean profit, it was a duty to carry the torch of civilization and progress to a land from which the light had been so long withheld. The nonconformist conscience of England, prophet of radicalism and laissez-faire, would remake India in England's image. It demanded the East India Company, last relic of the mercantilism it had overthrown, in propitiatory sacrifice. In meeting-house and chapel, upon the hustings and in the provincial press was voiced the spirit which animated less explicitly the policy of the government and the behavior of the money market. From 1857 to 1865 the major movement of British capital was toward India, to transform the land with public works. The government passed at the same time from Company to Crown, augmenting its activity and expense. And the effort that was made brought home with the dividends a spirit ripe for imperialism and impatient of laissez-faire.

The negative character of Company rule did not prevail merely because it was oriental, however. Nor was it simply because to its dual government in London, as to successive generations of high-minded Britons, India was "somewhere east of Suez." It was part and parcel of the governmental pessimism which guided British. statesmanship in varying degrees from 1825 to 1874. There being no economic process which government would not mar by its intervention, policy consisted in doing as little as decency would permit. If true at home, this doctrine was of special validity with reference to a great dependency such as India, of whose ultimate future no one would dare to think hard. So for many years roadbuilding and railways, river-steamers and the cultivation of tea and cotton existed chiefly as subjects for interminable minutes which continued to increase in bulk. No one formulated objections to these things in principle; no one stirred to bring them into practical realization. Capitalists hesitated to invest because they were uncertain of the political situation, of land tenures, of the adaptability to oriental culture of western technique. They desired encouragement from the Company, a privileged status, penal process for the enforce-

√"Great tracts are teeming with produce they cannot dispose of," wrote Dalhousie in a minute dated April 20, 1853, which is in a sense the fundamental charter of Indian railways.20 "England is calling aloud for the cotton which India does

68

Thus one of the first consequences of the Indian revolt was a focussing of money market zeal upon transportation in India. There was a decline in the guaranteed stocks on the first news of the rebellion. But the decline was only for a few months, and it was not as great as that caused to many other securities by the concurrent panic. The shares of the East Indian and Great Indian Peninsular scarcely fell below par, and they had completely recovered by Christmas, 1857. It was clear that Great Britain was determined to keep her empire, and few claims upon it seemed so promising as "guaranteed" railways. Guaranteed by whom or to what extent many investors did not inquire. The savings of the middle classes which had borne the burden of home railway construction and had found little enough share in the cosmopolitan adventures of the contractors, warmed to the call of empire and the "guaranteed" five per cent. Commoners demanded clamorously that railways under construction be carried rapidly to completion. A parliamentary inquiry was held to ascertain why their building was so slow. Under the pressure of public opinion especially in the manufacturing districts the Company and the dual government

So great was the outflow of British capital to India that in the early sixties the cry was raised by railway and agricultural interests at home that it was causing a serious rise in the interest rate. The amount of capital expended upon Indian railways alone from 1858 to 1869 inclusive is summarized in the following table:

| Year | Amount | Year | Amount |
|---|---|---|---|
| 1858 | £5,500,000 | 1864 | £3,800,000 |
| 1859 | 7,150,000 | ·1865 | 5,400,000 |
| 1860 | 7,580,000 | 1866 | 7,700,000 |
| 1861 | 6,500,000 | 1867 | 7,000,000 |
| 1862 | 5,800,000 | 1868 | 4,500,000 |
| 1863 | 4,780,000 | 1,869 | 4,400,000 |

This was one of the few economies involved in the capitalization of the Indian railways. There were no costs of promotion and flotation to meet. In all other respects the guarantee system was extremely expensive, to the guarantors. Dalhousie's idea had been to limit guarantees strictly to original estimates and to provide penalties for breach of contract. He intended further to limit the obligation of the government to the stipulated per cent upon the capital, irrespective of whether the railway earned its operating expenses or not. On the face of the contract dividends were not to be guaranteed. India was not to be taxed to make up deficits. But these safeguards of economy in construction and operation were tampered with when the contracts were arranged in London. And to the criticisms of the government in India, Lord Stanley returned the answer that the money market demanded guarantees that were virtually absolute. A subsequent Public Works Secretary at the India Office has characterized the resulting situation as follows: 32

How in one clause of these remarkable indentures it is pro-

anteed 5 per cent. on the revenues of India, it was immaterial to him whether the funds that he lent were thrown into the Hooghly or converted into brick and mortar." 33 Government engineers supervised every detail of expenditure, at the cost of the railway, with no real power to do anything but obstruct. And the company's agents thought only of doing a thoroly good engineering job, irrespective of cost or appropriateness. The original estimates, especially upon lines built under contract, were doubled and trebled. It was notorious, testified Lord Lawrence in 1873, that "if the work had to be done over again, it could be done for two-thirds the money." 34 Instead of the £8,000 per mile for which Dalhousie planned to cover India with railways, those in operation by 1868 had averaged £18,000, without reckoning dividends advanced upon the guarantee, which were charges upon the future possible earnings of the roads. Down to 1881, more than twenty-eight million pounds had been paid out by the government under the guarantees in dividends havend whet the reillurar actual near 35

exacted for loans upon the direct credit of the Indian government, altho the difference in security was chiefly metaphysical. The political interests of Government by the Queen coincided happily with the pecuniary interests of a considerable body of her British subjects.

The precipitation of British capital into India for railway purposes was thus sudden, and its application was expensive. Immediate return upon the investment could be provided only by augmenting the burdens of the taxpaying ryot. But it promised progress as well as public order.

The burdens that it was found convenient to charge to India seem preposterous.37 The costs of the Mutiny, the

# THE "ECONOMIC DRAIN"

√There can be here no attempt at a comprehensive estimate of British rule in India during the last three-quarters of a century. And into a company where controversy glows in inverse ratio to the zeal with which data are collated, the historian enters at his peril. But conflict of opinion is itself of the story of events which give rise to it. No investments

before 1875 had social consequences admittedly as great, or whose nature has been so disputed.

its wealth and capabilities will be enormously above the present standard." 39

and who had to be paid according to English standards, diminished further the benefits which could accrue to Indians from the railways.

The remaining two-thirds' of the railway capital, as the bulk of the public loans not spent upon Home Charges in London, were remitted to India in bullion, mainly silver. Their effects merged with that of the even larger quantities of specie sent eastward in partial payment for the increasing exports from India. For during the fifteen years 1854-69, more than two hundred million pounds in precious metals were imported into India in excess of her bullion exports. Among the consequences of this remarkable movement there were a fall in the value of money and an increase in prices which was serious enough to call for an investigation in the Bombay Presidency in 1863. It was ascertained that in a comparatively short time grain prices had trebled, prices in general had doubled, wages had risen fifty per cent. There had been a consequent stimulus to industry and commerce in the immediate vicinity of Bombay, at least. And the prosperity of all classes had been increased except those with fixed incomes, persons without produce or labor to dispose of, and petty manufacturers deprived by dearness of material of the means of working.

which was ready to think of foreign policy in terms of Empire rather than of England. These interests were at hand to justify decisions so extraordinary as to make the Northwest Frontier of India appear at times the pivotal point in the defense of the British Isles.

# CHAPTER VIII

# FROM BILL-BROKER TO FINANCE COMPANY

#### STOCK-AND-BOND CAPITALISM

of the largest return for capital.¹ It is the very heart of our much-decried "capitalism." And with its invention was born the concept of a business concern as an entity apart from the individuals engaged in carrying it on. Next to this notion the coming of transferable shares in the ownership of concerns shaped business life most significantly. It enhanced the independence of business from the man who at any time happened to own it. But it left him exposed to loss as unlimited as the advantages he might hope to gain. The final step to stock-and-bond capitalism was taken when the liability of shareholders for the conduct of their company was made purely pecuniary and limited to the amount of their investment.² The number of proprietors of a concern might now expand indefinitely. The number of concerns in which one proprietor might safely engage received indefinite extension. Capital was organized into Company, engaging in economic activity with not so much as a sign of the Capitalist to be seen. And in the midst of a world of such impersonal commercial entities, philosophers and busy men continued to prate of individualism.

pleased, government was thwarting the progress of freedom. So sacrificing individualism to laissez-faire, the sovereign delegated its prerogative to the registry office. In the name of freedom, England welcomed the business corporation.

This ceremony was accomplished by degrees. Companies were empowered to appear in court thru a recognized officer in 1837. They were given legal personality upon registering details of their constitution under terms of an act of 1844.10 The law of 1855 privileged registered companies with twenty-five proprietors and a proportion of their capital paid-up to limit their liability to creditors.11 Banking and assurance companies were excluded. What was treated as a privilege in 1855, was made in the following year a matter of right and to some extent a duty.12 All partnerships with seven members might and all with twenty must register as limited liability companies. And in place of legislative regulation of capital accounts, the beginning was made of that elaborate system of publicity with which Great Britain has sought to protect investors. Banking companies were still excluded from the benefits of the act until 1858.13 And limited liability was not then conceded to note-issuing banks with respect to their note-issues. But as most banks were already substituting deposit accounts for note-issues as a means of expanding loans, this was not a serious restriction.

"... Invention new— The Joint Stock Companies' Act— The Act of Sixty-two"

echoes the enthusiasm of the business community for the consolidation of company law for concerns of every description into one comprehensive code. It was an invitation to the trade and industry of the United Kingdom to cast more widely for their capital and to investors to view business companies as safer risks. Banks found securities of wider variety a suitable basis for their loans. And an era of company formation began which may be most quickly described by the following table: 15

| Year | Number of | Nominal | Capital | Capital |
|---|---|---|---|---|
|  | Companies | Capital | Issued | Called Up |
|  |  | (£ millions) |  |  |
| 1856 | 227 | 14 | There are no | official returns |
| 1857 | 392 | 20 | for these ite | ms; and no |
| 1858 | 301 | 29 | adequate compi | lations before |
| 1859 | 326 | 13 | 1865. The figu | res include all |
| 1860 | 409 | 17 | company flotat | ions in Lon- |
| 1861 | 479 | 24 | don, whether | registered in |
| 1862 | 502 | 68 | England or not |  |
| 1863 | 760 | 137 | \_ |  |
| 1864 | 975 | 235 |  |  |
| 1865 | 1014 | 203 | 122 | 50 |
| 1866 | 754 | 74 | 32 | 38 |
| 1867 | 469 | 28 | 29 | 17 |
| 1868 | 448 | 33 | 23 | 16 |

siderable part of British trade and industry into the form of companies with limited liability. And this favorable market situation developed at just the time when organizers of British enterprises abroad found it important to arrange a wider and more permanent support at home for their undertakings. So long as they had depended upon foreign rather than British capitalists to buy up the concerns which they developed, contractors and promoters had organized them under continental codes. But as they advanced into regions where resident investors were not likely to buy them out, it was necessary to secure a status which would be popular in London. Securities must run in pounds sterling; headquarters must be located in the British Isles; the promoters' wares must be adapted to the tastes of an insular market. And this was facilitated, so far as railway enterprise was concerned, by the fact that the policy of government subventions upon the Continent was being generally replaced by that of kilometric guarantees, which while limiting the possible profits of the founders, promised greater security from risk to the permanent proprietors.

There was in consequence introduced to Throgmorton Street a type of financial agency which had been developed

# THE CRÉDIT-MOBILIER IDEA

### THE BANKING TRADITION AT LONDON

The check-and-deposit system had had a remarkable development, displacing entirely after 1844 the issuance of notes by private banks.22 Bank deposits which in 1830 had been only £30,000,000, had grown to £200,000,000 in 1856 and to £350,000,000 in 1866.23 And this reflected in part an expansion of credit by means of deposits and partly a real augmentation of the savings of the country entrusted to the banks. Ninety-five per cent of all transactions in London were by 1860 being made by the use of checks, whereas the Continent scarcely knew the device.24

We owe the portrait of this great financial house to Stefanos Xenos, one of the many Greeks who in the fifties and sixties engaged in daring operations between London and the Levant.29 Its founder, Thomas Richardson, was long since dead. Samuel Gurney, who had made its reputation, died in the early fifties. David Barclay Chapman withdrew his millions from the business about the same time. A generation of men who had inherited their wealth occupied in 1860 the shabby "Corner House" at Lombard Street and Birchin

#### THE FINANCE COMPANIES

The Crédit Mobilier idea reached the British Isles for the first time in 1863, soon after the codification of company law in the Companies' Act. It took the form of a series of "finance" companies.

to negotiate loans and concessions; assist industrial enterprises, public works, and railway undertakings; negotiate Foreign, Indian and Colonial Bonds; conduct mercantile transactions; and establish agencies for large commission business; in a word, to undertake all such operations as an intelligent and experienced capitalist might effect on his own account with a capital of millions.32

Railway finance was encountering increasing difficulties, as competition increased in railway building and as the construction plant grew which needed to be kept in employment. Railway companies were creatures of the contractors. The latter kept the shares and sought capital for construction by the sale of bonds, mortgaging the roads before they were built. And they undertook new concessions as rapidly as they could get them and borfow money to commence. Between 1860 and 1869 the European railway system, United Kingdom included, increased from 51,496 to 94,901 kilometers. Even in the mad forties England had not built railways so rapidly as from 1860 to 1865. Elsewhere construction was just reaching its peak. And the capital cost was terrific. For during the same period the national finances of the great powers were being strained by costs of military preparation which grew tremendously after 1859 in fear and emulation of France. India was absorbing fifteen million pounds of capital a year; the Lancashire cotton industry was alternating chills with fever in consequence of the American blockade; and the shipping industry was facing a transition from wood and sail to iron and steam as the normal ocean-going unit. Loanable funds all over

All of these companies sought shareholders and competed with old businesses which were raising new capital or relieving proprietors of burden by registering under the Companies' Act. And a new financial journalism grew to promote and profit from the publicity which these endeavors entailed. The Money Market Review began to appear weekly at the end of 1859. A decade later its proprietors were publishing a daily edition, the Financier, five times a week; and soon after there appeared the Bondholders' Register under the same management, specializing in monthly announcements of new issues, coupons and drawings. A rival weekly was the Bullionist which was first published in 1866. The staid Economist caught the enthusiasm and began to issue the Investors' Monthly Manual in 1863, with a comprehensive tabulation of all officially quoted companies. The money articles in the daily press swelled to tremendous size. The Daily News, reaching widely the class of readers which dabbled in the market, carried nearly a page of quotations and comment.

