Delphi complete works of.., p.701
Delphi Complete Works of Stephen Leacock, page 701
In point of history and prestige, gold ranks as the noblest of the metals. Every language carries the stamp of such phrases as ‘a heart of gold,’ as ‘good as gold,’ the ‘golden mean’ and the ‘golden age.’ Even the Gates of Heaven are gold. Of late years dismal economists have tried to sneer gold out of existence as money — antiquated as a stagecoach, far inferior to an index number and a managed currency. For a little while, gold money trembled for its existence, and apart from money and prestige the metal is of little worth. But the first danger of war and now war itself, have restored gold to its throne. You can’t buy foreign munitions with an index number. This is all to the good fortune of the Empire, the world’s greatest gold producer by a lead that leaves the others nowhere. The marvellous sunken mountain of gold that forms the Witwatersrand of South Africa is matched, and presently will be surpassed by the Aladdin’s Cave of mineral wealth (gold, copper, nickel) of the land of desolation that fringes the sunken coast of the James and Hudson Bays.
The world’s production of gold now runs to an annual total of about 36,000,000 fine ounces. It was formerly the custom to quote statistics of gold in terms of dollars at $20.67 to an ounce. But the United States dollar has since been revalued (1939) (though not coined) as containing only 15 5/21 grains troy in place of the previous 23.22 grains. The Canadian gold dollar is still nominally at the old standard. In practice gold is sold at a price in the paper money of each country and hence the only significant statistics of output are those in fine ounces. On this basis South Africa produces 12,000,000 fine ounces, Canada 5,000,000, and Soviet Russia (believe it or not) anything from 5,000,000 to 8,000,000.
Beside these greater metals are copper of which the chief Empire supply is in Canada, potentially vast and even now about one-tenth of the world’s production; tin, of which one-third of the annual supply comes from British Malaya, and lead where again Canada supplies one-tenth. Silver is of little strategic consequence. The output of Canada (22,700,000 fine oz in 1937) with that of Australasia (14,100,000 oz.) is one-tenth of the total world production. The metal aluminium is of great and growing importance by reason of its uncanny lightness and tensile strength. It is an element but never found by itself in nature. For aeroplane construction and for transmission lines it is of unequalled utility. Its production is increasing by leaps and bounds, from 70,000 tons in 1913 to over 600,000 in 1938. The Empire, in the British Isles themselves, produced in 1938 nearly 25,000 tons, and in Canada is also ample potential supply.
Most strange of all metal deposits in the world is radium, filled with future meaning for the world’s curse or blessing. Here is, as it were, a left-over piece of creation, still disintegrating and discharging itself in atomic volleys when the other metals ‘ceased fire’ and sank dead, millenniums ago. All the world knows of the beneficent power of this atomic discharge against disease. No one can tell yet what its incalculable meaning may be as a source of power if its outgoing energy of explosion can be speeded up. Theoretically, a spoonful of it would blow up a battleship. But it refuses to hurry; it takes its time; a million years is nothing to it. As yet its energy is held back from the devil’s innings of war. Till a few years ago, such radium as the world had recovered came from the Belgian Congo with a minute output from what was Czecho-Slovakia. But radium has been obtained (1933) in the rocks of the Great Bear Lake in the far west of Canada, on the Arctic Circle. Nature had guarded it with Arctic cold and barren rocks and fierce river gorges that denied ascent. The aeroplane flutters down as gently as a bird, and a new chapter is added to the unveiling of that grim and desolate region. The Canadian output of 30 grammes a year has lowered the world price to $40,000 a gramme, and now, to a bargain price of $20,000. Even at this same bargain scale of value, by weight, a bag of potatoes would be worth rather more than three-quarters of a billion dollars.
