Weekly reports on the money market moved to the front page for the fin de siècle. Subsequent sections tied political news to investment. The headlines from 13 January 1883 were typical: ‘Suez Canal Dues and Traffic’, ‘The Finances of Eastern Roumelia’, ‘The Condition of the Peasantry of the Deccan’, ‘Roumanian Progress’, ‘Industrial Enterprise in Turkey’. Links were explicit. In the 1880s the Economist regularly assessed the creditworthiness of Russia and Italy, then embarking on major railway expansions. On Europe’s fringe, the instability of the Sublime Porte was a source of acute anxiety, even after it emerged from default in 1881 under the budgetary supervision of foreign bondholders. One appraisal of the Imperial Ottoman Bank concluded that its holding of government securities – despite high annual dividends and a stake in the profitable state tobacco monopoly – made it vulnerable in the event of political turmoil. ‘When the crash does come, it will be best for those institutions standing most clear.’22
Still greater scrutiny was reserved for Central and South America, where 20 per cent of British foreign investment was tied up by the 1880s.23 Brazilian and Uruguayan deficits it eyed warily on behalf of European bondholders.24 Past mistakes in Mexico were forgiven; the growth in railway stock revived hopes that, ‘with its vast natural resources, it would speedily become an orderly State, and therefore a State in which English capital might profitably be invested.’25 It anxiously watched Peru’s borders lest supplies of phosphorus-rich bat guano be disrupted.26 In Argentina it fretted not only over the government’s ability to finance its external debt – incurred largely through railway loans from England – but also at the erosion of British exports faced with goods emanating from France and Germany.27
News arrived regularly from Buenos Aires, as its share of British overseas investment bounded ahead between 1880 – when General Roca became president, pledged to ‘order and progress’ after his genocidal ‘Conquest of the Desert’ – and 1890, to 40–50 per cent of the total.28 Although the Economist hailed Roca’s administration, doubts grew under his successor, if not soon enough about the famed British merchant bank floating his loans.29 Baring Brothers actually blandished a politician with a free subscription to the Economist, and the governor of Buenos Aires with a stallion, to win this business. The horse, ten years older than advertised, and bandy-legged, turned out the wiser bet. The Economist rebuked the bank’s partners when the collapse of the property boom in Argentina revealed the extent of the risks they had taken: the bank was highly leveraged, invested in unstable mortgage-backed bank bonds, and overexposed, with 75 per cent of its portfolio in the River Plate region. As the value of its assets sank, Barings secretly approached the Bank of England – which spearheaded a huge £17.1 million guarantee fund with the City’s largest firms and joint-stock banks, to slowly liquidate Barings’ liabilities.30 Johnstone played a direct role in devising this plan, which avoided panicking money markets. ‘So great was the public desire to become acquainted with its opinion of the event’, recorded the Bankers’ Magazine, that ‘numerous reprints were required of the issue of the Economist following the announcement of the breakdown.’31
Nor was this the only display of its standing in the City. The Barings Crisis also signalled the end of a long investment boom in Australia, which for the next decade struggled to export enough to service its debt.32 In 1898 an Economist report exposing gold mining companies in West Australia, one of the few bright spots in the economic picture, as a ‘conspiracy to deceive investors’ led to a libel case against it. Johnstone agreed to withdraw any aspersions on Scott Lings, a Manchester cotton promoter and chairman of Golden Link Mines, but maintained the report had ‘been fully justified by events’ since the much-touted ‘main lode’ had still not been struck. Both parties, strangely enough, confirmed the special status of the paper. A simple retraction would not do, explained Lings’s lawyer, for ‘the very fact that the Economist has never had a libel action brought against it, and that it is a highly respectable and responsible newspaper, made it imperative’ that its statements ‘should be withdrawn in the most public way possible’.33
The Economist may have been more prudent than the competition, but it was no less optimistic about the overall direction of investment. It could become downright sanguine, in fact, when the capital in question was in good hands – a tone set by Bagehot, for whom the emigration of young men ‘with English capital’ to ‘manage English capital’ was one of ‘the great instruments of world-wide trade’ and ‘binding forces of the future’.34 South American investments had not only been profitable, but from this perspective, quite secure: it reminded readers that most of the ‘railways, tramways, gas, mining, improvement’ and other companies ‘in which our money has been sunk are purely English, in so far as the directorates and shareholders are concerned’.35
These statements hinted not only at the scale of British holdings, if direct investments are added to the portfolio type, but at the potential threats to them from rival national capitals.36 The problem was practical. Between 1878 and 1914, European territorial empires expanded massively, adding 8.6 million square miles throughout Asia, the Middle East and Africa. Germany, Italy, Japan, the US and even Belgium, as latecomers to the imperial stage, now joined older powers such as France and Russia to compete with Britain for land, resources and markets; the risks involved in the ‘new imperialism’ were manifestly higher. For Johnstone’s Economist, analyzing investment prospects also meant deciding what limits, if any, to place on this growth; when and where inter-imperial conflict could make way for cooperation; and how newly subject peoples ought to be treated.
