Dear New Left Review,

Anyone studying the dynamics of imperialism will have to take very seriously the arguments now being put forward by Arghiri Emmanuel. The first part of his Colonialism and Imperialism (NLR 73) presents a very convincing case for believing that under some circumstances the imperial or metropolitan power will be relatively more progressive than the power of colonialists actually in residence in the colony.

One or two points in the second half of his article are a little more open to question; on some matters of detail it is possible to produce evidence that contradicts him. Emmanuel’s article begins with a table showing British overseas investment as worth £1 billion in 1870 and worth £4 billion in 1914. This implies a rate of growth of the original investment of about 3 per cent a year. Emmanuel argues that this was distinctly too low a rate to be attractive, and he goes on to conclude that the capitalists who had made the original investment were steadily withdrawing a portion of their returns for domestic consumption or investment. The implication is that British imperial expansion did not proceed from a need to reinvest overseas the product of domestic capitalist investment.

At the simplest level, there are other estimates of the size of British overseas investment that point to a higher rate of growth. Imlah, in Economic Elements in the ‘Pax Britannica’ (p. 72–5), suggests that the 1870 value was £0·7 billion and the 1914 value was £4·0 billion, which implies a rate of growth of 4 per cent a year. Feinstein, in National Income Expenditure and Output 1855–1965 (p. 110), suggests that the 1870 value was £0·8 billion and the 1914 value was £4·2 billion, which implies a slightly slower rate of growth, but still something clearly over 3½ per cent a year. These estimates make overseas investment look rather more profitable.

Even within Emmanuel’s framework of a rate of growth of 3 per cent a year it might be possible to show that overseas investment was a self-sustaining activity. Certainly nobody would want to invest his money outside England in an investment that offered so little. But this was only a consideration in the mind of an individual investor before making his decision. He would ask for more than 3 per cent because he could get 3 per cent perfectly safely inside England. To be precise, the rate of return on Consols, taking the annual averages for the 45 years from 1870 to 1914 inclusive, was just under 3 per cent. Any investment that wanted to draw an Englishman away from the complete security of Consols would have to offer rather more, to make up for the fear of bankruptcy and repudiation. But if, after the event, the investor found that he had got an average 3 per cent on his investments outside Consols, he would have nothing to complain about.