Among the conspicuous world products outside of the field of metals is asbestos, of which the chief supplies are in Canada, Rhodesia and Siberia. The Canadian field alone, about 60 per cent of the total, can easily suffice for Empire needs. For rubber, one of the greatest strategic products, the chief British source of supply is in Malaya. For the production of paper from wood pulp the British Empire has the long lead of the forests of Canada and Newfoundland. The industry is eating itself off the earth. Something will have to happen, unless we substitute hearing for reading, and the ‘morning paper’ and the ‘advertisement’ go the way of all grass. Books alone, apart from newspapers, would never overstrain the forest that first (from its beech trees) gave them its name. The world’s consumption of paper is reported as about 30,000,000 tons. This obviously can’t go on. But instead of something happening, something may ‘turn up,’ and at least we, in the Empire, can keep our newspaper longest.
For petroleum the outlook is poor. Of the vast annual production that flows as a river of oil — 272,000,000 metric tons, the British Empire contributes little more than a rivulet, 5,990,000; from Burma 1,000,000, from Trinidad 2,500,000. The oil from Iran and Iraq is under British financial control, but not political sovereignty; and the supply is beset and bounded by all the rivalries of a world at war. Oil, indeed, is the chief shortage of the British world, and may be thus indicated last in our cornucopia of plenty, as a wholesome reminder, like a death’s head at a feast.
Such is in outline the aspect of the vast material resources, active and latent, of the British Empire. To set these assets down in terms of money would merely be to substitute the shadow for the substance. And in any case, as said at the outset, money is but a poor measure of the value of physical things. Money value does not emerge until scarcity brings a purchaser, and until transport makes purchase possible. For uncounted centuries the flowers blossom over a thousand miles of prairie — flowers, field and all as worthless as the breeze that fans them. But all real calculations of national wealth must set these unredeemed assets, at least for such an Empire as ours, in the very foreground.
Yet there is one portion of British wealth which of necessity must be reckoned by its money value, for lack of any other means of computation. By this is meant the enormous total of ‘foreign investment,’ which forms one of the mainstays of immediate imperial strength. It was commonly reckoned before the Great War of 1914 that British overseas investment represented £4,000,000,000 — to use the customary measure of the pound sterling, without multiplication into dollars. It is estimated for the eve of the present war at about £3,692,000,000. Any such comparison must of course, take further account of the shift in general world prices during the period. With higher prices the investment means less in goods, its only ultimate meaning. World prices, computed with 1913 as the base of 100 rose to nearly three to one at the peak of 1920 and stood in 1938 at about 107. But even as thus reduced the total of British outside investment is formidable, and until now, unequalled. This vast over-
seas proprietorship came as a historical consequence and legacy of the British industrial advance of the nineteenth century. In the factory industries, in the railroad and shipbuilding of the age of steam, Great Britain, and here especially England, was for a long time the first in the field and the rest nowhere. England made the world’s cotton goods, built the world’s iron ships, rolled the rails for the railways and sent overseas its contractors with their trained ‘navigators,’ or navvies, to do the work unlearned as yet by foreign hands. Free trade brought cheap food, and high profits, and the profits went pouring overseas again for further investment. The United States in its industrial infancy fed on British capital. Money from England took up State loans — some still unpaid — financed banks, railroads, canals and steamboats that carried the new tide of migration from the old states to the Mississippi between 1830 and 1850. As early as 1836, $90,000,000 had gone into railways and canals, the bulk of it English money.
The speculation was good and bad. Some of the money went into Pennsylvania bonds, or into imaginary real estate in the marshes of the Mississippi. We are told that a part of the glorious profits of Pickwick sank thus in the Mississippi mud, to come up as dragon’s teeth in the satire of Martin Chuzzlewit’s New Eden. But in the main the profits were vast. Interest on State bonds was 3 and 6 per cent, for companies and banks it ran to 10 per cent. Investors could afford to lose part for the sake of the rest. Even when the flood tide of imported money had been largely replaced by native streams, the United States, at the opening of the present century could absorb about 2 o per cent of outgoing British capital.