Some of the railway financiers had their own organs of publicity. There was the Railway News, backed by James McHenry, and edited by the father of his private secretary.43 And this was not the only journal that spoke hysterically of the prospects of the railway McHenry was building in the United States.

Something of it must be told. Without McHenry and his road, the story of the finance companies and their crisis would be Hamlet without the King of Denmark. The transactions of this booming, optimistic, assiduous projector precipitated financial drama upon two continents.44 We shall remain in the British theatre, however. That other "chapter of Erie" must be dramatized upon another occasion.

Briefly, McHenry was about to build the line and to own it without putting a cent of capital into it. The stock,

They took counsel with Garrett of the Baltimore & Ohio and fed his hopes. But the Yankee directors of the Britishowned Erie had their own ideas. They did not involve the purchase of the road McHenry had built to sell to them.

empire in Mexico. And Smith, Knight & Co., which had undertaken to build a railway for him, found themselves unable to meet their bills.

### CHAPTER IX

#### THE GOVERNMENT LOAN BUSINESS

—Disraeli, Tancred.

ill need not understand decimals; but it was indispensable that he know how excise schedules may be reduced.

Even in regions which were rapidly becoming industrial-

### THE COSMOPOLITAN FAMILY BANKING FIRM

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Vienna flung in such volume upon her finoney market that a contemporary economist was able to show that Austria indirectly subscribed the loan herself and paid the cosmopolitan bankers handsomely for the privilege.

# IN QUANTITATIVE TERMS

£800,000,000, a sum approximately the volume of the National Debt.

European governments increased their public debts, 1848 to 1872, according to Van Oss, from £1,730,000,000 to £4,-605,000,000.11 During the last ten years of that period they borrowed at the rate of £240,000,000 a year. Of the total sum, Seyd estimates that at least two billions consisted in internationally held debts, with a market value in 1875 of about £1,700,000,000.12 Germany and France were each creditors for £400,000,000. The smaller investing regions, Switzerland, Belgium and Holland, were believed to have invested £100,000,000,000 in international indebtedness.

The distribution of securities between these countries fluctuated sharply. Between 1870 and 1875, there was something of a game of "general post" in the location of the debts of several countries of Europe as well as of the American bonds. This was a sequel to the Franco-Prussian war and the indemnity of five billion francs which France was called upon to pay to the new German Empire. Berlin became the leading market for Russian loans, and absorbed a good deal of the Italian and Austrian debt as well in the adjustment of the French indemnity payments. England lost interest in Austria and Italy as eventually in Russia, and she bought up nearly all of the American bonds that could be found in Germany at prices which represented not far from fifty per cent profit to the original German purchasers. At the same time the absorption of continental money markets in the remittance of the French indemnity made London the chief source of supply for loans to Turkey and Egypt, and checked a growing disposition of South American republics to interest Paris in their finances. These investment shifts involved tremendous sums of capital; but they can not be quantitatively traced. \*\*

But as for formal relations between government and the loan business, they were usually exceedingly chilly. There was not the least disposition on the part of the Foreign Office to do anything but make "stern representations" when debtor governments failed, as they frequently did, to make

### ORGANIZING THE BONDHOLDERS

The Corporation of Foreign Bondholders was at least a

At an early stage in the organization of bondholders, the suggestion was made that it make its object to "insist that the Government of the day should take measures with reference to the claims" of outraged investors in foreign government securities. The suggestion came from an eloquent member of Parliament, Mr. H. B. Sheridan; and it was repelled at once by George J. Goschen, once of Frühling & Goschen, and at the time a cabinet minister, who presided over the meeting.

lishman lends his money to a foreign Government, and gets high interest, because he incurs a risk. I believe the duties of the Council will be most important... by exercising a moral power over the foreign Governments contracting loans; and also by exercising a moral power over our own Government by inducing them to interfere, if by their good offices they can do anything.24

### THE HARVEST OF INSOLVENCY

The work of the organized bondholders was cut out for them. Before their incorporation was completed in 1873 events had taken place which were beginning to stay the recklessness of British investors to buy any security bearing the the name of a foreign government. In 1872 a large Honduras Ship Railway loan, thru the opposition of the new bondholders' organization failed wholly to find a market; and a short time afterward bankers announced that previous loans to that government were in default. Costa Rica, Santo Domingo and Paraguay defaulted in the same year, amid whispers as to the legitimacy of their loans and as to the disposition of the proceeds. To relieve a desperate financial situation in Spain and keep King Amadeus on the throne, bondholders consented to a funding of the portion of the interest then due. There was in consequence a heavy fall in Spanish stock, a collapse of credit, the abdication of King Amadeus, civil war, and complete default in June, 1873.

# CHAPTER "X

### THE BANKRUPTCY OF THE NEAR EAST

—Disraeli, Tancred

#### THE REFORMATION OF TURKEY

There is a closed closet in the cabinets of most European chancelleries, which bears the legend "The Near East." Here hang as in Bluebeard's story, the mangled corpses of their successive pledges to constancy and virtue. We are not assessors to weigh the temptations to which the Powers have in turn succumbed or to measure the forces which have brought the eastern Mediterranean to its present pass. The Near East is a cockpit of historical motivation. Today it is oil which gives wakeful nights to statesmen and financiers from western capitals. But yesterday it was the Bagdad Railway. The rights of Christian minorities, the Keys to the Holy Places, the prestige of all of the great powers and the route of one of them to India have directed political action in the Near East in the none too distant past. And there are the slower-moving tides of culture and decay which have lined the shores of the eastern Mediterranean with the driftwood of past cities, mocking at our national prides and

international consortiums. It is with no confidence that one may speak of motives or achievement in this presence. And what the fates intended which poured European capital into Turkey and Egypt for a score of years, reduced their governments to bankrupicy and the peoples to desperation, brought the one under financial tutelage of the Powers and the other under British administration, and finally covered those lands with warring nationalities and contending capitalisms, we are not seers to declare.

Among the powers, Great Britain displayed about 1840 the greatest eagerness to preserve the integrity of Turkey. She had a trade of long standing to the Levant, which was increasing as the machine-made products of Sheffield and Manchester drove those of Smyrna and Damascus from the market. With India too there was an interchange of prod-

All of these considerations called for the maintenance of a strong Turkey highly under British control. And in 1842 Stratford Canning was installed at Constantinople as British ambassador, with a broad commission to work for the reform of Turkey.4 From the Turkish point of view, reform consisted essentially in the secularizing of a law which had been purely theocratic, and the modernizing of a scheme of civil and military organization which had been characteristically feudal. Canning's instructions went beyond discipline, however, to prosperity. They specifically mentioned the promotion of roads and steam communications. But not much was done either with reforms or with opportunities for deserving investors until after the Crimean War. The Turks—or more properly, the Armenian bankers who enjoyed a monopoly of credit facilities at rates ranging from twenty to forty per cent—were highly distrustful of western innovations. Not even the mania year of 1845 produced a prospectus from a company promoter in London to build a railway in Turkey. And tho talk of concessions was

Influential Englishmen upon the ground were very frank in discussing their hopes. Let the clause of the Hatt-i-Humayoon of 1856 (the charter of reforms) be enforced

But to Lord Stratford de Redcliffe railways seemed to involve reform in another sense. They could hardly be built at all without improving the Turkish administration, he declared at the laying of the corner-stone of the Smyrna railway station in 1858.9 They must imply "a progressive diminution of abuses, prejudices, and national animosities." The property created by the railways "would call for securities in matters of police, of finance, and of administrative justice." And such reforms must be made. "Western

urged Palmerston in 1841 to endorse the project of a canal to be built by a private company, under a political guarantee of the great Powers. The concession was to be obtained from the sultan; the canal was to be the boundary between Syria and Egypt; and the tolls were to be shared equally between company and sultan. The reply of Palmerston, if any, is not in the public records. But several years later, on his return to the Foreign Office, he instructed the Consul-General at Cairo that "any new arrangement which could facilitate commerce in general and which would shorten communication and cheapen transport, would necessarily be advantageous to England, the greatest commercial country of the world." He considered that France overrated the political advantages a canal might have for her, in view of England's superiority at sea. "On the whole, therefore, Her Majesty's Government do not wish to oppose the canal absolutely, but would greatly prefer the Railway." 19

Britain, too, before they would place the concern upon the stock market.

#### THE RISE OF THE OTTOMAN DEBT

Thus nineteenth century Europe approaches the administrative problems of the Middle Ages.

pounds, in 1872–73 were reckoned at eighteen million. And expenditures rose faster. Abdul-Aziz loved his little extravagances. Ambassadors agreed that he should augment the equipment of his army and navy. So shipyards and gunworks rose by the side of the Bosphorus. Turkey vied with western Europe in recognizing the inventive genius of munitions makers, in providing a market for Krupp and Armstrong.38 And to cover the ensuing deficits, fresh loans were constantly required.

In 1869 Abdul-Aziz made a European tour and on his return entertained lavishly for western royalty in connection with the opening of the Suez Canal. The festivities preluded a new season of projects and concessions. Western banking groups crowded Galata with financial companies formed to make advances to the sultan and to speculate in his funds. The Oriental railway line, joining Constantinople to European railway systems, was at last conceded to the Bischoffsheim son-in-law, Baron Hirsch, who passed for an Austrian. In Paris, Brussels and London the bourses were filled with various denominations of Turkish paper, which sold at widely differing prices, with activity unceasing. The proportion of interest burden to revenue soon grew greater and the necessity for loans increased as the difficulty of finding plausible revenues to mortgage for their support became more difficult. In 1869 there was a loan for twenty-two million pounds, in 1871 one secured upon the augmented tribute of Egypt for £5,700,000, in 1872 a loan for eleven millions, in 1873 a loan for nearly twenty-eight millions, in 1874 a loan for £15,900,000 at 5% which was offered to subscribers at 43½!

During these years the devotion of London to the cause of Turkish credit was by no means constant. There were other offerings of Ottoman securities which did not come to London at all; and it was the business of the cosmopolitan financiers who competed for the loans to distribute them widely among the money markets of Europe. Paris held sway for a season, and when her energies were absorbed by the war with Prussia, Vienna sponsored many financial combinations. But London continued to be a source of strength to Galata bankers with their accommodation bills. And when disaster overtook Vienna in 1873 it was the English market upon which Turkey had chiefly to rely. There were annual interest and amortization payments to be met in the West amounting to more than eight million pounds, not including numerous usurious short-loan arrangements which had been made at Paris and Brussels. If Turkey met them from her mortgaged revenues she would be unable to maintain her government. The powers could not have both Turkey and dividends without supplying the money themselves. And so long as Turkish credit enjoyed an adventitious esteem which came from the conviction that a great British interest was at stake there were always fresh investors to enable the old to earn their interest.

#### THE RISE OF THE EGYPTIAN DEBT

To the stock of de Lesseps' canal company, the viceroy, Said Pasha, subscribed not only his original allotment of 96,517 shares but also 85,506 shares which it had been planned to sell in Great Britain, the United States, Russia, and Austria-Hungary, and which had failed to find purchasers. This gave the viceroy more than a half interest in promoting an enterprise which would not be of advantage to other Egyptian revenues. It would divert a valuable transit trade from the state railway which had been built in the early fifties by British engineers. But to a partly sovereign prince, anxious to enlarge his prestige and escape dependence, there seemed to be political advantages of consequence. There might also be profits some day. And altho Said had already begun to live beyond his means at the rate of five hundred thousand pounds a year, by means of treasury bonds and acceptances, it was not difficult to persuade Paris banks to discount the notes which he gave de Lesseps as initial payment upon the shares.

Meanwhile the Suez Canal was building, in a zone over which de Lesseps was as sovereign as the viceroy in Egypt, by the labor of 20,000 fellaheen conscripted from the upper Nile for the purpose. If it was the most momentous engineering feat of the century, it was as plainly working revolution in the relation of western Europe to the Near East. And not a difficulty was left untried which British agents could throw in the path of that revolution. When Ismaïl Pasha succeeded his uncle at the beginning of 1863 it was not

It is not necessary to describe in detail the other embarrassments into which the new viceroy was led by the desire
to exploit the cotton boom. This was one consideration,
apart from dynastic reasons, which led to his purchase of
the estates of his uncles, Mustapha and Halim, as a result
of which Ismail became proprietor of one-fifth of the cultivable land in Egypt. It prompted extravagant attempts
to introduce agricultural machinery. It led him to make
large advances to the fellaheen when their stock was ravaged by epizoötic in 1864, and to issue "village bonds" to free
the peasants from the hands of money-lenders when cotton
fell in 1865–66. Each operation required money and meant
an addition to the floating or funded debt. And revenue\\nincreased but slowly in comparison with the operations.
For it was not only cotton that attracted this strange mixture of enterprise and autocrat, this eastern prince who had
been educated in the Paris of the Second Empire. There
was a navigation company to exploit the pilgrim trade to
Mecca, an "Agricole" to lend money to the fellaheen which
turned into a speculation in building lots, and a succession
of banks in Alexandria to lend money at twelve per cent to

\*

Thus during the first twelve years of Ismail Pasha the

One attempt was made to check the rake's progress. In 1868 the khedive, after vain attempts to conclude a suitable loan with other houses, was forced to accept the terms offered by Oppenheim for the redemption of the floating debt then due. The loan was for a nominal sum of more than eleven million pounds, of which the Egyptian treasury was credited with about seven. And it involved the condition, imposed by the sultan in reassertion of authority over his vassal, that no further loan should be issued by the Malieh (public treasury) for five years. English diplomacy which had procured this arrangement at Constantinople took pride in its work. But it appeared that "loan" did not refer to the discounting of treasury bills; and the limitation of the Malieh in no way applied to the Daïra Sanieh, the private estates of the khedive. In 1870 there was a huge loan for the khedive to build railways, buy warships and sugar machinery. In subsequent years operations multiplied in character and expensiveness. A weekly paper of Alexandria published at the end of 1872 a list of twenty-seven distinct operations

concluded on behalf of the Malieh or Daira since September, 1871. More than four hundred million francs of new indebtedness were involved, easily a year's revenue, bearing an average discount of 13%. There were deals in sugar and cotton futures with Greek merchants, borrowings to ease the paths of diplomacy at Constantinople, issues of bills of all dates from two months to eighteen. Oppenheim, Dervieu, the Anglo-Egyptian Banking Company, Ltd., the Franco-Egyptienne, the Bank of Alexandria, Ltd. (Greeks under English protection), and other houses in most of which Ismail was a partner, were ready for all emergencies with an abundant supply of bills on London. Borrowing at from three to six per cent in Paris and London, they kept the rates at Alexandria well over ten, and found additional profit when they could employ discounted treasury notes, far from maturity, at par in making payments upon formal loans. In fact the high strategy of the gentry engaged in this business consisted in manipulating the short-time bonds with a view to compel their funding or renewal upon terms most favorable to themselves.

large part to fund these very notes that the loan was being issued. This procedure, comments Stephen Cave, the treasury official whom Disraeli sent a few years later to investigate Egypt, "added materially to the profits of the operation." When the Bischoffsheim syndicate was dissolved in January, 1874, it was stated that it divided £1,600,000 between its participants. And this result had been achieved despite the fact that by that time the loan had fallen to 67.

uel Baker, Charles George Gordon, and Sir John Fowler, in their several ways, were engaged in enterprises which filled Ismaïl with pride and constituted a severe drain upon his purse.49 At Alexandria a. firm of English contractors were constructing port works for £2,500,000, which cost them about £1,400,000 to build.

