Jeffry A.Frieden 125The analytical problem is different for the two countries. India was a heavy
borrower despite its underdeveloped and colonial status: according to one set of
figures, 55 percent of British investment in India between 1865 and 1914 was in
government bonds. Two obvious explanations suggest themselves. First, the British
government implicitly subsidized Indian bond issues (primarily by allowing them
to be used for trust accounts), which increased their attractiveness. Second, India’s
strategic importance to the British Empire required a massive railroad network,
most of which was publicly owned and much of which the British government
encouraged to be financed in London. Accurate as these explanations may be,
they do not represent support for my approach in this instance; at best, they reflect
the potential importance of other factors, which is indubitable.
The relationship between foreign economic interests (including bondholders)
and the extension of British control to Egypt is a complex and hotly contested
issue. It is clear enough that Egypt’s foreign debt (largely to British and French
bondholders) was an important irritant in the country’s relations with the European
powers and that Egyptian finances were regularized, to the benefit of foreign
bondholders, after the British occupation in 1882. Several considerations, however,
mitigate the quick conclusion that the country’s foreign debt was the sole or principal
cause of the British intervention. The first is the obvious importance of other
economic interests in the area—cotton cultivation and exports, the large community
of resident investors, and the Suez Canal—all of which contributed to British
concern. Indeed, it might well be argued that the Suez Canal was the ultimate
example of an overseas asset whose value was site-specific and whose protection
by the use offeree was particularly feasible. The second consideration is that the
Egyptian saga began, like that of the Ottoman Empire, with a joint creditors’
committee, in this case an Anglo-French dual control commission. British occupation
came as the French left the field, and British unilateralism may have been spurred
by the gradual failure of cooperation. In any event, more work needs to be done
before all the case’s analytical implications are clear. It is, in fact, striking that,
while loans represented roughly half of all foreign investment in the developing
world before World War I, there are few cases in which even the boldest historians
argue for a connection between lending and intervention.
Despite gaps, then, it does appear that sovereign lending was seldom associated
with the use of force by home governments. It also appears that such lending
typically involved multilateral cooperation among private creditors or their
governments.
CONCLUSION
By putting forth a relatively simple set of hypotheses such as those discussed
here, I do not mean to imply that these variables are the sole or even the most
important explanations of colonialism or North-South relations more generally.
Everything from relative military capabilities, through geostrategic considerations,
to norms of sovereignty would need to be included in a full discussion of the
determinants of variation in colonial policy over time and across regions. I do