THE GREAT CREDITOR COUNTRY.

Nelson Evening Mail, Volume XLVI, Issue XLVI, 21 October 1911, Page 2

THE GREAT CREDITOR COUNTRY.

rBEITAIN'S FOREIGN LOANS.

Some interest inn- tacts about the growth and efl'e'ct of Britsh invesments abroad, are brought out in a "Quarterly Review" article by Mr Edgar Crammond. It appears that the annual in- ■ come from foreign and colonial commit:merits identified by the revenue commissioners has risen from £44.508.000' in 1887 to about £89,000,000 at the present time. In addition to the identified income .there is approximately as as much again derived: from sources which •do not. come under the purview of the commissioners. As they themselves point out, their figures do not. include the return upon moneys invested in concerns (ether than railways), situate abroad but having their seat of direction in the United Kingdom, such,as mines, rubber plantations, nitrate grounds, oilfields, etc. ; nor concerns jointly worked abroad and in th eUnited Kingdom, such as electric-telegraph cables and shipping- ,• nor foreign, and colonial branches of banks, insurance companies, and mercantile houses in the United Kingdom : nor again, mortgages and other such securities abroad, belonging to banks and other financial institutions, in the United Kingdom. It is plain, therefore, that the whole of the income front foreign and 1 colqiiial investments cannot now be less than about £178,000.000.

This estimate is confirmed by a detailedexamination of the amount of British, capital that ha.s actually been invessted abroad. The grand' total for 1910 amonntwl to no less than £3.272.000, £1.652.000.000 being in British dominions beyond-sea?, and £1.620,000.000 in foreign countries. In 1896 the grand total was £2.092.000.000. so that .in 14 vears there has been a total increase of no less than 1,180.000.000 in British investments outside the United. Kingdom. It is noteworthy that the great bulk of these investments has been made in countries from which the United Kingdom draws its supplies of food and raw material, such as the United States, Canada. Argentina. India, Australasia,.and South Africa. "The .soundness of. the principle upon which investments have been made in these countries cannot," remarks Mr. Crammon4, "be questioned, because it establishes the conditions most essential to reciprocity of trade. Great Britain offers the finest market in the world for- foodstuffs and raw materials ; and it is natural and that these commodities should be sent to us by our colonial and foreign- debtors in' payment, of interest on our capital in vestments, and for our services as bankers or carriers, etc." In addition to the £178,000,000 derived from investments abroad, there are the gross earnings of the British, mercantile marine, estimated at about £100,000,000, and the gross earnings of the banking and mercantile houses carrying on business abroad, which bring in another £55,000,000. The actual position, then, is that the peoples of the world, British and foreign, who" do business with the United Kingdom stand as a whole to remit to it goods to the value of- at- least ±;330,000,Cq0 in payment of interest on loans and foz other-services rendered. A very smaJJ proportion of this sum is paid in gold. About half of it is annually invested abroad, and; the rest reaches the, United Kingdom-in the form of foodstuffs, .raw. materials, or manufactured goods. These facts haye an important bearing upon, the fiscal policv of. the United Kingdom. So long: as the United Kingdom, remains the greatest creditor country, in the -world, that is. to say, so ' long .at. it continues the. investment,,, of capital abroad on:the present scale,' so "lons as it does two-thirds of the >ankmg, business, it will be impossible , for-iV to prevent the. importation of foodstuffs, T aw materials, and manufactured goods having an aggregate value greatly iji ex.cess o'f the commodities.exported, unless, of course, it is prepared, to reinvest abToad the whole of its earnings from the abovementicned sources. It would appear, therefore*.as Mr. Crammond admits, that a'tariff designed for the protection of the whole of the country s ma>. nufactured industries is impracticable. One of the greatest advantages which the United Kingdom derives from its enormous and widespread foreign investments is stability of income. It is generally, found that, if trade in one part of the world is .'suffering, from depres sion, or from a failure of -the .harvests, in another nart the harvests are abundant and business |is expanding, and; the ■United Kingdom reaps the advantage of 'a good' season, say, % hv Argentina, or, the States, to neutralise any. loss, it ■mayincui- from ..a bad season, say, m ;Australia or South Africa.. , '. .