A Liberal Scramble for Empire?
The imperial landscape was already shifting rapidly – and taking more newsprint to cover – in the years leading up to Johnstone’s tenure. In 1877, Disraeli made Queen Victoria Empress of India, a move intended to rally India’s princelings to the British Raj. The Economist did not see what difference it made to Indians what she was called – ‘a great army and navy was behind the name, and that is enough for them’ – but it did wonder at a Conservative prime minister tinkering with the ‘magic’ of the English Constitution.37 The ‘Eastern Question’ re-emerged at the same time, as Russia launched a new war against the Ottomans that threatened to redraw the map of south-eastern Europe in its favour, and undermine British naval predominance in the Mediterranean. The Economist favoured intervention to avoid this outcome in 1878 – first welcoming a diplomatic convention to backstop Ottoman rule in Asia, then endorsing the Congress of Berlin, which divided up most of the Balkans between the Europeans, and handed Cyprus to Britain.38 A new skirmish with Russia irrupted almost immediately, however, when the Tsar sent his ‘envoys’ to Afghanistan. Britain promptly invaded, with the paper calling for an ‘irresistible demonstration of our power’ to depose ‘Ameer Shere Ali’ in Kabul and shore up the north-western frontier with India in the Second Anglo-Afghan War.39 At the same time, Britain also pressed forward in Africa, brutally uprooting the Zulu nation in 1879, clearing a path for white settlers hungry for its land and labourers. The Dutch-descended Boers in the neighbouring Transvaal then rebelled against the prospect of being annexed too, temporarily checking British expansion at Majuba in 1880 during the First Boer War.40
The Economist tried to take stock of the frenetic pace of imperial activity the year Johnstone took full control of the paper in 1883, sounding a more prudent note than before: London needed room for manoeuvre in imperial affairs, but should carefully weigh further territorial commitments. ‘The air is thick with projects of annexation. In Africa, in Asia, and in Australasia, schemes of conquest or of colonisation are being pressed forward.’ Though some chances could not be passed up – ‘to such enterprises as the opening up of the Congo we cannot, of course, be indifferent’ and there could be no red lines ‘where we can say thus far and no farther’ – on the whole, ‘consolidation and development rather than fresh adventure’ was the wisest course. It reminded readers of the vast possessions alr
eady under British sway – an expanse sixty-five times the size of the British Isles, twice the area of Europe, with an estimated populace of 217,695,000. ‘Our interests will be better promoted by international agreements as to freedom of trade, than to extend our dominion over new land.’41 Let latecomers, ‘under an emotion of tropical territory’, fight for leftovers, as Britain and the Economist focused on the invisible bonds of capital being laid by the City of London. This was not because territory was unimportant to the paper, but because Britain already had the best bits, ‘holds all coaling stations on the two routes to the far East’ and the ‘keys of the Mediterranean, of the Red Sea, of the Persian Gulf, the Straits of Malacca, the Eastern Archipelago, and rules in unquestioned and practically lonely sovereignty the people of India’.42
If the paper favoured indirect forms of imperial control based on trade and investment, it recognized the necessity of the territorial strings often attached to them. After Egypt had followed Turkey into default in 1876, its main creditors, Britain and France, had imposed a ‘Dual Control’ over its budget.43 This violation of Egypt’s sovereignty stoked a nationalist movement, led by Colonel Arabi Pasha, which the creditor nations promptly resolved to crush. The Economist had pondered a joint expedition even before the deaths of fifty Europeans in Alexandria in June 1883, during riots that broke out when British and French warships appeared off the coast.44 Now that law, order and European lives were at stake, action could not wait. Admiral Seymour’s shelling of the city the next month was ‘an act not of aggression, but of self-defence’, while the ‘burning and pillaging’ it triggered among the Egyptians – ‘pure vandalism’, ‘no strategic purpose’ – showed that Arabi and his followers were ‘not high-minded patriots’ but ‘military adventurers, capable of any excesses, and caring little what injury they inflict on their country’.45
