New estimates of Australasian Public Debt issued in London, 1855-1914

"The beginning of Australasian borrowing in London coincided with, and contributed to, the upswing in British capital exports from the mid-1850s. Subsequently, Australasian borrowers remained active in the London market up to 1914 and beyond. Amongst them, colonial governments (the five on the Australian continent; Tasmania, and New Zealand) were the most important. Between 1865 and 1914, the region as a whole accounted for approximately 10 per cent of British overseas portfolio investment. Governments absorbed 65 per cent of those funds. This paper presents new annual estimates of Australasian government borrowing in London between 1855 and 1914 as part of wider research into the relationship between colonial governments and capital markets during the period. It also presents annual estimates of the stocks of outstanding debt sold in London and the colonies which disaggregate the official statistics published by colonial governments. Estimates of the annual investment in Australasian public securities are of two kinds. The first (e.g. Hall, 1963; Simon, 1967; Davis and Huttenback, 1986; Stone, 1999) show the annual value of new British portfolio investment (either, as in Hall’s case, the nominal value of the new debt created, or more commonly the actual capital subscribed) based on data published in the Investor’s Monthly Manual. They have several limitations. Most obviously, they only start from 1865 or after, when the IMM began to publish useable data. They are also restricted to investment in securities offered for public sale. An alternative set of estimates, referring only to the six Australian colonies, was created by Butlin (1962; 1964) for a reconstruction of the Australian balance of payments between 1860 and 1900. This draws on material in the colonial public accounts and shows annual net receipts of loans raised in London. The series, however, is also limited by its terminal dates and contains several errors. The new estimates also use the data published in public accounts, together with unpublished archival material, to revise and extend each of the available series, therefore also making them consistent with each other. Most importantly, their start dates are taken back to the colonial entry to London, and the final series include capital subscribed in securities sold by private treaty (the principal mode of sale before 1865). Finally, the new estimates make it possible to disaggregate contemporary colonial statistics of the stock of outstanding public debt, which up until the 1890s generally do not distinguish between the components sold in the colonies and those overseas. This provides further quantitative evidence of the growth and limitations of the colonial capital market, as well as the potential scale of remittances of colonial securities to London during the period."