amount of British capital estimated to have been invested abroad; (b) the value of the exports of British produce and manufactures; and (c) the excess of imports over exports during each of the eleven years 1900-10.

The figures contained in the foregoing table establish the correlation that exists between the exports of British manufactures and produce and the amount of capital invested abroad. For reasons given above, to take the figures for individual years would give a misleading result; but, if we divide the past decade into two quinquennial periods, namely 1900-4, when, owing mainly to the South African war, capital was invested abroad on a comparatively small scale, and 1905-9, when capital was invested abroad on an unprecedented scale, we shall find that the dependence of exports upon the investment of British capital in the Colonies and in foreign countries is very marked.

From the above table it will be observed that concurrently with an increase of 49,000,000l. in the average annual amount of capital sent abroad there was an increase of 88,113,000l. in the average annual value of

the exports of British produce and manufactures. The Board of Trade returns for the past year afford further confirmation of this theory of the interdependence of the investment of capital abroad and the export of British manufactures. During 1910 there was an increase of about 35,000,000l. in the amount of capital invested abroad; and this was accompanied by an expansion of 41,096,000l. in the value of the imports of raw materials and articles mainly manufactured, and an increase of 46,264,000l. in the exports of articles wholly or mainly manufactured.

Another striking characteristic of our foreign trade returns which is brought to light by the foregoing figures is the fact that, in those years in which capital is being invested abroad on a comparatively limited scale, the excess of imports over exports is much greater than in those years in which capital is being placed abroad on a lavish scale. Taking again the two quinquennial periods 1900-4 and 1905-9, it will be observed that during the first-named period the average annual amount subscribed for investment abroad was only 65,600,000l., and the average annual excess of imports over exports was 176,843,000l. But during the second quinquennial period, when capital was being invested abroad at the average rate of 114,600,000l. per annum, the average excess of imports over exports fell to 144,730,000l. The relation between the excess of imports and the amount invested abroad is further emphasised by the relative figures for the past year. During 1910, as stated above, the amount of capital subscribed for investment abroad was 170,000,000l.-the largest figure yet recorded; and the excess of imports over exports declined to 147,850,000l. The explanation of these wide movements in the excess of imports lies in the fact that when we invest largely abroad we bring a smaller proportion of our surplus income home. The bearing of this on the trade balance will be discussed later.

There are doubtless still many people who believe that British capital invested abroad finds its way out of this country in the shape of gold or silver. The official returns admit of no such conclusion. The declared value of the registered imports of gold and silver bullion and

specie into the United Kingdom for the ten years 1900-9 was 498,592,000l., and that of the registered exports of the same was 467,592,000l., leaving an excess of imports during the decade of 31,000,000l. It is, of course, true that the gold and silver movements are not fully revealed in the Board of Trade returns, owing to the large sums which are imported and exported by private individuals and are not registered. But, allowing for a large unrecorded movement in both directions, it may be accepted that the general tendency of each year is fairly reflected in the official returns, and that the approximate result was as shown above, namely, a net import of treasure during the ten years of 31,000,000l. Now the total sum subscribed for investment abroad during the ten years was not less than 901,000,000l.; and, as this sum obviously did not find its way out of the United Kingdom in the shape of gold, in what manner, it will be asked, was it provided? The amount was obtained mainly from four sources:

(a) Exports of British produce and manufactures.

(b) The reinvestment abroad of interest, dividends, etc., earned abroad and not brought home.

(c) The earnings of British shipping which were not remitted home.

(d) The earnings of British banking, insurance, and mercantile houses carrying on business abroad, which were reinvested in the countries in which they were earned or elsewhere abroad.