#### DISRAELI BUYS THE CANAL SHARES

Dervieu strove for some days to find support in Paris for a project which might unintentionally have ruined the Crédit Foncier. De Lesseps helped in the search, and urged the French government to buy. The khedive offered to guarantee as high as 11% upon one hundred million francs, if anyone would give so much for the shares. But everyone seems to have been more interested in the painful predicament of the Crédit Foncier than in Dervieu's hopeful idea for earning a commission.

It must not be supposed that this was the first time Derby or the British government had heard of the Canal

# CHAPTER XI

### AT THE END OF THE SURPLUS

"Blessed are the meek; for they shall inherit the earth."

Matthew, v, 5.

#### THE STOCK-AND-BOND ARISTOCRACY

#### THE REVOLUTION IN FOOD SUPPLY

For twenty years following the repeal of the Corn Laws, English agriculture had continued to thrive.1 The machine

Climatic conditions were in part, no doubt, responsible for the rapidity with which England shifted her source of supply of agricultural products. From 1875 to 1879 the harvests were the worst in half a century. But the climatic conditions only made emphatic the influence of factors chiefly manifest at the market end of the agricultural process.

Now to pay for all this wheat and bacon without disturbing the harmonies, it was necessary to export a great deal

### IN LIEU OF CONCLUSION

British capitalists as a group did profit from investment

and directed the export of Britain's surplus. There were heirs to Baring and Rothschild, to Brassey and Gurney and Bischoffsheim. The commission merchant, the contractor, the bill-discounter, the cosmopolitan banker, were institutions that survived the wreckage of innumerable particular firms. Their activity was only partially diminished by the cessation of the surplus. To the new England whose industry and life always gave fresh hostages to the seas, they were the monarchs on whose word the defense and glory of all depended.

![](https://samisdat.in/user/pages/03.books/1926%20-%20Migration%20of%20British%20Capital%20to%201875/read/_page_344_Picture_0.jpeg?g-16018011)

# NOTES TO CHAPTER ONE

It is somewhat arbitrarily, therefore, that this study makes no special attempt to consider investments in shipping enterprise between Great Britain and other countries, or investments by British merchants in carrying on their foreign trade. These uses of capital doubtless have some of the same political and social involvements as investments in industry, agriculture, public works and government securities. They in part function similarly in the international balance of payments. For investigation and report, however, they offer unusual difficulties, and they are knit up in a chain of events which makes their discussion seem more appropriate to a history of commerce than to one of finance. This discrimination, moreover, conforms to common use of the term "foreign investments."

8 Paish in supplement to The Statist, Feb. 14, 1914.

9 "Early capitalistic" is here in the sense of Sombart II: 1-15. 10 Sombart II: 954-55. This situation altered rapidly in the eighties with the rise of the cotton industry and the Anglo-French Commercial Treaty of 1786.

and Heywood fortunes were as parasitical as those of the nabobs. Cf. Fox Bourne, H. R., English Merchants (1886) 319-30, 324.

12 Trevelyan, G. O., George III and Charles James Fox (1914) II: 327-33; Lecky, W. H. R., England in the Eighteenth Century (1892) V: 201-02.

14 Serionne, II, 25-26. On the relative prevalence of the credit system in English trade as compared with the continental of the time. cf. Sombart. II: 514-16.

Geschichte der Handelskrisen (1908) II:4-8.

Palgrave, R. H. I., Notes on Banking (1873), citing a French government report of 1729, is authority for the statement that the Bank of Sweden (1657) was the first institution to issue banknotes. The goldsmiths appear to have used the device without public authorization before this date. More indisputable is their origination of the checking-account. By 1793 the London private bankers had abandoned note-issue entirely for this device, and check-books and a clearing-house (1773) flourished. Pownall, George H., English Banking: Its Development . . . (1914) p. 7.

J. E. T., The First Nine Years of the Bank of England.

16 Savary, II, 687-89. Cf. Malthus, Essay on Population (4th edit.) p. 437 as to importance of England's surplus agricultural production as a source of her wealth

20 Halévy, I: 338-44; Hamilton, Robert, *Inquiry concerning the National Debt* (3rd edit. Edinburgh 1818); Hume, "Of Public Credit," in *Essays Moral*, *Political and Literary* (London 1752).

23 Steuart, Sir John, Inquiry into the Principles of Political Economy (1772) pp. 399-401; Smith's Wealth of Nations (Everyman) I:81; Cambridge History of British Foreign Policy (New York 1922-23) I:164-70.

is the testimony of Thomas Richardson before the Bullion Committee of 1810. *Minutes of Evidence*, pp. 177 ff. Bagehot, ch. 11 and Tooke & Newmarch, VI: 584-608 cover later developments? Cf. Fox

# NOTES TO CHAPTER TWO

covering the years 1842-52; it is now out of print. John Marshall's Digest of all the Accounts (1833) is a somewhat chaotic summary of statistics officially published to about 1830.

1 Cannan, Edwin, The Paper Pound of 1797-1821 (London 1917); Acworth, A. W., Financial Reconstruction in England, 1815-1822 (London 1925). A brilliant study, ascribing England's troubles chiefly to deflation); Silberling in Q. J. Econ. XXXVIII: 214-33, 397-439.

3 Del Mar, Alexander, History of the Precious Metals (London

1880\) pp. 152, 203.

5 Report of finance commission headed by J. Laffitte, summarized in *Times*, 6 Oct. 1816. Dareste de Chavanne, A. E. C., *Histoire de la Restauration*, Vol. I (Paris, 1879). Nervo, G. de, *Les finances françaises sous la Restauration* (2 vols. Paris 1865-68). Bresson, Jacques, *Histoire financière de la France*, Vol. II (Paris, 1829).

financières. (3 vols. Paris, 1826-27) I:226.

7 Ouvrard, I, 216-17, claims credit for the idea, and his narrative checks in the main with the dispatches of Wellington and Stuart, English ambassador in Paris, where verification is possible. However, Capefigue, *Histoire des grandes operations financières*, T. III (Paris, 1858) pp. 63 ff., assigns credit to Wellington and Pozzo di Borgo.

Dictionary of National Biography.

9 Ouvrard, I: 238-44. Capefigue, III: 28-29. The connection seems

op. cit. I:247.

13 Baring insisted that he be given the loan at five points below the market price, and was successful. Supplementary Despatches of the

14 The Austrian loans of 1794 and 1795, made thru Boyd, Benfield & Co., totalling £5,600,000, carried the guarantee of the British government and proved to be in fact British securities. Accounts and Papers. 1821 (11) and (520). British claims were composed for £2,500,000 under convention of November 17, 1823, which was raised in the following year by a loan in London. Lord Brougham stigmatized this arrangement as a settlement for half a crown in the pound.

In 1809 there had been a Portuguese loan for £600,000 privately ar-

singled out for repudiation

17 Vansittart in Commons, 9 Apr. 1818.

19 Parl. Deb. XXXV: 226-32, 428-35. "A" in Times. 27 Dec. 1817.

20 Morning Herald, 9 Jan. 1822.

land, managing partner of Baring Brothers

27 F. O. Protocols of Aix-la-Chappelle, #36-38. Drafts of letters

30 Ibid, page 158.

48 Canning's policy followed closely the action of France with reference to Spain, and became positive only after France invaded Spain in behalf of Ferdinand's absolutisms. In April, 1823 the French army crossed the Pyrenees; in October Canning accredited consuls to the principal South American cities. The French army lingered thru 1824; the Foreign office assisted in organizing a Mexican expedition and negotiated a commercial treaty with the provinces of the Plate. When it became certain that the French army would remain indefinitely at Ferdinand's service, Canning announced January 1, 1825, definite recognition of all the revolting republics. The parallel with the movement of elation in the stock market is

49 It is piquant to discover these arguments set forth with skill by the future prime minister, Benjamin Disraeli, who made his debut upon this occasion by writing the publicity for a stockbroker interested in keeping up the price of mining stocks. Disraeli: An Enquiry into the Plans, Progress and Policy of the American Mining Companies (1825) and Lawyers and Legislators (1825). Cf. Rawson, Sir William: The Present Prospects and Future Operations of the Mexican Mining Associations Analysed . . . (1825).

50 Alexander Baring denounced the joint-stock mania in the House of Commons in February, 1825. It interfered with "legitimate"

government-loan making.

51 Quarterly Review XXXI: 349. Tooke, History of Prices,

52 The American Moritor, a Monthly Political, Historical and Commercial Magazine, particularly devoted to the Affairs of Souths America (London, 1824-25) esp. I:136, 181, 366-7, 412. The Present State of Colombia, pp. 314-24. Report of Lieut.-Col. Campbell, 7 Nov. 1824, at F. O. 18:3

(London, 1826) pp. 303-4.

be consulted for details. Ward, Henry G.: Mexico in 1826 may be consulted for details. Ward, Henry G.: Mexico in 1827 (2 vols. London 1828). Times 11 Sept. 1838. Kinder vs. Taylor in 3 Law Journal R. ch. 68-84, reports a law-suit involving the Real del Monte company. In 1826, two million pounds additional capital was called up on the mining company shares; in 1827, £800,000; in 1828, over one million; and thereafter two or three hundred thousand a year until the revival of joint-stock enterprise about 1835. These figures are based upon computations derived from data in Wetenhall, J., Course of the Exchange and the Financial and Commercial Record, weekly precursors under private auspices of the Stock Exchange Daily Intelligence. These publications contain the amount paid up at any time upon shares in active trading. It has thus been possible to compute at least the nominal investment in the enterprises listed. To 1849 when the company sold out, the Real del Monte mine cost \\$15,000,000 for a return to the proprietors of \\$10,500,000. Hill, S. S., Travels in Peru and Mexico (2 vols. London 1860) II:308-10. Cf. Powles, Illingworth & Co., Observaciones sobre la Mineria de la Nueva Granada (Bogota, 1837). Head, F. B., Reports relating to the Failure of the Rio Plata Mining Association (London 1827); Dahlgren, C. B. Historic Mines of Mexico (N. Y. 1883).

Herring, Richardon & Co., which succeeded Goldschmidts as agents for Colombia as well as for Mexico, to fail in 1828, also with government funds in their possession. Cf. comment in *Times*, 29 Jan. 1820.

About one-fourth went to the colonies.

# NOTES TO CHAPTER THREE

A clear narrative of American financial experience in the Jackson period is presented in Dewey, D. R., Financial History of the United

<sup>1Report of Committee on the State of the Bank, 1819 (282) p. 109.

<sup>2 Channing, Edw., History of the United States, IV:95

4 Niles Register, XLV: 178: Gallatin, Observations on the Currency

5 Catterall, op. cit., pp. 108 ff. and 508. Niles Reg. XLI, 112, 113. 6 Report of Secretary of the Treasury, Oct. 15, 1828. Cf. Seybert tatistical Annals, p. 757. H. R. 121. 22 Cong. 2 Sess. p. 13. The stimate of £8,600,000 queted in Niles Reg., June 12, 1824 is certainly

unfounded.

Channing, ob. cit., IV: 111.

Accounts. (1834).

10 Smart, W., Economic Annals, 1820-30, pp. 329-30. The Auction System (Baltimore, 1824). Circular to Bankers, 14 March, 1834. This system is described in discriminating detail in Buck, Organization of the Anglo-American Trade. (1925).

nique to 1830.

13 Thomas Wilson & Co., Timothy Wiggin & Co., George Wilde & Co. (the three "W's" which failed in 1837), Morrison & Co., Lizardi & Co. and Rothschilds were the other firms engaged in this business in 1836. Rothschilds had only recently been drawn into it, possibly because they succeeded Baring Brothers in 1835 as agents abroad for the United States government. Niles Reg. XLVII:234; Circular to Bankers, 13 Feb. 1835. They had houses in New York, Boston, Philadelphia and Baltimore within a year. Niles Reg. XLVIII:250. After 1837, Palmer, Dent & Co. and Magniac, Jardine & Co., among others, were drawn into the business by the close connection of the American with the Chinese trade. Cf. Circular to Bankers 7 Oct. 1836. 25 Mar. 1837. The Liverpool firm of Brown

14 Report of Committee on Commerce, Shipping, etc. 1833 (690)., testimony of Joshua Bates, managing partner of Barings, # 769, 867,

964-6, 1001.

