'It has been claimed that Britains financial institutions were too oriented towards overseas investment between 1870 and 1914 and that this led to the neglect of domestic industry. Discuss

The first 200 words of this essay...

British Economic History

''It has been claimed that Britain's financial institutions were too oriented towards overseas investment between 1870 and 1914 and that this led to the neglect of domestic industry.

(a) Examine whether British industry could gain sufficient funds from the financial sector.

(b) Consider whether an alternative institution, such as the investment banks found in Germany, was needed to improve British industry.''

Introduction

Overseas investment,and most particularly,capital exports,is one of the most interesting and important historical phenomena of the period 1860-1914.Paish,in order to define the magnitude of these capital exports,estimated that the total stock of overseas British assets just before First World War,was not less than 4 billion pounds,the one third of the British wealth. Never before or since,has one nation invested so much of its national income to capital formation abroad. The reasons for this preference to foreign investments are controversial. However,in the late nineteenth and twentieth centuries there were two streams of though concerning why financial institutions and individuals had turned to overseas investment. The first one,is that foreign investments had higher returns than the domestic ones,but there is a dispute here about whether these funds were pushed