The Economist considered the ‘preservation of our right of way through the Suez Canal’ a matter of life and death for Britain. But in making the case for a swift invasion of Egypt, it also insisted on unselfish motives: dutifully reporting on the risks of disorder to ‘the City and businessmen’, it dismissed these as a casus belli. Britain was acting on liberal principles. Egyptians had registered anger at their ‘“exploitation” by bondholders’. ‘But bad as some of its features may have been’, surely they ‘would be glad to return to it’ – given the ‘paralysis of industry’, ‘growth of official corruption’, ‘revival of torture’, ‘diminishing security of life and property’, and ‘other Oriental abominations’.46 Any new regime in Cairo would, meanwhile, be submitted to all the powers of Europe for ‘sanction’ – a point to which it returned even as it cheered the rout of Arabi by 31,000 Anglo-Indian troops in September.47 Here tutelage proved unavoidable: ‘we have tried to govern Egypt through its treasury, and the attempt has failed.’48 So during the ‘temporary occupation’ that followed, the paper tinkered with different policies to make ‘financial control’ both inconspicuous and inescapable.49
In practice, the Economist rarely paused to draw a critical breath between colonial wars, even when these arose from the unintended consequences of a previous one. Invading Egypt further weakened the Khedival ruling structure, for example, opening the door to a rebellion in Egypt’s own southern colony of Sudan. When the capital Khartoum fell to the jihadi forces of the Mahdi in 1885, the paper demanded vengeance – in uncharacteristically shrill tones – for a no less messianic figure, General Gordon, who had stayed in the city despite orders to evacuate: ‘The Englishmen in the Soudan have shown the best qualities of the national character, and their achievements will always hold a conspicuous place in the annals of British heroism.’50
More typical of the Economist’s justification of British imperial greed was the case it made a few months later for the seizure of the rest of Burma not already coloured red, and the destruction of a monarchy and monkhood that had structured its society for over a millennium. King Thibaw could not be allowed to defy Westminster by pursuing independent policies, whether with France, Russia or China, on the north-eastern border of India, or in commercial matters – where a fine levied on the Bombay Burma Trading Co. amounted to a violation of free trade.51 Lord Dufferin, viceroy of India, who had amassed an army to carry this last point home to Thibaw in October 1885, was ‘a moderate man’, who ‘must be trusted’.52 As in Egypt, ‘opening up new outlets for trade’ was unacceptable as an official motivation for conquest. What was at stake, however, was the sacred right of contract, and contrary to the harrumphs of radicals like John Bright, ‘we are surely bound to guard against arbitrary and illegal spoliation of our subjects.’53
Getting the rationale for imperial expansion right was important for the Economist, since narrowly nationalistic, commercially self-interested arguments played into the hands of Britain’s rivals – already liable to pursue empire for the wrong reasons, and with increasing assertiveness. Germany could be a productive partner on the world stage – as in 1884, when Bismarck worked to settle the status of the Congo and the Niger at the Berlin Conference.54 But in 1888 the paper questioned if its leader ‘directed or utilised the national desire for colonies with any wisdom’, having selected neither places where surplus population could settle, ‘nor ones which promise to greatly increase the volume of national trade’.55 Russia was untrustworthy, madly expansionist, and backward.56 France, with whom Russia allied in 1894, was tetchy and impulsive – a portrait that grew darker towards end of century, as Paris and London clashed repeatedly throughout Africa and Asia.