15 Ibid, testimony of Joshua Bates, #744-1057. Circular to Bankers, 13 Jan. 1832. Fully one-half of the value carried by American vessels to China, for instance, in the thirties consisted in bills on London. These bills went from Hong Kong to India in payment for opium, and came to London in payment for the increasing exports of Manchester goods to the Orient or as part of the Indian revenue. The disruption of the opium traffic from 1838 to 1842 was no small factor in the breakdown of the commercial system of which it was an important part. Forbes, R. B., Remarks on China and the China Trade (New York 1844). Testimony of Sir George Larpent before Committee on East Indian Trade, 1840. Pitkin's View, 303. Hunt's Merchants' Magazine, VI:567-70; XII:44-52.

16 Pitkin's Statistical View, pp. 189-213 contains a discussion from the New England standpoint of the effect of Jackson's diplomacy. Cf. Benns, F. Lee, The American Struggle for the British West India

17 Porter, op. cit., 391, 403.

18 Circular to Bankers, 13 Jan. 1832.

19 Report of Committee on Commercial Distress 1847-48, testimony of Samuel Gurney. Times 5 April, 17 May, 1830.

21 Ibid, 13 Jan. 1832.

22 The case of the Earl of Derby, with estates in Lancashire worth £14,000 a year before the rise of manufacturing centers raised his rent-roll to £180,000. Money Market Review, 10 Dec. 1864.

summary

24 New York Annual Register, 1834, p. 176. American Railroad Journal, VI:37; Trotter, 127-57; Message of Gov. W. H. Seward, Jan. 1840, in Hazard, U. S. Comm. & Stat. Reg. II, 60-74

and Denison, Heywood & Co.

28 Times, 5 Nov. 1842.

29 American Railroad Journal (1839) pp. 30, 348

30 Quoted from New York Express in National Daily Intelligencer,

10 Sept. 1839.

Wright & Co. failed in 1840. Two of the banks the Bank of Australisis and the Jonies Bank wars atill in swittens in 1841.

46 Palmer, J. Horsley, Causes and Consequences of the Pressure in the Money Market (London, 1837); Ricardo, Samson, Observations on the recent Pamphlet of J. Horsley Palmer, (1837); Duncan,

Francis, The English in Spain (London, 1877).

- 58 N. Y. American 27 Nov. 1837; Morning Chronicle (London) 22 March 1837.

55 Circular to Bankers, 23 Apr., 27 May, 1837. Tooke, History of Prices, II:264-73 argues that it was an oversupply of tea, cotton and silk that caused pressure upon overstrained credit relations. But it must be kept in mind that it was upon the trade in which those items figured prominently that the brunt of credit restriction fell. Silk declined in price from Dec. 1836, cotton from February; wool and

iron were leading items in the subsequent slump.

57 This relation is clearly analyzed in *Circular to Bankers*, I July

1837\.

Reg. LV: 259.

60 Niles Reg. LII: 65, 66, 81, 390; Manchester Times, 20 May, 1837. 61 Manchester Times 29 Apr. 1837; Circular to Bankers, 28 April, 5 and 27 May, 1837.

62 A rise of a penny in the pound on the 1837-38 crop, explains Vincent Nolte, op. cit., p. 419, would make a difference of \\$11,500,000

in its market value.

88 Report of Committee of Stockholders of the Bank of the United States, April 3, 1841 in Hazard, op. cit., III:228-9 Letters of Biddle to J. Q. Adams, 10 Dec. 1838 and to J. M. Clayton, 8 April 1841, printed in Hazard, op. cit., III:248-50. Circular to Bankers 15 June 1838. One of Biddle's operations is said to have involved the accept-

not immediately necessary to think about

the United States. See Biddle's correspondence with Cowell, agent for the Bank in Philadelphia. Circular to Bankers, 28 May 1842. Possibly as a result of this contretemps, the Bank shipped one million pounds in gold to the United States in February, 1838 to facilitate resumption, an action which Tooke denounces as "mere quackery." History of Prices, III:79-81.

75, 189.

70 The money articles in the New York Herald for 1837-40, written by Thomas P. Kettell, give the best account of these concerns. These were the first daily money articles published in the United States. Kettell continued with the Herald until Nov. 1843. Later he was proprietor of the Democratic Review and his monthly fluancial

71 Quoted by Daily Nat. Intelligencer (Washington) March o. 1830.

from the Richmond Enquirer.

73 Hazard, III:282.

75 Tooke, III:73. Circ. to Bankers, 6 July, 26 Oct. 1838.

78 Tooke, III:74. Manchester Guardian, 29 Dec. 1838, 3 July

1839

3 July 1839.

81 The issues of *Circular to Bankers*, 13 Sept. to 18 Oct. and 13 Dec. 1839 give the arrangements made to carry the post-notes of the

Bank.

82 Hazard, III :228–29, 261–64.

# NOTES TO CHAPTER FOUR

- 4 Hunt's Merchants' Mag., X:78.
- 5 H. R. 296. 27 Cong. 3 Sess. p. 117
- 6 North American Review, LI:335.

8 Annual message of Governor Grayson of Maryland, Niles Reg.

March 28, 1840.

10 Times, 2 Jan. 1847, 5b: Hunt's Merch. Mag., VI:478-79. B. R. Curtis in North Am. Rev., LVIII:109-54; U. S. Mag. & Dem. Rev., March, 1845. A detailed discussion of the "Debts and Finances of the States of the Union" is contained in a series of articles by Thomas P. Kettell which appeared in Hunt's Merchants' Magazine, XVII:466, 577; XVIII:243; XX:256, 481; XXI:148, 389; XXII:131.

12 Times, 31 Oct. 1844.

13 Smith, Sydney, Letters on the American Debts (2nd ed. London.

14 First printed in Times, 15 May 1843. An answer, The American's Defended, by an American (London 1844) is not in the British Museum. Smith's investment was in fact made out of a legacy which had been recently acquired.

15 Bankers' Magazine (Baltimore) II:201-05. U. S. Economiss

Sess., Mar. 3, 1843.

21 Times, 12 Jan. 1843.

23 Times, 28 June, 1843.

25 Humboldt, Alexander, Political Essay on the Kingdom of New

Spain (London 1811) Book VI.

41 Times, 23 April, 1829.

42 G. R. Robinson to Col. Ytterreguy, 26 Feb. 1847 in Times, 13 Mar. 1847. Fenn on the Funds.

43 Parish, H. H., Diplomatic and Financial History of Greece

(1838) pp. 204–68, chapters 7 and 8, and App. 65ff.

44 Times, 4 Nov. 1842, 16 Mar. 1843

Branch of Trade (London, 1842)

47 The following are some of the materials used for the account of the Rio Plate intervention: Pfeil, A. R., The Anglo-French Intervention in the River Plate (London 1847); Idem, Resumé des Affaires de la Plate (Paris 1849); Baines, Thomas, Observations on the Present State of Affairs in the Plate (Liverpool 1845); Bourguignat, La Question de la Plate (Paris 1849); de Montrenal, L. T., La Plate au point de vue des interêts commerciaux de la France (Paris 1851); Parish, Woodbine, Buenos Ayres and the Provinces of the Rio de la Plate (2nd edit. London 1852); Shuttleworth, N. L. K., Life of Woodbine Parish (London 1910); Latham, W., The States of the River Plate (London 1868); Edinburgh Review, LXXXVII:564; Economist, 6 Nov. 1847, p. 1273.

50 Hansard's Parl. Deb., 3 ser. XCIII:1285-1307.

51 State Papers, British & Foreign, XLII, 385.

# NOTES TO CHAPTER FIVE

be a mine of documentary source material.

- - 2 Circular to Bankers, 21 Oct. 1842.
- 3 Trueman & Cook's Overland Despatch, I June, I Aug., 2 Oct., 2 Dec. 1843. For further details of the depression, cf. Page I:
- 4 Scrivenor, Henry, The Railways of the United Kingdom Statistically Considered (London 1849) App. pp. 58 ff; Williams, F. S., Our Iron Roads (7th ed. London 1885) p. 39; Herapath's Railway Iournal
- 5 Data from Porter, *Progress of the Nation* (1851) p. 327 and Tooke & Newmarch, V:352, which are in turn compiled from numerous parliamentary returns, made up from voluntary reports.
- - 7 Tooke & Newmarch, V:355-57
- - 10 Disraeli, Endymion, (1881) chapter 58
- 11 At least not as directors of English railways. A number of
- 12 Spackman, W. F., Statistical Tables of the United Kingdom and its Dependencies (London 1843) tabulates the nominal value of securities quoted at that time upon the Stock Exchange:

| British and Irish funded debt Loans to foreign govts and Am. States | £773,000,000 121,501,410 |
|---|---|
| 70 Railway companies | 57,447,903 |
| Banking interest | 46,449,694 |
| 59 Canal companies | 17,862,445 |
| 8 Dock companies | 12,177,237 |
| Turnpike Trusts | 8,774,927 |
| East India Company | 6,000,000 |
| South Sea Company | 3,662,734 |
| 24 foreign mining companies | 6,464,833 |
| 81 British mining companies | 4,500,000 |
| 107 Assurance companies | 26,000,000 |
| 27 gas, light and coke companies | 4,326,870 |
| II water companies | 2,536,122 |
| 5 bridge companies | 2,123,874 |

17 Francis Hist of the Fun Ry I 266-73 II 76-7

19 Helps, Arthur, The Life and Labours of Mr. Brassey (London 1872).

20 Galt, William, Railway Reform (London 1865) 348-50.

Staatsbahnen (Wien, 1913) I:29-39.

25 The first steam railway opened in Europe, was the line from Brussels to Mechlin, May 5, 1835. In the Germanies, Bavaria (1835) and Saxony (1837) were ahead of Prussia (1838) in commencing

railway operation.

the six-volume work of Picard previously cited.

30 Memoirs of Sir Edward Blount (London 1902) ch. 4; Helps, Life of Mr. Brassey, ch. 4 and 5; Devey, Joseph, Life of Joseph Locke (London 1862); Fay, Sir Sam, A Royal Road, being a History of the London & Southwestern (London 1883); Testimony of Thomas Brassey and William Reed in Second Report from the Select Committee on Railway Acts Enactments. 1846 (687); Bulletin des Lois, 1840, suppl. 2nd. sem. p. 65; Times, 5 June 1840 (prospectus); Journal des Chemins de Fer, 3 and 10 Sept. 1842, 9 May 1843, etc.

Empire.

32 Railway Register, III:359. The promoters sold their Paris-Rouen shares at 100% profit. By the end of 1846 it was thought that the English had made at least five million pounds upon their original investment in French railways. Ry. Register, IV:259-61.

33 For this report and current opinion see the issues of Journ. Chem

de Fer, 26 Nov. 1842 to 7 Jan. 1843

Stater's Manchester Directory. 1841. Barry proposed to get his capital and build the Orléans-Tours line within two years, if the French government would admit iron rails duty free. His mission appears to have been in the first instance that of business getter for iron manufacturers. However there were also iron manufacturers in France, and when the project got definitely under way in 1844, one of them appeared as a promoter, entitled to 10% of all the profits above 6%. The Orléans-Tours line was finally built by Mackenzie & Brassey, who employed American excavating machines, and laid a mile of track a day. Thirty locomotives were ordered in England; the balance of the rolling-stock was built in France. Times. 17 Aug. 1845.

39 Morning Post, 11 Jan. 1843. Cf. Times, 12 Jan. 1846, 5b

40 Circular to Bankers, 2 Nov. 1844.

41 J. Chem. de Fer, 4 Feb. 1843; Times, 19 Nov. 1845, 3b.

1845).

- - 45 Audiganne, A., in Rev. des Deux Mondes, 15 Feb. 1855.

46 J. Chem. de Fer, 30 Aug. 1845.

47 Details of the fused company are in *Times*, 29 Aug. 1845 and *J. Chem. de Fer*, 30 Aug. 1845. The following are the English

allottees whose nationality is readily recognizable, with the number of shares assigned to each:

| Baring Brothers | 8000 | J. D. Powles | 2000 |
|---|---|---|---|
| Denison, Heywood & Co. | 8000 | Joseph Esdaile | 2000 |
| Morris, Prevost & Co. | **4** 400 | Andr. Spottiswoode | 2000 |
| Morrison, Sons & Co. | 4400 | L. Murray | 2000 |
| I. L. Goldsmid | 4400 | Francis Mowat | 5381 |
| A. J. Paull | 2000 | T. M. Weguelin | 5125 |
| John Gattley | 2000 | Pratt Barlow | 5125 |
| Thomas Cooke | 2000 | W. Magnay | 5125 |
| John Shewell | 2000 | T. O. Powels | 500 |
| Francis Mills | 1250 | David Salomons | 1250 |
| J. Hopkinson | 2000 |  |  |

49 Economist, 23 Jan. 1847, p. 111.

II:254-55

58 Shareholder, 15 Oct. 1845.

55 Andrew Spottiswoode at first meeting of shareholders, Railway

56 Railway Register, II:296-98.

57 Ibid., III :207.

57ª Ibid., IV: 260 ff. There was no public quotation of railway

shares in Belgium until 1847. Moniteur Belge, 30 Mar. 1847.

61 Evans, D. M., pp. 32, 51, 107

54 Andréades, A., History of the Bank of England, pp. 331-42.

a considerable investor in foreign rails.

68 Hubbard, J. G., Letter to Sir Charles Wood, Chancellor of the Exchequer (1847) quoted by Morrison; Economist, 21 Aug. 1847, p. 954; Testimony of Joshua Bates, Samuel Gurney, J. Pears, James Morris and Adam Hodgson in Report of Commons Committee on Commercial Distress 1847-48, #605-8, 1927-29, 3502, 4589-91, 2458-60, 2579-80, 2614-31.

