Imperial Federation: The Problem of National Unity

by George R. Parkin

CHAPTER XII.

FINANCE.

THE financial aspects of our question are striking and significant. Britain herself is the greatest money-lending nation of the world: her colonies and dependencies, with their vast undeveloped resources, are among the greatest borrowers. The public debts of the Australasian colonies amount to nearly £200,000,000, and private investments for the development of mines, for the wool producing and meat raising industries and so on, amount, I have been told by Australian business men, to even more. It is probably a moderate estimate to say that Australasia borrows £400,000,000, all of which is raised in London, to which the interest steadily flows back.

In his 'Problems of Greater Britain' Sir Charles Dilke says: 'British capital to the extent of £350,000,000 sterling has been sunk in Indian enterprises, on official or quasi-official guarantee; and a further vast amount of British capital is employed by purely private British enterprise in industry.'

Canada's public borrowings amount to about £50,000,000, and allowing an equal sum for private {272} investments, she perhaps draws £100,000,000 of working capital from English sources.

Nothing has been said about South Africa, the West Indies, and the minor divisions of the Empire, but even the rough estimates already given prove that the aggregate of money loaned from Britain, and borrowed by other parts of the Empire, reaches enormous figures, and certainly exceeds £1,000,000,000 sterling.

For investor and borrower the benefit is mutual. The investor has the advantage of placing his money where it will be employed in making the most of vast natural resources, under a settled government, and in the energetic and responsible hands of men of our own race. This advantage is emphasized by the experience of British capitalists in countries like Argentina, where government is unstable, or Turkey, where it is inefficient. It is emphasized by the contrast between the financial position of Egypt, when dominated by British influence and protected by British power, and the same country when free to follow its own methods of administration and compelled to find its own defence.

It is shown by the difference between the rates at which Australia or Canada borrow money, and those paid by many foreign states.

The colonial borrower has the advantage of getting the money he requires at the cheapest rate possible. The last Canadian loan was floated at 3 per cent, and the Australian colonies are borrowing at 3 1/2. Lord {273} Dufferin has said that British capital is ventured in India 'on the assumption that English capital and English justice would remain dominant in India.' In like manner the rate at which colonial loans are issued is unquestionably determined in part by the fact that the industrial position and military security of the colonies is guaranteed by the imperial power. Independent, exposed to face the risks of war unaided, and compelled to bear the whole burden of defending their coasts and commerce, the credit of the colonies could not be what it is to-day.

On the other hand, since cheap capital means cheap production, the money lent on easy terms to the colonies returns far more to the mother-country than the interest which has hitherto been so regularly paid. It secures for Britain what she most requires, cheap food and cheap raw material—wheat, beef and mutton, wool, cotton and minerals. For a great consuming country the free movement of the wheels of industry in the areas of production is all-important. Even the cheap insurance which comes from assured safety in the transport of goods between producer and consumer is no slight element in the prosperity of both.