France’s Tonkin Expedition of 1883 was a foolish land-grab, which was bound to ignite a war with China and damage trade, causing a rise in the price of tea ‘felt in every English cottage’ and an interruption to flows of Indian opium, product of ‘a century of care and skill, akin to Lafitte among clarets, or Havannah cigars among tobaccos’.57 In 1898 it asked if French behaviour in the Fashoda Crisis was ‘worthy of a great nation’ – for, besides ‘annoying England’, why would Major Marchand, ‘with his 120 negroes from Timbuctoo’, dare tangle with General Kitchener’s mighty army over a ‘swamp at the bottom of Ethiopia’?58 Anglo-Egyptian forces had marked out this terrain in blood, tracking the Nile up to Omdurman – where they finally avenged Gordon by killing 11,000 dervishes, and exhuming and torching the remains of the Mahdi.59 ‘France has an enormous colonial empire’, it granted after the crisis was defused, ‘but she makes so little of it that it is a burden rather than a source of profits’, since it was ‘overrun by officials and soldiers, and hampered by unwise tariffs’.60
The Economist was ambivalent about American imperialism, which also reared its head in 1898 during the Spanish-American War. It advised Europe to let ‘second-rate’ Spain nurse its losses, and accept America’s seizure of Cuba, Puerto Rico, the Philippines, not to speak of Hawaii, Guam and Wake Island; at least the US would promote economic development – or ‘the interests of humanity and the higher civilisation’ – in these places.61 But the paper harboured few illusions about American exceptionalism, pointing to the wide gap between the country’s constitution and its territorial ambitions, which made it ill-suited to be an empire. Under President McKinley the US was taking a ‘momentous step’ that was ‘not in harmony with the spirit or letter of American institutions’, in ‘violating the inalienable right to liberty’ of the native populations of the islands it had seized. More fundamentally, for the Economist the US was compromised by the character of its national political economy. For if it resembled ‘the mother country’ in seeking a commercial empire (a need for new markets was ‘the fundamental economic fact’ in the US), its ‘people have never been guided by free trade principles’.62
This was a major shortcoming in what looked likely to be the next inter-imperial feeding frenzy, over China, a ‘dying nation’ after its drubbing by Japan in the Sino-Japanese War in 1895, whose corpse the Western powers hungrily circled – including America, its ‘Open Door Policy’ in East Asia mere window dressing, in the Economist’s opi
nion.63 The Economist’s response to the 1899 Boxer Rebellion – an anti-Western uprising that swept through north China, cresting in Beijing, where a rebel siege of foreign legations lasted for months – was at once an admission of Britain’s overreach elsewhere, and an illustration of what distinguished its Empire from the others. Boxers ought to be ‘extinguished’ for killing Western diplomats and missionaries, but unlike in Africa, Europeans could cooperate in this stern duty. The aim was to restore order with a multi-national armed response, but to avoid partition: not just because the Chinese were clearly better able to resist than, say, Egyptians, but because the ruling Manchu dynasty was not to be jeopardised.64 Foreign investment in railways, mines, banks and the like required political stability, which outright control, in China, would undermine. If the Economist deplored the treaty that ended the expedition, it was not for exacting a huge indemnity from the ‘bloodthirsty’ Empress Dowager, but because it did so in violation of liberal precepts, on the back of higher customs duties. Afterwards, the paper deplored the protectionist leanings of the French, German, Russian and Italian businessmen who poured into China, and their cynical reasoning that if the country were ‘really and honestly thrown open’ – ‘the Anglo-Saxon will beat us in the Chinese market as he has in every other market in Asia’. In the end, it was a little disappointed with this inter-imperial experiment, which ‘future historians will describe as without precedent … the first time since the Crusades the whole white world joined in an attempt to punish an Asiatic power for a grave outrage’.65
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