18 Mar. 1848.

70 Normanby, A Year of Revolution (London 1850) pp. 262-65.
71 Ibid., pp. 178-79, 230-31, 266-67; J. Chem. de Fer, VI: 640; Euvres de Emile & Isaac Pereire.... Series G. III (Paris 1913) pp. 2610-17.

# NOTES TO CHAPTER SIX

Sources of Information for British Enterprise upon the Continent.—The activities of British enterprise upon the Continent during the conquest of the latter by industrialism form an almost forgotten chapter of history. Scholarship in France, Germany, Austria, Switzerland and Russia has been more attentive to the recent economic annals of those countries than British scholars have been even to their own. But this chapter may fairly claim to be the first attempt to show the influence of Great Britain upon the economic transformation of the Continent generally. It is to be hoped that it may harbinger a more exhaustive report. For such a purpose the existing secondary literature is of value only as a background.

The basis for this account consists mainly in the news columns and market reports of the financial press; reports of directors and of shareholders' meetings in the same; manuals, almanacs, directories, year-books and commercial dictionaries; the reports of British consuls and secretaries of embassy and legation; testimony taken by various parliamentary committees; contemporary periodical and pamphlet literature; and, in a few instances, the Foreign Office papers at the Public Record Office in London.

The prospectuses carried in the advertising pages of the *Times*, with accompanying comments in its City column and in the financial weeklies, provide the most comprehensive survey of British enterprise, so far as it assumed the form of public companies. Company meetings are most adequately reported in *Herapath's Railway Journal*, the most widely read railway weekly in the fifties, which also carries a partial list of "calls" on railway capital. Complete files of *Herapath's* (1836-1901) and of the *Railway Times* (1833-1914) are ac-

Of European financial publications, the Journal des Chemins des Fer (Paris) was in the fifties controlled by the promoter J. Mires, and was a combination of a brokerage house and newspaper. It is accessible in the NYPL (1842-date) and the BM. The entire French financial press in the middle of the century was merely the publicity department of various financial groups. I have not run across a file of any other of the numerous weeklies which flourished in connection with the Paris Bourse. The terms of concessions and shareholders' lists of the companies organized under French law in 1867 are contained in the Bulletin des Lois (Harvard). For international financial relations the Moniteur des Intérêts Matériels (Brussels) and Der Aktionär (Frankfurt) provide the most illuminating and uncolored reports from 1850 to 1875. Their correspondence from London, Paris, Vienna and other money markets is frequently superior to the news published in those centers. The Moniteur was published by the de Laveleye family, and its editorial articles are of a distinction fully equal to those of the Economist for the period. Files of both these periodicals were obtained in the library of the University of Heidelberg, which incidentally contains a voluminous and well-indexed collection of pamphlet material relating to British economic conditions in the early part of the nineteenth century.

The Revue des Deux Mondes is the contemporary general periodical containing the most suggestive articles upon social and economic affairs in Europe.

Other sources which have been used are in part referred to particularly in the ensuing notes.

2 Soetbeer, Ad. in *U. S. Consular Reports* (1887) XXIV, pp. 435-663; *U. S. Mint returns;* Del Mar, *History of Precious Metals* (2nd edit) p. 440: Tooke & Newmarch, VI:150-51: Sombart, I:534-35.

592-93.

5 For contemporary views of the relation of the gold discoveries to the business revival, see Tooke & Newmarch, VI, ch. 4; Newmarch W., The New Supplies of Gold (London 1853) Hyde Clarke in The Mining Manual and Almanack for 1851 (London) pp. 224-40; Patterson, R. H., The New Golden Age (London 1868 2° vols); Leon Faucher in Rev. des deux Mondes, Aug. 1852.

printed in Volkswirtschaftliche Studien (1873) 1:278-79

follows:

| 14,868 | J. P. Kennard | 628 |
|---|---|---|
| 14,864 | A. Devaux | 600 |
| 3,080 | Grisewood, Harman | 600 |
| 2,355 | W. J. Chaplin | 554 |
| 1,750 | Jas. Morrison | 450 |
| 1,750 | Thomas Smith | 442 |
| 1,750 | John Masterman | 400 |
| 1,605 | B. E. Morrice | 363 |
| 900 | A. A. Hogton | 300 |
| 750 | S. M. Murray | 300 |
|  | Sir John Easthope | 300 |
|  | 14,868 14,864 3,080 2,355 1,750 1,750 1,750 1,605 900 750 | 14,868 J. P. Kennard 14,864 A. Devaux 3,080 Grisewood, Harman 2,355 W. J. Chaplin 1,750 Jas. Morrison 1,750 Thomas Smith 1,750 John Masterman 1,605 B. E. Morrice 900 A. A. Hogton 750 S. M. Murray Sir John Easthope |

10 Paris-Strasburg, Blêmes-Didier-Gray and West of France

(originally Versailles to Rennes).

11 Bull des Lois. 1852. 1st sem. suppl. 712; J. des Chem. de Fer 1852, pp. 249, 411, 494. There is an account of Laing in Escott, T. H. S., City Characters (London 1922) pp. 183-85. Masterman with Sir William Magnay and James Ashwell were given prison

sentences for misuse of funds of the Great Luxemburg.

18 There were English directors upon the Ardennes, Blême-St. Didier-Gray, Creil-Beauvais, Dijon-Besançon, Dôle-Salines, Grand Central, Graissessac-Béziers, Paris-Caen-Cherbourg, Paris-Lyon, Lyon-Genève, Lyon à la Méditerranean, Midi, Montluçon-Moulins, Nord, Ouest, Paris-Orléans, Paris-Rouen, Rheims-Mezières, Rouen-Havre. The consolidations of the later fifties merged most of these lines in the five great systems, Nord, Est, Ouest, Orléans and P-L-M, in each of which there was for a time at least one English

director.

14 Edwin Chadwick in Journal of Stat. Socy. of London. Jan.

18, 1859. XXII:385.

15 R. Dudley Baxter in *ibid.*, Nov. 1866, XXIX:567-79 printed separately as Results of Railway Extension, (see pp. 21-26). Baxter found that the dividends of the large systems averaged above ten per cent, altho net profits were only five or six. The large subventions from the French government accounted for this situation, as well as the large bonded debt carried at three per cent. The high dividends enabled considerable amounts to be paid to the original promoters upon founders' shares.

17 Herap. Ry. Journ. XV: 766.

18 Nassau Senior, Conversations with Thiers, etc. (London 1878)

19 Cochut, André, "Les Chemins de fer Autrichiens," Rev. de Deux Mondes, 2d ser. IX:1059. Frühling & Goschen, a firm of Leipsic Jews established in London about 1815, is said to have made the fortune of its members out of Hungarian mining property.

20 The British Almanac and Companion (1853) contains an ex-

21 Hedrich, O., Die Entwicklung der eschleswig-holsteriischer

Eisenbahnwesens (Kiel 1915).

Bert, letter dated 28 Oct. 1845.

26 See despatches of Sir James Hudson to Palmerston, 23 March,

23 June, 7 Nov. 1852, at F. O. 67:184

29 Gubler, pp. 330-31.

Turin-Susa and Turin-Novara running thru Piedmont to the Lombardy frontier. Rothschilds also approved of this route across the Alps. Helps, ch. 13.

32 Der Aktionär, 10 Sept. 1854.

33 Thayer's Cavour, II:4-9; Pratt, E. A., Rise of Rail Power in

War and Conquest (London 1915) pp. 9-13.

Details of the fusion of 1856 in Times 18, 19 Mr., 26 Apr. 1856.

11c; Herap. Ry. J. XVIII:462.

- 36 Moniteur des Intérêts Matériels, 2 May 1858, 8 Aug. 1858, 1 Jan. 1860. 
    - 37 Infra, pages 244 and 297, n. 20.
    - 38 Memoirs of Sir Edward Blount, p. 47.
    - 39 Bull. des Lois. 1859, 1st sem., suppl. p. 972
- 40 Helps, Life and Labours of Mr. Brassey; Herap. Ry. Journ XV:482. 
    - 41 Monit. des Int. Mat., 16 Sept. 1860, 24 Feb. 1861
    - 42 Monit. des Int. Mat., 18 Oct. 1857; J. des Chem. de Fer, passim

43 Mont. des Int. Mat., 2 May 1858.

44 Monit. des Int. Mat., 29 Dec. 1867; 22 Nov. 1868

47 A list of leading iron and steel merchants published in the *Mining Manual and Almanack*. 1851, pp. 429-30, includes the following which appear frequently in lists of foreign shareholders:

Dunn, Matthias, View of the Coal Trade (Newcastle-on-Tyne, 1844)

pp. 157-201.

64 Schulze-Gaevernitz, pp. 205 ff.: Ischchanian, pp. 146-47.

67 This was a société en commandite, under French law. E. E

Goldsmid and W. B. Gregory were the managers.

68 Herap. Ry. Journ. XV:366. William H. Goschen was the original chairman of the company.

Madrid in 1852, capitalized at £800,000. Ibid., XIV:214

70 Bull. des Lois, 1854, suppl., 1st. sem, p. 55.

71 Revelation of Spain in 1845 by an English Resident (London 1845. By T. Hughes) II:121. Brown, N. and Turnbull, C. C. A Century of Copper (London 1906)

72 Moniteur Belge, 1845, 1st sem., 589; Times, 19 May 1846; Herap

Ry. Journ. IX: 58.

78 Mining Journal, May 5, 1855, p. 274.

75 Consul Mulvany in Second Report of Commission on Depres-

77 Bankers' Magazine (Baltimore) I. 88-90.

80 Monit. des Int. Mat., 13 Sept. 1857

81 Monit. des Int. Mat., 3 Jan. 1858.

82 Rep. on Bank Acts, pp. 112-42; Andréades pp. 343-52; Evans, D. M., The Commercial Crisis of 1857 (1859).

# NOTES TO CHAPTER SEVEN

2 The chief companies formed to do business in Australia before the fifties were: Australian Agricultural (1825), South Australian Company (1836), Bank of Australasia (1840), Union Bank of Australia (1840), Royal Bank of Australia, and Scottish Australian

Investment Co.

3 The account of the Grand Trunk rests chiefly upon the following authorities: Skelton, O. D., The Railway Builders (Toronto 1916) ch. 4 and 5; Skelton, The Life and Times of Sir A. T. Galt (Toronto 1920) ch. 2 and 4; Myers, Gustavus, History of Canadian Wealth (Chicago 1914) I: chs. 10, 11; Brown, Thomas S., A History of the Grand Trunk Railway (Quebec 1864); Keefer, T. C., Eighty Years' Progress of British North America (Toronto 1863); Helps, Life of Mr. Brassey, ch. 14; Report of the Commissioners appointed to inquire into the Affairs of the Grand Trunk Railway (Quebec 1861); Trout, J. M. and Ed., The Railways of Canada for 1870-71 (Toronto 1871); prospectuses and reports of directors and shareholders meetings from Herapath's.

6 Skelton, Railway, Builders, pp. 81-82.

7 Times, 21 Feb. 1861, 5b, citing report of shareholders' investigat-

ing committee.

9 Seeley, J. R., The Expansion of England (1885); Wingate, George, Our Financial Relations with India (L. 1859) states: "Not a shilling from the revenues of Britain has ever been expended on

the military defence of our Indian Empire."

11 Cooke, C. R., Rise, Progress, etc., of Banking in India (L. 1863) Report of Sel. Comm. on East India 1833, III, Testimony of Thomas

Bracken of Alexander & Co.

18 Report of Sel. Comm. on Growth of Cotton in India.

15 An important exception must be made as to plantation advances. The development of indigo, reaching a peak about 1833, was almost

16 Times, 6 Jan. 1846, quoting Friend of India, 20 Nov. 1845.

path's IX:229, 741; X:1257–58

19 See note 13.

20 Correspondence relating to Railway Undertakings in India, 1852-53 (787) On Dalhousie's policy cf. Arnold's Dalhousie, ch. 20.

22 Annual Register 1858, p. 259.

28 Report of Select Committee on East Indian Finance. 1872. Test. of Lt. Col. George Chesney.

27 Cf. statements of Lord Stanley, then Indian Secretary, 14

28 Economist, 12 June 1858, p. 644

umanitarians, among whom was Sir Morton Peto.

& Wythes and Hunt, Bray & Elmsley were the most active firms. 31 Parl. Deb. 152: 362; 153: 792-93. Cf. also Lord Lyveden in Parl. Deb. 155: 1331, who declared "no one would be bold enough ir this country to repudiate the debt."

34 Report on East Indian Finance 1873. Test. of Lord Lawrence, #4589-93.

35 Annual Report on Railways in India, 1881-82.

37 Report of Select Committee on E. I. Finance. 1871. Appendix. Petition of Members of the Bombay Association, pp. 513-16. Testimony of Sir Charles Trevelyan in 1873 report, #424-25.

38 The following table summarizes the balance of trade between

India and the British Isles.

| Years | Av. Export Mdse. | Av. Import Bullion (in £ millions) | Av. Export Balance |
|---|---|---|---|
| 1849-54 | 8.o | 3.8 | 4.I |
| 1854-59 | 9.4 | 10.3 | -1.0 |
| 1859-64 | 18.2 | 16.1 | 2.I |
| 1864-69 | 24.2 | 15.8 | 8.3 |
| 1869–74 | 24.0 | 6.7 | 17.3 |
| 1874-79 | 22.0 | 7.0 | 14.9 |

39 Clarke, Hyde, Practical and Theoretical Considerations on the Management of Railways in India (1846).

40 These data are taken from the annual reports of the Govern

42 Dutt., op. cit., pref., xiv. Connell, A. K., The Economic Revolution in India (L. 1883) takes a similarly critical view. Cf. also the testimony of James Geddes before the Select Committee on E. Todios Figure 2022.

current stage of economic history.

5 Davis, J. S., Essays in the Earlier History of American Cor-

porations (Cambridge 1917) finds material for two volumes in the record of companies formed by special favor in the eighteenth

9 Hansard, 134:751-99; 139:1378 ff, 1896; 140:110-38

107 & 8 Vict. c. 110 & 111.