British money built the railways and supplied the industrial equipment of Argentina and Uruguay. When the electrical age began in 1880, British capital went overseas, as apparatus, machinery and technical services, to light the streets and generate the power of half a dozen South American capitals, as well as those of its Colonies. It built the railroads of India, dug the mines of South Africa and, in the form of vast shipping companies, carried the ocean commerce — quite literally, at the opening of this century — of half the world.
This overseas investment of British capital takes various forms, some of which can be accurately traced and calculated while others can only be computed as estimates and inferences, shading off into experienced guesswork. The latest (December 1939) of the masterly series of tabulations made annually by Sir Robert Kindersley, showed the grand total of British overseas investment as standing at £3,692,000,000. A certain part of this, accurately traceable, is represented by investment in the bonds of Dominion, Colonial and foreign governments and municipalities. The grand total of all this stands at £1,398,000,000, the greater part being invested inside the Empire (over £1,000,000,000). The money invested in such public loans in foreign countries and expressed in millions of pound sterling, shows European countries owing 107, the Argentine 35, Brazil 72, Chile 19, China 25, and Japan 42. It must be remembered that some of these holdings are not really British, but merely negotiated through London to the credit of outside holders. Of the interest on foreign government bonds 42 per cent is paid away to foreign municipal interest. Even in the case of Dominion and Colonial Governments 12 per cent of the interest goes out of England. Australia, where the railways were built as State enterprises on borrowed capital has absorbed more in government loans from London than any other imperial partner (£430 million outstanding); India with Ceylon, is next with 245-, New Zealand shows 122 then Canada and Newfoundland 116, and South Africa with Rhodesia 109.
Another vast block of overseas investment (a total of £1,210,000,000) is represented in the capital of British companies operating abroad, the original method of investment par excellence in new and undeveloped places. Such companies are under purely British control with headquarters in London. Money was thus invested to build railways, to establish banks and general industrial concerns, for tea and coffee planting, later on for electrical and power industries and for mines, oil, rubber, and the things of today. Most of the money (70 per cent) is invested in stocks (share capital, as named in England) and the rest in bonds and debentures (loan capital). Putting the two together railway investment is the largest item, over £80,000,000 in India, about £30,000,000 in the Dominions and Colonies, in the United States only £1,600,000, in foreign railways throughout the world almost £400,000,000. These investments in British Companies, must not be confused with the money placed in American, Canadian, and other outside railways companies as mentioned below. From these British Company securities, at the height of the post-war good times (1929), British investors received £67,700,000 in dividends and £18,000,000 in bond interest (£86,000,000 in all). The slump of the ‘thirties cut the total in half but it now is back to £69,000,000.
A third large class of investment obviously less controllable by Britain is found in the money placed by British residents in companies registered abroad. These represent, in shares and bonds together, a total of £685,000,000. Among the big items are the Dominion and Colonial Railway companies £210,000,000, including the British investment in the Canadian Pacific Railway company; United States railways £47,600,000; foreign banks, £38,200,000; commercial and industrial companies £100,000,000 and mines — South Africa, Canada, etc., £83,200,000.
To this long and imposing category Sir Robert Kindersley’s estimate adds a parting gift of another £400,000,000 to stand for various private and miscellaneous investments not in market form — such as private estates, and private money used abroad in a variety of ways not traceable as share or loan capital.
Common sense demands certain qualifications to the exuberance of the above account. Much of the overseas capital, especially in war-time, is unrealizable in any immediate form of purchasing power. It is ‘frozen’ by the exchange control of our own and foreign Governments. Much of it is, in the simple sense of the word ‘lost’; the loans to Brazil on which interest has stopped; the £40,000,000 that went into the clogged pipes of Mexican oil companies, and much else. Nor indeed can any overseas investment, dependent on the will of a foreign government, be altogether safe. The days when a paramount Power could compel small debtor nations to live up to a contract, no matter what they thought of it; the days when the company shareholder was protected in darkest Africa by a missionary and a gun-boat; the Cobdenite days when all men were to be brothers and all doors open to the commerce of a cosmopolitan world — that world has vanished. The lurid panorama of recent object lessons from Shanghai to Warsaw, from Prague to Helsingfors, has dissipated it into thin mist. One dollar under the flag is safer, and in the long run, better, than two outside of it.