In order to show how capital is provided from the sources above referred to, for investment abroad, it is necessary to devote some consideration to the method by which the trade balance of the United Kingdom is adjusted. The principal credit items in the national income account are, (1) exports of commodities and specie; (2) the interest, etc., on our investments abroad; (3) the earnings of the British mercantile marine; and (4) the earnings of our banking, mercantile, insurance, and other houses carrying on business abroad. The most important items on the debit side are, (1) the imports of commodities and specie; and (2) the amount of capital annually invested abroad. The values of the imports and exports of commodities are fully revealed by the

Board of Trade returns. For the year 1910 our imports (including specie) amounted to 749,862,000l. The exports (including re-exports and specie) were valued at 598,734,000l., leaving an excess of imports of 151,128,0001.

The next credit item in point of magnitude is the income derived from investments outside the United Kingdom. For the reasons stated above, the income derived from this source for the year 1910 may be estimated at not less than 178,000,000l. There is evidence which points to the conclusion that not more than onehalf of the interest annually earned abroad is actually brought home in the shape of food-stuffs, raw materials, etc.; but, for the purposes of our present consideration, it may be assumed that the credit which accrued to Great Britain under this head during 1910 was 178,000,0007.

We have now to consider another great source of national wealth, namely, the earnings derived from our mercantile marine. In 1882 the late Sir Robert Giffen went exhaustively into this question, and he then estimated the earnings of the British shipping industry at 80,000,000l. per annum. Since that date vast changes have taken place in the position of the industry. Freights have been cut down drastically; but, on the other hand, the tonnage of steamships has been greatly augmented, and the transition from sailing vessels to steel steamships has been almost completely effected. The efficiency of the steam tonnage has been enormously increased in recent years, both with regard to speed and carrying capacity; and, as a matter of fact, practically the whole of our mercantile marine has been rebuilt during the past eighteen years. There is a growing tendency to build larger vessels in all trades; and the economy of working obtained by large steamships points to a continuation of this policy. The earnings of the industry fluctuate with the condition of trade in different parts of the world; and, so far as liner companies are concerned, the past year was one of the best experienced for many years.

At the end of last year the well-known shipping journal Fairplay' published a table showing the results of working of twenty-three representative shipping companies. The undertakings referred to had a paid-up share capital of 21,211,360l. and a loan capital of 14,462,7647.

The book-value of the steamers, with a total of 4,117,147 gross tons, was 43,220,365l., or (say) 107. 10s. per ton. The aggregate amount distributed in dividends was 1,030,1047., equal to 4.85 per cent., which cannot be looked upon as a satisfactory return for an industry subject to such vicissitudes of fortune as shipping. But the results of working of the cargo steamships were much less favourable. The eighty-eight companies included in the tabular statement had a paid-up share and loan capital of 15,005,000l. The book-value of the steamships was returned as 14,610,000Z., with a total tonnage of 1,725,335 gross tons, equivalent to say 8l. 98. per ton. There was a net profit of 842,511l.; and the sum of 290,1157. was written off for depreciation, a wholly inadequate provision. The sum of 217,6817. was distributed in dividend, giving an average return of only 2.3 per cent. The steamships owned by the two groups of companies referred to represent more than one-third of the total steam tonnage belonging to Great Britain.

While the figures are interesting and valuable as to the net results, they do not throw much light upon the question of gross earnings, with which we are more particularly concerned at the moment. The problem of estimating the total earnings of the British shipping industry and the proportion which remains in or ultimately reaches this country is one of profound difficulty. There is, to begin with, a great discrepancy in the earnings per ton of the different companies. The Cunard Line, for example, earns an average of about 137. per ton, the P. and O. an average of about 81. per ton, and the International Mercantile Marine an average of about 71. per ton. The gross tonnage of the steam shipping owned by Great Britain is 16,767,000 gross tons. A portion of this total is controlled by a foreign corporation, the International Mercantile Marine; but, on the other hand, British shipowners are interested as owners in a considerable amount of tonnage sailing under foreign flags. It would perhaps be a reasonable estimate to assume that the average earnings of the entire steam tonnage work out at about 61. per ton. The sailing vessels owned by this country have a net tonnage of 749,000, and an average of 21. per ton would perhaps be regarded as a reasonable estimate in respect of these vessels. On these bases we arrive at a total gross income of 102,000,0007.