11 18 & 19 Vict. c. 133

18 21 & 22 Vict. c. QI.

15 Leone Levi in Journ. Stat. Socy. XXXIII (1870) 1-41

Partly as sequel to the panic of 1866 the mass of iron and textile manufacturers in Great Britain conducted their business until the twentieth century without resort to the form of a limited liability company. Cf. von Wieser, Der Finanzielle Aufbau der Englischen Industrie (Jena 1919) ch. 5 and 6.

17 The account of the Crédit Mobilier is based chiefly up on Plenge, J., Grundung und Geschichte der Crédit Mobilier (Tubingen 1903); Aycard, Histoire du Crédit Mobilier (Paris 1867. A well-documented attack, afflicted with the notion that anything that causes stocks to move up or down is essentially wicked); Vergeot, J. B., Le Crédit comme stimulant et regulateur de l'Industrie (Paris 1918) pp. 111-93, based upon the still unpublished Pereire manuscripts; Eugen Forcade in Revue des Deux Mondes. 15 March. I

18 Œuvres de Saint Simon de d'Enfantin (Paris 1865-78), esp.

20 Herab. Rv. Journ. XXVII:832.

21 Jannet, Cl., Le Capital, la Speculation et la Finance au xix 'Siècle (Paris 1892).

25 Times. 23 April 1844.

26 Economist, 20 Nov. 1847, pp. 1333-35

evident as early as 1857 and continuing unchecked to 1868. Essays in Finance, Second Series (London 1886) p. 1012.

41 Oberholtzer, E. R., Jay Cooke, Financier of the Civil War (New

York, 1907 ff.) I:391; II:211.

45 Fite, E. D., Social and Industrial Conditions in the North during

the Civil War (New York 1910) pp. 54–57

46 Economist, 9 December 1865, p. 1487.

48 The meeting is reported in Herapath's XXVII:1303.

49 Mastermans and Kennards manœuvered consolidations, becoming the Agra & Mastermans' Bank and the Consolidated Bank, respectively. The former attempted to do branch banking in France.

52 For other accounts of the panic, cf. Bagelot, Lombard Street, ch. 8; Andréades, pp. 353-61; Tugan-Baranowsky.

2 Dietzel, Carl, Das System der Staatsanleihen (Heidelberg 1855) p. 200.

<sup>1 Cohn, Gustav, *The Science of Finance* (Chicago 1895) translation by Thorstein Veblen, pp. 691-726, contains a detailed historical account of public debt theory.

3a Some notion of the possible limits of this activity is supplied by the estimate of Ernest Seyd in *Journ. Socy. Arts*, 5 Apr. 1878, XXVI: 409, that there were 50 to 60 million pounds in acceptances continually

oustanding in Europe against London.

text discussion unnecessary.

7 Drummond Wolff, II:56–66.

8 Report of Foreign Loan Committee, # 21 ff.

9 Money Market Review, 8 June 1872; Seyd, Ernest, in Journ. Stat. Socy. XXXIII:46-49.

II:198-235

Society of Arts, XXIV:306–34, 345–66.

15 Alvarez, F. A. . . . , A La Nacion. Manifiesto de los senadores i representantes que votaron contra el contrato de emprestito de \\$7,500,000 (Bogota 1866). The terms of the contract are here set forth.

16 Testimony before Select Committee on East Indian Finance, 187.

(363) # 9674.

18 Maxwell's Clarendon, II:107

20 Address to his constituents. Times, 20 October 1856, 10d

22 Bullionist. 2 November 1867.

23 Moniteur des Int. Mat., 15, 22 Nov., 6 Dec. 1868.

24 Economist, 1868, p. 1300.

25 Giffen, Sir Robert, "The Liquidations of 1873–76," Economic Inquiries and Studies (London 1904) I:98–120; current market reports.

26 Report on Loans to Foreign States, 1875, p. xlv

27 Giffen, p. 108.

# NOTES TO CHAPTER TEN

2 Raport from the Solect Committee on Steam Navigation to India. 1834 (478); Euphrates Expedition. Accounts & Papers. 1837 (540).

3 Kinglake, A. W., The Invasion of the Crimea (London 1863 ff)

4 Lane Poole, II: 70

6 Farley, J. L., Modern Turkey (London 1872) p. 343.

fee simple." Conversations and Journals in Egypt (1882) II: 194-

9 As reported in the Times, 16 Nov. 1858.

On early Turkish railway projects, see further: Wilson, Thomas, The Lowlands of the Danube (London 1855); Forester, Thomas, The Danube and the Black Sea, Memoir on their Junction by Railway (London 1857); Stephenson, R. Macdonald, Railways in Turkey (London 1859); report of C. Alison on the commerce of Turkey in Reports of Her Majesty's Secretaries, etc., 1858; Abstract of Reports of Her Majesty's Ministers and Consuls. No. 6. 1858, pp. 219-26; Dimitschoff, R. M., Zur Geschichte der Balkan-Eisenbahnen (Wurzburg 1894. A brilliant study.) Dimitschoff supplies corroborating details for the statement of the Levant Herald (Times, 13 Feb. 1869, 6a) that to 1869 all railways in Turkey, except the Smyrna-Cassaba had been a "system of contractors' jobs."

17 Report from the Select Committee on Steam Navigation to India, 1834.

$^{18}F.O.97:411.~$ The letter is dated Feb. 20. 1841.

castle Daily Journal, 23 March, 12 June, 1868.

28 For instance, Times, 5 Jan. 1846; Messrs. Waghorn & Co.'s Overland Guide to India by Three Routes to Egypt. (London 1846).

24 Article under heading, "The Direct Line to India," Shareholder,

The Times, 10 Aug. 1857, 4f. urged favorable action. The adverse decision of the government was announced in debate, August

27 Nassau Senior, Journal kept in Turkey, p. 84.

30 Nassau Senior, p. 115.

31 Economist, Sept. 4, 1858, p. 991. The Bankers' Mag. declared in this year, pp. 724-25 that "scarcely any country possesses in a greater degree the elements of financial prosperity."

32 Du Velay, p. 154.

38 Sir Henry Bulwer to Said Pasha, 6 Aug. 1860. Papers relating to Administrative and Financial Reforms in Turkey, 1858-61. 1861. pp. 44-48.

35 Reports of Mr. Foster and Lord Hobart on the Financial Condition of Turkey 1862 (175): 1863 (503)

The bulk of the literature of Egypt in English dates from the formal British intervention in 1882, and discreetly is silent about the activity of bankers who depended upon British capital. Rothstein, Theodore. Egypt's Ruin (London 1910) is an exception. Cromer,

| Rece | ipts | Expenditures |  |
|---|---|---|---|
| By Revenue Loans Sale of Suez Canal shares Floating Debt | £94,281,401 31,713,987 3,976,583 18,243,076 | Administration Tribute to Porte Works of utility Extraordinary expenses, some of questionable\\nutility, others under | £48,868,491 7,592,872 30,240,058 |
|  | 2140,215,047 | parties Interest and Sinking | 10,539,545 |
|  |  | Fund Suez Canal | 34,898,962 16,075,119 |

51 There had been an earlier proposal for the British government to purchase the khedive's shares, first considered in December, 1870, which was allowed to pass without action. On both proposals and the controversy with de Lesseps, see Moneypenny and Buckle, V411–13; Parl. Deb. 219: pp. 1032–37; Correspondence relative to the Question of the Suez Canal Dues. 1874 (455); Correspondence respecting the Suez Canal. 1876 (C-1302).

54 Lesage, p. 208.

55 Times, 27 November, 1875.

# NOTES TO CHAPTER ELEVEN

2 Caird, p. 127.

| 1863 | 85 | million | 1bs |
|---|---|---|---|
| 1868 | 106 | " | " |
| 1873 | . 131 | " | 66 |
| 1878 | 157 | 44 | " |

4 Armes, Ethel, The Story of Coal and Iron in Alabama (Birmingham, Ala. 1910) pp. 377-93; The Hill Country of Alabama, U. S. A. (undated. Found at BM, pressmark 10410. cc. 5).

5 Great Britain's Export of Surplus Capital.

one to three million pounds a year.

The items of insurance, brokerage, stamp duties, and shipping commissions have been computed from Giffen's estimated allowance of 2½% upon the entire volume of British foreign trade. Higher

estimates have been made.

Then there are the profits upon England's foreign trade. Where imported goods were shipped by English firms residing abroad, or where exports were to be marketed abroad thru English houses, mercantile profit is an invisible item to be placed in the balance in England's favor. Bourne estimated trading profits for the twenty years ending in 1877 at an average of from 20 to 30 millions a year, with reference to an average total trade of 500 millions. In addition he allows 5 to 10 millions annually for ship earnings in the carrying trade abroad, besides recognizing the existence of profits from mercantile, industrial and agricultural establishments abroad. I have ignored these latter items and computed a flat 5% on the foreign trade as being a probable moderate estimate of foreign trade profits.

volume of Great Britain's foreign investments. Giffen in 1878 estimated this amount as at that time £1,200,000,000. Seyd in 1876 (Journal of the Society of Arts, XXIV: 309) considered it certainly more than one billion pounds in 1875; probably about £1,200,000,000. The data in Nash's Short Enquiry (1880) make possible the following estimates of it by classes:

| Foreign Government Loans and Guarantees | £500,000,000 |
|---|---|
| Railways in Europe, U.S. & South America | 240,000,000 |
| United States Debt | 200,000,000 |
| Indian Railways | 90,000,000 |
| Indian Debt | 70,000,000 |
| Colonial Government Loans | 50,000,000 |

| United States | 50 to | 60 | million | pounds |
|---|---|---|---|---|
| French, Belgian, Dutch and | - |  |  |  |
| Russian govt. securities | 45 to | 55 | " | cc |
| Spain and Portugal | 35 to | 45 | " | \*\* |
| Latin America | 35 to | 40 | " | 64 |
| French Railways | 25 to | 30 | " | " |
| Belgian Railways | 5 | • | " | 44 |
| Total | 195 to | 230 | ) " | ££ |

Assuming this sum to have compounded by reinvestment at 5%, and compounding the capital export balances in the same manner, a total is reached which bears comparison with the estimates of Giffen and Seyd.

about 1875. It is adequate to support the modest inferences drawn from it in the text.

| Year | Import Bal. incl. Bullion and Ship Sales | Net Freight | Foreign Trade Profits | Insurance, Blokerage, | Capital and Interest |
|---|---|---|---|---|---|
|  | (I) | (2) | (3) | (4) | (r) |
|  | (-/ | (/ | (0) | (4) | \[subtract (1) |
|  |  |  |  |  | from $(2)$ , $(3)$ |
|  | ۵ |  |  |  | and(4)\] |
|  | (in n | illions of | pounds s | terling) | · · |
| 1854 | 40.6 ° ° | 24.0 | 12.4 | 7.9 | 3.7 |
| 1855 | 34.0 ° | 25.2 | 11.9 | 7.7 | 10.8 |
| 1856 | 34.1 ª | 25.3 | 14.4 | 9.1 | 14.7 |
| 1857 | 33.5 ° | 26.6 | 15.5 | 9.9 | 18.5 |
| 1858 | 33.7 | 27.4 | 14.0 | 8.9 | 16.6 |
| 1859 | 17.0 | 27.3 | 14.4 | 10.2 | 34.9 |
| 186 0 | 49.9 | 27.4 | 17.3 | 10.б | 5.4 |
| 1861 | 55.5 | 28.7 | 17.1 | 10.4 | .7 |
| 1862 | 61.1 | 29.6 | 17.4 | 11.3 | - 2.8 |
| 1863 | 54.9 | 32.2 | 18.8 | 12.6 | 8.7 |
| 1864 | 66.1 | 34.6 | 21.7 | 13.5 | 3.7 |
| 1865 | 57.5 | 36.5 | 21.8 | 13.1 | 13.9 |
| 1866 | 67.8 | 37.2 | 24.2 | 14.7 | 3.6 |
| 1867 | *57.* 8 | 37.3 | 22.8 | 13.5 | 15.8 |
| 1868 | 70.1 | 37.5 | 23.6 | 14.2 | 5.2 |
| 1869 | 61.6 | 37.6 | 24.2 | 14.2 | 14.4 |
| 1870 | 68.o | 39.2 | 25.1 | 14.9 | 11.2 |
| 1871 | 50.4 | 41.2 | 27.7 | 17.2 | 35.7 |
| 1872 | 36.1 | 43.7 | 30.5 | 18.2 | 56.3 |
| 1873 | 61.0 | 45-7 | 31.3 | 18.6 | 34.6 |
| 1874 | 70.6 | 48.2 | 30.4 | 18.0 | 26.6 |
| 1875 | 96.1 | 49.8 | 29.8 | 17.9 | 1.4 |
| 1876 | 125.4 | 51.0 | 28.7 | 17.4 | -28.3 |
| 1877 | 138.8 | 53.0 | 29.6 | 18.1 | — 38.ī |
| 1878 | 127.5 | 55-5 | 28.0 | 16.8 | - 27.3 |
| 1879 | 107.2 | 5 **7.** 6 | 27.7 | 16.6 | - 6.3 |
| 1880 | 119.5 b | 59.8 | 31.7 | 18.3 | - 10.2 |

6 Grundherr zu Althenhaun u. Weyherhaus, Werner von, Ueber die wirtschaftliche u. politische Bedeutung der Kapitalanlagen im Auslande (Greifswald 1014)

| Securities | Profit in Dividends | Increase in Market Value of Principal | Total Profit |
|---|---|---|---|
| Foreign Government Stocks | 5.9 | 0.3 | 6.2 |
| Colonial Government Debentures | 5.0 | 0.5 | 5.5 |
| Indian Four Per Cents | 4.0 | 0.3 | 4.3 |
| Indian Railways | 4.8 | 1.5 | 6.3 |
| Canadian Railways | 1.9 | 0.2 | 2.1 |
| American Railways | 5.7 | 3.6 | 9.3 |
| U. S. Govt. Loans | 6.1 | 1.4 | 7.5 |
| Continental Railways | 5.1 | 0.4 | 5.5 |
| South American Railways | 5.3 | 3.4 | 8.7 |
| Indian Banks | 5.1 | - 2.0 | 3.1 |
| Colonial Banks | 8.4 | 4.3 | 12.7 |
| Foreign Banks (chiefly Europe) | 7.2 | — r.r | 6.1 |
| Land and Mortgage Companies | 13.3 | 10.0 | 23.3 |
| Steamship Companies | 6.1 | 0.3 | 6.4 |
| Cable Companies | 6.6 | **— 1.3** | 5.3 |