Fortunately the turn of things has for some time been shifting British investment from outlandish adventure to Empire development. In 1880 it was calculated that only 20 per cent of annual new British overseas investment, remained British. At the present time 60 per cent remains under the flag. British capital in Canada alone now stands at $2,684,000,000 — with an infinity of room to expand.
For it is this possibility of further expansion that gives its real meaning to the wealth of the Empire, monetary and physical. This is no dead civilization of an Egypt, dying beneath the dusty pyramids for which it gave its life. For us the Empire is still all space, and light, and air.
Its wealth is opportunity — beyond the count of any counting-house. —
SOME BOOKS FOR REFERENCE
Statistical Abstract of the United Kingdom (Annual)
Statistical Abstract of the United States (Annual)
League of Nations Statistical Annual Canada Year Book (Annual)
CUNNINGHAM, s c. The Products of the Empire (1921)
Resources of the Empire. 4 vols Strategy of Raw Materials JENKS, L H. Migration of British Capital to 1875 (1927)
COPLAND, D. B. and WELLER. The Australian Economy (1933)
CHAPTER IV
Imperial Government
The Ordered Series of Empire Governments — The Outside Fringe of Mandates and Protected States — The Protectorates: Indirect Rule over Natives under their own Law — Crown Colonies — Government by Officials Only — Councils with Nominated Members — Colonies with Elected Assemblies — Representative Government — Semi-Responsible Government — The Government of the Empire of India — India and Dominion Status
IF you had asked a Canadian just before the outbreak of the present war, ‘Does Canada have to go to war if Great Britain does?’ he would have answered, ‘Of course not.’ Then if you had asked him, ‘And will Canada go to war if Great Britain does?’ he would say, without hesitation, ‘Oh, yes.’ Then if you had gone on to ask, ‘Why?’ he would have reflected a little and said, ‘Oh, because we’d have to.’
With which you would get a first introduction into what may be called the paradox of British government, its perpetual contrast between things in the abstract and things as they are. It is filled with legal fictions as transparent as John Doe, such as that the King becomes a Presbyterian as soon as he enters Scotland but loses it again on the way back; or such as that every British subject in England is a member of the Church. It lays down rights that are not used. For nearly five hundred years the Members of Parliament had the right to two shillings a day from their constituents when they went up to Westminster. It ceased to be ‘the thing’ to ask for it, somewhere in the fourteen hundreds, but the right went on till 1910, when pay began again. Similarly anybody accused of murder in the England of the Middle Ages had the right, if a gentleman, to trial by wager of battle. If he was a lord, he could, if busy, send one of his men. This right got forgotten till a certain Mr. Thornton asked for it, and got it, in 1818. British government also assigns penalties that get forgotten. Nobody nowadays is punished for not going to church on Sunday except soldiers and sailors, but supposedly anybody can be fined a shilling a Sunday for it. Compare also the long list of offices which have lost all their duties and retain nothing but the pay — those of the First Lord of the Treasury and the Lord Privy Seal, or have lost both the duties and the pay, as have the offices of the Steward of the Chiltern Hundreds and the Escheator of Munster. Put beside these the quaint offices that recall earlier dignity — the Norroy King-of-Arms, The Pursuivant Unicom, the Red Dragon, and the Black Rod — but sound like a winning hand at poker; or such mysterious functions as those of the Keeper of the Swans, and the Clerk of the Checque; or the various posts of honour that recall by-gone history — the Warden of the Cinq Ports, the Captain of the Yeomen of the Guard, the Lord of the Stanneries. But most of all consider the complicated and important function — no mere forms these — which rest simply on an understanding that such and such a thing is the proper thing to do. There is no legal obligation on a British ministry to resign if unsupported, none whatever for selecting ministers from a particular Party, or for ministers to be Members of Houses of Parliament — in short the whole of the Cabinet Government is just a way of doing things.