![](https://samisdat.in/user/pages/03.books/1926%20-%20Migration%20of%20British%20Capital%20to%201875/read/_page_422_Picture_0.jpeg?g-16018011)

## APPENDIX A

| Year | Contract | Partners | Mileage |
|---|---|---|---|
| 1841 | Paris and Rouen | W. Mackenzie | 82 |
| 1842 | Orléans and Bordeaux | W. & E. Mackenzie | 204 |
| 1843 | Rouen and Havre | W. Mackenzie | 58 |
| 1844 | Amiens and Boulogne | E. & W. Mackenzie | 53 |
| 1847 | Rouen and Dieppe | W. Mackenzie | 31 |
| 1848 | Barcelona and Mataro | W. Mackenzie | 18 |
| 1850 | Prato and Pistoja |  | 10 |
| 1851 | Norwegian Railway | Peto & Betts | 56 |
| 1852 | Nantes and Caen |  | 113. |
| - | Le Mans and Mezidon |  | 84 |
|  | Lyons and Avignon | Peto & Betts | 67 |
|  | Dutch Rhenish |  | 43 |
|  | Grand Trunk of Canada | Peto, Betts & Jackson | 539 |
| 1853 | Sambre and Meuse |  | 28 |
|  | Turin and Novara |  | 60 |
|  | Hauenstein Tunnel |  | 11/2 |
|  | Royal Danish Railway | Peto & Betts |  |
| 1854 | Central Italian Railway | Jackson, Fell & Jopling | 52 |
|  | Turin and Susa |  | 34 |
| \_ | Bellegarde Tunnel | Parent & Buddicom | 21/2 |
| 1855 | Caen and Cherbourg |  | 94 |
| 1858 | Bilbao and Miranda | Wythes, Paxton & Bartlett | 66 |
| • | Eastern Bengal | Wythes, Paxton & Henfrey | 112 |
| 1859 | Victor Emmanuel Railway | Jackson & Henfrey | 73 |
| 0.0 | Ivrea Railway | Henfrey | 19 |
| 1860 | Dieppe Railway | Buddicom | (second |
|  | 3.5 |  | track) |
|  | Maremma, Leghorn, etc. | D | 138 |
| 0.5 | Jutland Railway | Peto & Betts | 270 |
| 1862 | Rio de Janeiro Drainage | Ogilvie | · • • • |
|  | Mauritius Kaikvay | Wythes et al. | 64 |
|  | 4 | .19 |  |

| Contract | Partners | Mileage |
|---|---|---|
| Meridionale Railway | Parent & Buddicom | 760 |
| Ouganaland Railway | Peto & Retts | \#O1/ |
| North Schleswig | Deta & Betts | 7074 |
| Control Amentino Poilmon | Westher Wheelswich | 70 |
| Central Argentine Ranway | Oritain | X. |
| T 1 C : | Ognvie | 247 |
| Lemberg-Czernowitz | • | 165 |
| Viersen-Venlo Railway | Murton | II |
| Delhi Railway | Wythes & Henfrey | 304 |
| Boca and Barracas | Wythes & Wheelwright | ^ 3 |
| Warsaw and Terespol | Vignoles & Ogilvie | 128 |
| Chord Line (India) | Wythes & Perry | 147 |
| Calcutta Waterworks | Wythes & Aird |  |
| Czernowitz-Suczawa Rail- | • |  |
| way |  | 60 |
| Kronprinz Rudolfsbahn | Klein & Schwarz | 272 |
| Nepean Bridge | Peto & Betts |  |
| Callao Docks |  |  |
| Vorarlbergbahn | Klein & Schwarz | 55 |
| Suczawa and Tassy |  | 135 |
|  | Contract Meridionale Railway Queensland Railway North Schleswig Central Argentine Railway Lemberg-Czernowitz Viersen-Venlo Railway Delhi Railway Boca and Barracas Warsaw and Terespol Chord Line (India) Calcutta Waterworks Czernowitz-Suczawa Railway Kronprinz Rudolfsbahn Nepean Bridge Callao Docks Vorarlbergbahn Suczawa and Jassy | Contract Partners Meridionale Railway Queensland Railway North Schleswig Central Argentine Railway Central Argentine Railway Central Argentine Railway Lemberg-Czernowitz Viersen-Venlo Railway Delhi Railway Boca and Barracas Warsaw and Terespol Chord Line (India) Calcutta Waterworks Czernowitz-Suczawa Railway Kronprinz Rudolfsbahn Nepean Bridge Callao Docks Vorarlbergbahn Suczawa and Iassy Parent & Buddicom Peto & Betts Wythes, Wheelwright Wythes & Henfrey Wythes & Wheelwright Vignoles & Ogilvie Wythes & Aird Klein & Schwarz Peto & Betts Wythes, Wheelwright Wythes & Wheelwright Vignoles & Ogilvie Wythes & Aird Klein & Schwarz Peto & Betts Klein & Schwarz |

# APPENDIX B

| 1 | ron and | (Railway |  | Hardwares |  |  |  |
|---|---|---|---|---|---|---|---|
| Year | Steel " | Iron) | Machinery | and Cutlery | Copper | Tin d | Total |
|  |  | (in mill | ions of pou | nds sterling | ) |  |  |
| 1846 | **4.** I |  | 1.1 | 2.1 | 1.5° | -7 | 9.5 |
| 1851 | 5.8 |  | r.r | 2.8 | 1.5 | I.I | 12.3 |
| 1856 | 13.0 | ( 4.0) | 2.7 | 3.7 | 2.5 | 1.6 | 23.5 |
| 1861 | 10.3 | ( 2.9) | 4.2 | 3.4 | 2.1 | 1.2 | 21.2 |
| 1866 | 14.8 | ( 4.1) | 4.7 | 4.3° | 2.5 | 2.2 | 28.5 |
| 1871 | 22.6 | ( 8.0) | 5.9 | 4.0 | 2.9 | 3.6 | 39.0 |
| 1873 | 34.1 | (10.4) | 10.0 | 4.9 | 3.2 | 4.7 | 56.9 |
| 1876 | 17.2 | ( 3.7) | 7.2 | 3.4 | 2.9 | 3.2 | 33.9 |
| 1846- | 422.0 | (07 #) | -o- 6 | 7000 | \*\*\* | 62.7 | 806.0 |

figures are available earlier than 1856

"Including "Brass" 1846.

After 1868 the figures under "Hardwares and Cutlery" are made up of a slightly smaller range of items than before that date.

# APPENDIX C

Table of Government Loan Issues in London, 1860 to 1876, Inclusive

| Year | Country or State | Issue Amount | Issue Price | Rate of Interest | Amorti- zation | Issue House |
|---|---|---|---|---|---|---|
|  |  | mill. | % | % | % |  |
| 1860 | Brazil | 1.3 | 90 | 41/2 | 1.65 | Rothschild |
|  | Russia | 5.0 | 92 | 41/2 | 11/2 | Baring; Hope |
| 1861 | Italy | conv. |  | 4 | perp. | Rothschild |
|  | Denmark | conv. |  |  | ī | Hambro |
| 1862 | Denmark | .6 | 91 | 4 | none | Hambro |
|  | Egypt | 2.1 | 821/2 | 7 | 1 | Frühling & Goschen |
|  | Egypt | 1.0 | 841/2 | 7 | I |  |
|  | Italy | 1.3 | 74 | 5 | 99-yr. | Hambro |
|  | Morocco | -5 | 85 | 5 | 5 | Robinson & Fleming |
|  | Peru | 5.5 | 93 | 41/2 | 8 | Heywood, Kennard |
|  | Portugal | 4.0 | 44 | 3 | none | Knowles & Foster |
|  | Russia | 10.0 | 94 | 5 | none | Rothschild |
|  | Turkey | 8.0 | 68 | 6 | 2 | Ottoman Bank; C. De vaux; Glyn, Mills & |
| 1862 | Brazil | 28 | 88 | 416 | T 65 | Rothschild |
| 1003 | Colombia | 3.0 | 86 | 6'2 | 1.05 | I. & County Bank |
|  | Confederacy | 2.0 | 00 | 7 | 20-77 | I H Schroeder |
|  | Constitutiacy | 3.0 | 90 | , | 20 11. | F Friancer |
|  | Ttalv | 2.0 | 77 | e | nern | Rothschild |
|  | North Carolina | 3.0 | nar | 2 | per p. | Manchester & County |
|  | ATOTEM CHICIMA | •3 | PAI | , |  | Bank County |
|  | Portugal | T.2 | 48 | 2 | none | Stern |
|  | Venezuela | T 2 | 62 | š | 2 | Baring |
|  | Turkey | 5.0 | 72 | 6 | 2 | Ottoman Bank |
|  | Luiney | 5.0 | 1- | • | - | Crédit Mobilier |
|  | Tunis | T.5 | 06 | 7 |  | Erlanger |
| 864 | Danubian Prin- | 3 | , | , |  | Ottoman Bank |
| .004 | cipal | ٠.0 | 86 | 7 | 2 | Stern |
|  | Denmark | 1.2 | 03 | ź | ī | Hambro |
|  | Denmark | 1.7 | 0416 | ž | 13-Vr. | Raphael |
|  | T | 1 | 27/4 | 2 | -3 3-1 | D 0 0 -1 |

| Year | Country or State | Issue Amount | Issue Price | Rate of Interest | Amorti- zation | Issue House |
|---|---|---|---|---|---|---|
|  |  | mill. | % | % | % |  |
|  |  |  |  | 4 |  | Glyn, Mills |
|  | Mexico | 8.0 | 63 | 0 | ٠, | Crédit Mobilier |
|  | Mexico | arrears | 90 | 3 |  | Baring Hone |
|  | Russia | 0.0 | 0316 | 416 | E4-Vr | Schroeder |
|  | Sweden | 2.2 | 60 | 7′2 | 74.7\*\* | Maila Macaragan |
|  | Uruguay | 1.0 | 60 | š | 2 | Gen Fin Co |
|  | Venezuela | 1.5 | 74 | ž | ~ | Rothschild |
| 865 | Brazii | 0.0 | 7416 | 5 | re-vr | Con Credit & Fin C |
|  | Italy | 2.5 | 8016 | ş | £3 J | Thomson Popper |
|  | Peru | 9.0 | 6-16 | ž | 2.44 | Ottoman Panla |
|  | Turkey | 9.0 \* | 6572 | ž | 27-VT. | Agra & Mastermana |
|  | Austria | r . | 00 | 3 | 37 5 | rigia & Mastermans |
|  | San Paulo | •4 |  |  | 2 | Danie |
|  | Massachusetts | - 4 |  | E | ĭ | Carro |
|  | Turkey | 3.0 | 50 | ə | - | Gen. Credit Co.; |
|  |  | - |  | 6 | 216 | Pariner II |
| 866 | Argentina | •5 | 75 | č | 2-72 | Daring; Hope |
|  | Chili | •4 | 9272 |  | 2-y1. | Monason, Bonar |
|  | Chili | .0 | 92 | 7 | 624 | Accile F |
|  | Egypt | 1.0 | 90 | 7 | 2-8 1750 | Anglo-Egypt. Bank |
|  | Fgabi | 3.0 | 92 | *'* | 3-0 713. | Pruning & Goschen |
|  | Russia | 0.0 | 80 | 5 | 2 | Daring; Hope |
|  | Massachusetts | .4 | ٥. | 6 | 3 | Maring |
| 867 | Chili | 2,0 | 04 | ě | r 62 | Friblian & Conton |
|  | Danubian Pr. | 1.2 | 71 | ٥ | 1.02 | Cottoning & Goschen |
|  | Egypt | 2.0 | QO | ٥ | 31/2 | Opposition Bank |
|  |  |  | \_ | , | 0,2 | Pinch of the im |
|  | Honduras | 1.0 | 80 | 10 | 3 | Holatman & Co |
|  | Holland | ∙3 | 89 | 4 √ 2 |  | Stern |
|  | Portugal | 3.7 | 381/2 | 3 | none | Paringe Wans |
|  | Russia | 12.2 | 61, | 4 | .15 | Thomas Pones |
|  | Russia | 4.5 | 771/2 | 5 |  | Baring et al |
|  | Russia (ry) | 3 |  | 5 |  | Friancer |
|  | Tunis | 4.0 | 63 | 7 | none | Raring |
|  | Massachusetts | .4 | 77, | 5 | . 17 | Baring Hone |
| 1868 | Argentina | 1.9 | 721/2 | 6 | 21/2 | Ottoman Bank |
|  | Egypt | 11.8 | 75 | 7 | 1 | T. & County Bank |
|  | Hungary | 8.5 | 71.07 | 5 | 50-yr. | Stern |
|  | Italy. | 9.4 | 81.35 | 6 | 15-yr. | Baring |
|  | Russia | 1.9 | 78 | 5 |  | Raphael |
|  | Russia | 2.0 | 80 | 5 |  | Schroeder |
|  | Kussia | 1.3 | 80 | 5 | 17 | Ranhael |
|  | Sweden | 1.1 | 90 | 5 | 74 | Raring |
|  | Massachusetts | .0 |  | 5 |  | Daring |
|  | France | • • • • | 0 | 0 |  | Calamandam |
| 1809 | Castomals | 1.0 | 701/ | 6 |  | Thomson Rons- |
|  | Guatemaia | •5 | 7072 | 414 | 3 | Montagi |
|  | rioliand | -4 | 91-/2 | 472 | (+8+6-0+) | Angle Italian Danie |
|  | Dome | 5.2 | 73 | 5 | (10)0-01) | Thomson Done |
|  | Feru Portugal | 0.3 | 71 | 5 | 2000 | I HOMSON, DONAL |
|  | Poumonio | 0.0 | 32-/2 | 3 | 7-37 | C Devous & Co |
|  | Poumania | .4 | 773/ | 716 | /-y1. | Angle-Austrian Ran |
|  | Pussic | 1.5 | 60 | 172 | . 7 5 | Raring Hope |
|  | Can Domina | 11.1 | 70 | 4 | -32° | Peter Lawson H |
|  | San Dominiko | • • • | ,,, | • | ±7 4 | Total Danison, |

| Year | Country or State | Issue Amount | Issue Price | Rate of Interest | Amorti- zation | Issue House |
|---|---|---|---|---|---|---|
|  |  | mill. | % | % | % |  |
|  | Spain | 8.0 | 291/2 | 3 |  | Morgan |
|  | Turkey | 22.2 | 601/2 | 6 | r | Louis Cohen & Co. |
|  | Turkey | 2.4 | 83 | 6 | (1872-73) | Devaux |
| 870 | Alabama | •4 | 941/2 | 8 |  | Schroeder |
| - | Austria |  | conv. | - | \_ | C. de Murrieta & Co |
|  | Buenos Ayres | 1.0 | 00 | 9 | a later r | Morgan |
|  | Chili | 1.0 | 03 \#816 | 5, | 236 | Bischoffsheim |
|  | Egypt | 7.0 | 7072 | 6 | 298 | Morgan |
|  | France | 10.0 | 85 | 70 | • | Bischoffsheim |
|  | Honduras | 2.5 | 00 | 10 | (1872-82) | Schroeder |
|  | Japan | 1.0 | 90 | 2 | (10/3-04) | Baring |
|  | Massachusetts | .0 | 07 | 2 | 2 | Schroeder |
|  | Peru | 11.9 | 0272 | 7 | - | Devaux |
|  | Roumania | •4 | 80 | 716 |  | Anglo-Austrian Bank |
|  | Koumania | .0 | 72 | 772 | 008 | Rothschild |
|  | Russia | 12.0 | 80 | 2 | 20-37 | Rothschild |
|  | Spain | 2.3 | 00 | 5 | 30-31. |  |
| \_ | Spain | - | CONV. | 6 | **-16** | Murrieta |
| 1871 | Argentine | 0.1 | 00-72 | ž | 174 T | Rothschild |
|  | Brazil | 3.4 | 89 | ž | 2 | Bischoffsheim |
|  | Costa Rica | 1.0 | 73 | ž | - | Rothschild: Baring |
|  | France | r | 02-72 | 2 |  | Montagu |
|  | Holland | .2 | 90-72 | ş | τ1/ 9 | Raphael |
|  | Hungary | 3.0 | 81 | 2 | - /2 | Holderness, Nott |
|  | Liberia | ·I | 85 | Ŕ |  | Robinson & Fleming |
|  | Louisiana | -4 | 84.38 | ž |  | Baring |
|  | Massachusetts | .0 | 91 | 8 | 2 | Rothschild |
|  | Paraguay | 1.0 | 80 | Ĕ | -008 | Robinson & Fleming |
|  | Russia | 12.0 | 8172 | ĕ | ,- | Stern |
|  | Spain | 2.0 | 80 | 3 |  | (by govt, commission |
|  | Spain | 6.3 | 31 | ŏ | I | Dent. Palmer & Co. |
|  | Turkey | 5.7 | 73 | • | \_ | Zent, ramier a co. |
|  | United States | 40.0 | 102.38 | 6 | 21/2 | Thomson Bonze |
|  | Uruguay | 3.5 | 72 | š. | I . | Stern |
| 872 | Argentina | 1.2 | 70 | ŏ | 2 | Lumh Wanklyn |
|  | Bolivia | 1.7 | 68 | 7 | 1 | Knowles & Foster |
|  | Costa Rica | 1.5 | 82 | 7 | 21/2 | Murrieta |
|  | Entre Kios | 3·2 | 90 | 5 | - 12 | Baring: Rothschild |
|  | France |  | 8472 | ž |  | McCalmont Bros. |
|  | Massachusetts | -4 | 93 | ลั | 2 | Robinson & Fleming |
|  | Paraguay | 5 | 85 | 5 | 2 | Schroeder: Stern |
|  | Peru : | 15.0 | 7772 | ž | .098 | Rothschild |
|  | Russia | 15.0 | 90 | ž |  | Hambro |
|  | Kussia | 1.7 | 0772 | 3 |  | (by govt commissio |
|  | Spain | 9.0 | 2094 | Š | (1876-78) | Ranhael |
|  | Washington ar | 11.0 | 90-72 | , | (-0/- /-/ | Seligman, Rothschil |
|  | other Ame | ri- |  |  |  | Barings |
|  | can cities | 4.60 |  | \_ |  | m • |
| 1873 | Buenos Ayres | 2.0 | 891/2 | 6 | I | Baring . D. |
|  | Chili | 2.2 | 94 | 5 | 2 | Oriental Bkg. Corp. |
|  | Colombia |  | conv. |  |  | L. & County Bank |
|  | Egypt | 32.0 | 841/4 | 7 | 30-yr. | Bischoffsheim |
|  | Hungary | 5.4 | 8o - | 5 | 11/2 | Raphael |
|  | Hungary | 7.5 | 89 | 6 | (1878) | Rothschild |
|  | Tanan | 2.4 | 021/2 | 7 | 2 | Oriental Bkg, Corp. |

# 424° MIGRATION OF BRITISH CAPITAL

| Year | Country or State | Issue: Amount | Issue Price | Rate of Interest | Amorti- zation | Issue House |
|---|---|---|---|---|---|---|
|  | r | mill. | % | % | % |  |
|  | Massachusetts Russia Spain Turkey | .1 15.0 8.0 | 91½ 93 conv. 58½ | 5 5 6 | .098 , | Baring Rothschild Imp. Ottoman Bank |
| 1874 | United States Spain Argentina Belgium Hungary Santa Fe Turkey | 60.0 6.3 .3 1.4 7.5 .3 15.9 | 80 75½ 91½ 92 43½ | 5 6 3 6 7 5 | 1 1½ (1879) 2½ none | Stern Baring Rothschild Murrieta Imp. Ottoman Bank |
| 1875 | American citie Brazil Chili Massachusetts Russia | 5.3 1.1 .3 15.0 | 96½ 88¼ 98 92 coupon | 5 5 5 5 | 1 (1895) .098 | Morgan & Co. Rothschild Oriental Bkg. Corp. Baring Rothschild |
| 1876 | Sweden American citie China Norway Portugal Sweden United States Cincinnati | 13.0 1.0 s .6 .2 1.3 .3 .3 .5 60.0 .3 | 98¾ 100 96½ 83½ 96½ 103½ 103½ | 4½ 8 4½ 5 4½ 4½ 6 | .167 5 39-yr. ½ | Erlanger Morton, Rose Hong-Kong Bkg. Corp. Hambro Soc. des Dépots Hambro Rothschild; Morgan Alliance Bank |

# APPENDIX D

SUMMARY OF FOREIGN SECURITY ISSUES MADE IN LONDON, 1860-76

| Year | Foreign Govern- ment Loans | Colonial and Indian Loans (including Railway guarantees) | Foreign and Colonial Railways and Other To Companies |  |
|---|---|---|---|---|
|  | (in | millions of pou | nds sterling) |  |
| 1860 | 5.8 | 13.2 | 6.7 | 25.7 |
| 1861 | .6 | 12.7 | 4.8 | 18.1 |
| 1862 | 22.5 | 12.4 | 7.4 | 42.3 |
| 1863 | 8.9 | 7.9 | 12.9 | 29.7 |
| 1864 | 13.5 | 5-4 | 14.2 | 33.1 |
| 1865 | 22.0 | 9.6 | 20.9 | 52.5 |
| 1866 | 8.0 | 11.6 | 11.0 | 30.6 |
| 1867 | 11.4 | 9.4 | 6.5 | 27.3 |
| 1868 | 22.I | 11.9 | 9.7 | 43.3 |
| 1869 | 20.1 | 10.8 | 8.8 | 40.7 |
| 1870 | 35.0 | 6.4 | 9.8 | 51.2 |
| 1871 | 40.I | 4.9 | 15.3 | 60.3 |
| 1872 | 43.3 | 2.6 | 31.2 | 77.1 |
| 1873 | 16.5 | 4.8 | 29.8 | 50.1 |
| 1874 | 27.0 | 17.7 | 26.0 | 70.7 |
| 1875 | 20.4 | 13.0 | 10.б | 44.0 |
| 1876 | 3.5 | 7.6 | 6.4 | 17.5 |
| Totals | 320.7 | 159.9 | 232.0 | 712.6 |

APPENDIX E

SECURITIES OF PRIVATE COMPANIES OPERATING ABROAD, ISSUED IN LONDON, 1860-76

|  | European |  |  | South | Other\* | Α. |
|---|---|---|---|---|---|---|
| Year | Private | Colonial | United States | American | Foreign | Total |
|  | Railways | Railways | Railways | Railways | Companies |  |
|  |  | (in millio | ns of pounds | sterling) |  | ٠ |
| 1860 | 1.8 | 1.2 | 1.0 | .9 | 1.8 | 6.7 |
| 1861 | 2.3 | ı. |  | 1.3 | I.I | 4.8 |
| 1862 | 3.0 | .3 | • • | .2 | 3.9 | 7.4 |
| 1863 | 4.0 |  | .2 | .4 | 8.3 | 12.9 |
| 1864 | 2.7 | ٠3 | 1.3 | .6 | 9.3 | 14.2 |
| 1865 | 4.6 | • • | 2.7 | 1.0 | 12.7 | 20.9 |
| 1866 | 1.3 | .I | 2.0 | .7 | 6.8 | 11.0 |
| 1867 | 2.2 |  | 1.0 | .4 | 2.9 | 6.5 |
| 1868 | 5.2 |  | 1.6 | I.I | 1.7 | 9.7 |
| 1869 | 3.3 | -3 | 1.8 | -5 | 2.9 | 8.8 |
| 1870 | -5 | .5 | 3.9 | .I | 4.5 | 9.8 |
| 1871 | .9 | 1.0 | 6.1 | 1.3 | 5.9 | 15.3 |
| 1872 | 1.1 | 1.2 | 12.0 | 3.2 | 13.7 | 31.2 |
| 1873 | .2 | 2.7 | 14.3 | 3.2 | 9.2 | 29.8 |
| 1874 | .8 | 2.4 | 14.3 | 2.8 | 5.6 | **26.** 0 |
| 1875 | •4 | I.I | 4.7 | 1.3 | 3.4 | 10.6 |
| 1876 | .I | -5 | 3.6 | .I | 2.0 | 6.4 |
| Total | 34.4 | 11.7 | 70.5 | 19.1 | 95.7 | 232.0 |

![](https://samisdat.in/user/pages/03.books/1926%20-%20Migration%20of%20British%20Capital%20to%201875/read/_page_432_Picture_0.jpeg?g-16018011)

## INDEX

### A

## В

# C

### D

Dalhousie, Lord, 211, 212, 213, 220, 222
Dantzig, 189
Dalhi Railway, 216, 262
Del Mar, 28
Denison, Heywood, Kennard & Co., 143
Denmark, railway construction in, 168
Detroit, Grand Haven & Milwaukee railway, 205
Dervieu, Edouard, 322
Deutsche Bank, 270
Devaux, Charles, 249
Dilke, Charles, 216, 223, 230
Disraeli, 55, 128, 130, 139, 326; purchase of Suez Canal shares by, 324
Donetz basin, 185
D'Orléans, Duc, 147
Dorr Rebellion, 100
Dutch-Rhenish railway company, 144
Dutt, Romesh, 229

### F.

# F

# G

# H

Haldimand, A. L., 41, 48
Hambro, (C. J.) & Son, 267
Hambro, (C. S.) & Co., 171
Hamburg, 189, 190
Hamilton, James, 97
Hargreaves, 183
Harrison, Frederic, 231
Hastings, Warren, 211
Hatt-i-Humayoon, 297
Hesse-Cassel, 42
Heywood & Kennard, 131
Herring & Richardson, 48
Herring, Powles & Graham, 46, 55
Herzogovina, 320
"Hibernia" mines, 187
Hincks. Francis. 200

# I

# J

# K

# a T

### O

Ohio & Mississippi Railroad,
257
Old World, British connections\\nin, 188
"Open credits," 189
Oppenheim, Henry, 313, 322
Oppenheim, (H.) Neveu et cie,
313
Oriental railway line, 309
Orientbahn, 269
Orissa famine, 228
Orléans railway, 144

# O

Ouadruple Alliance, 39, 40, 43

# R

# S

# т

### U

Union Bank, 151
Union Gas Company, 186
United Kingdom, iron and steel exports from, 174
United States, 64, 335; attitude of British merchants toward, 80; Bank of, 68, 75, 92, 93, 95, 97, 98, 101, 108; British capital invested in, 67, 73, 85; domestic exports of, 67; exchange relations between Great Britain and, 86; First Bank of, 66; "Industrial Revolution" in, 76; movement of capital to, 82; public debt of, 66; Second Bank of, 31, 66, 89; Senate of, 100; stimulation of trade in, by British capital, 84; trade of, with Great Britain, 67, 84; Treasury of, 106, 107
Ural Mountains, mines in, 161
Urquhart, David, 286
Uruguay, development of, 122
Uzielli, Matthew, 144, 172

# V

Van Buren, administration of, 89

### W

x

Yorkinos, 111

Yorkshire, banks in, 21 \\$

Xenos, Stefanos, 246, 24

Z

Y

Zea, vice-president of Colombi

Zimmerman, S

York & North Midland Railway 128

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