John A. Hobson

Imperialism, A Study


Chapter IV
Economic Parasites of Imperialism


Seeing that the Imperialism of the last three decades is clearly condemned as a business policy, in that at enormous expense it has procured a small, bad, unsafe increase of markets, and has jeopardised the entire wealth of the nation in rousing the strong resentment of other nations, we may ask, “How is the British nation induced to embark upon such unsound business?” The only possible answer is that the business interests of the nation as a whole are subordinated to those of certain sectional interests that usurp control of the national resources and use them for their private gain. This is no strange or monstrous charge to bring; it is the commonest disease of all forms of government. The famous words of Sir Thomas More are as true now as when he wrote them: “Everywhere do I perceive a certain conspiracy of rich men seeking their own advantage under the name and pretext of the commonwealth.”

Although the new Imperialism has been bad business for the nation, it has been good business for certain classes and certain trades within the nation. The vast expenditure on armaments, the costly wars, the grave risks and embarrassments of foreign policy, the stoppage of political and social reforms within Great Britain, though fraught with great injury to the nation, have served well the present business interests of certain industries and professions.

It is idle to meddle with politics unless we clearly recognise this central fact and understand what these sectional interests are which are the enemies of national safety and the commonwealth. We must put aside the merely sentimental diagnosis which explains wars or other national blunders by outbursts of patriotic animosity or errors of statecraft. Doubtless at every outbreak of war not only the man in the street but the man at the helm is often duped by the cunning with which aggressive motives and greedy purposes dress themselves in defensive clothing. There is, it may be safely asserted, no war within memory, however nakedly aggressive it may seem to the dispassionate historian, which has not been presented to the people who were called upon to fight as a necessary defensive policy, in which the honour, perhaps the very existence, of the State was involved.

The disastrous folly of these wars, the material and moral damage inflicted even on the victor, appear so plain to the disinterested spectator that he is apt to despair of any State attaining years of discretion, and inclines to regard these natural cataclysms as implying some ultimate irrationalism in politics. But careful analysis of the existing relations between business and politics shows that the aggressive Imperialism which we seek to understand is not in the main the product of blind passions of races or of the mixed folly and ambition of politicians. It is far more rational than at first sight appears. Irrational from the standpoint of the whole nation, it is rational enough from the standpoint of certain classes in the nation. A completely socialist State which kept good books and presented regular balance-sheets of expenditure and assets would soon discard Imperialism; an intelligent laissez-faire democracy which gave duly proportionate weight in its policy to all economic interests alike would do the same. But a State in which certain well-organised business interests are able to outweigh the weak, diffused interest of the community is bound to pursue a policy which accords with the pressure of the former interests.

In order to explain Imperialism on this hypothesis we have to answer two questions. Do we find in Great Britain to-day any well-organised group of special commercial and social interests which stand to gain by aggressive Imperialism and the militarism it involves? If such a combination of interests exists, has it the power to work its will in the arena of politics?

What is the direct economic outcome of Imperialism? A great expenditure of public money upon ships, guns, military and naval equipment and stores, growing and productive of enormous profits when a war, or an alarm of war, occurs; new public loans and important fluctuations in the home and foreign Bourses; more posts for soldiers and sailors and in the diplomatic and consular services; improvement of foreign investments by the substitution of the British flag for a foreign flag; acquisition of markets for certain classes of exports, and some protection and assistance for trades representing British houses in these manufactures; employment for engineers, missionaries, speculative miners, ranchers and other emigrants.

Certain definite business and professional interests feeding upon imperialistic expenditure, or upon the results of that expenditure, are thus set up in opposition to the common good, and, instinctively feeling their way to one another, are found united in strong sympathy to support every new imperialist exploit.

If the £60,000,000 which may now be taken as a minimum expenditure on armaments in time of peace were subjected to a close analysis, most of it would be traced directly to the tills of certain big firms engaged in building warships and transports, equipping and coaling them, manufacturing guns, rifles, and ammunition, supplying horses, waggons, saddlery, food, clothing for the services, contracting for barracks, and for other large irregular needs. Through these main channels the millions flow to feed many subsidiary trades, most of which are quite aware that they are engaged in executing contracts for the services. Here we have an important nucleus of commercial Imperialism. Some of these trades, especially the shipbuilding, boiler-making, and gun and ammunition making trades, are conducted by large firms with immense capital, whose heads are well aware of the uses of political influence for trade purposes.

These men are Imperialists by conviction; a pitiful policy is good for them.

With them stand the great manufacturers for export trade, who gain a living by supplying the real or artificial wants of the new countries we annex or open up. Manchester, Sheffield, Birmingham, to name three representative cases, are full of firms which compete in pushing textiles and hardware, engines, tools, machinery, spirits, guns, upon new markets. The public debts which ripen in our colonies, and in foreign countries that come under our protectorate or influence, are largely loaned in the shape of rails, engines, guns, and other materials of civilisation made and sent out by British firms. The making of railways, canals, and other public works, the establishment of factories, the development of mines, the improvement of agriculture in new countries, stimulate a definite interest in important manufacturing industries which feeds a very firm imperialist faith in their owners.

The proportion which such trade bears to the total industry of Great Britain is very small, but some of it is extremely influential and able to make a definite impression upon politics, through chambers of commerce, Parliamentary representatives, and semi-political, semi-commercial bodies like the Imperial South African Association or the China League.

The shipping trade has a very definite interest which makes for Imperialism. This is well illustrated by the policy of State subsidies now claimed by shipping firms as a retainer, and in order to encourage British shipping for purposes of imperial safety and defence.

The services are, of course, imperialist by conviction and by professional interest, and every increase of the army and navy enhances their numerical strength and the political power they exert. The abolition of purchase in the army, by opening the profession to the upper middle classes, greatly enlarged this most direct feeder of imperial sentiment. The potency of this factor is, of course, largely due to the itch for glory and adventure among military officers upon disturbed or uncertain frontiers of the Empire. This has been a most prolific source of expansion in India. The direct professional influence of the services carries with it a less organised but powerful sympathetic support on the part of the aristocracy and the wealthy classes, who seek in the services careers for their sons.

To the military services we may add the Indian Civil Service and the numerous official and semi-official posts in our colonies and protectorates. Every expansion of the Empire is also regarded by these same classes as affording new openings for their sons as ranchers, planters, engineers, or missionaries. This point of view is aptly summarised by a high Indian official, Sir Charles Crossthwaite, in discussing British relations with Siam. “The real question was who was to get the trade with them, and how we could make the most of them, so as to find fresh markets for our goods and also employment for those superfluous articles of the present day, our boys.”

From this standpoint our colonies still remain what James Mill cynically described them as being, “a vast system of outdoor relief for the upper classes.”

In all the professions, military and civil, the army, diplomacy, the church, the bar, teaching and engineering, Greater Britain serves for an overflow, relieving the congestion of the home market and offering chances to more reckless or adventurous members, while it furnishes a convenient limbo for damaged characters and careers. The actual amount of profitable employment thus furnished by our recent acquisitions is inconsiderable, but it arouses that disproportionate interest which always attaches to the margin of employment. To extend this margin is a powerful motive in Imperialism.

These influences, primarily economic, though not unmixed with other sentimental motives, are particularly operative in military, clerical, academic, and Civil Service circles, and furnish an interested bias towards Imperialism throughout the educated classes.


By far the most important economic factor in Imperialism is the influence relating to investments. The growing cosmopolitanism of capital is the greatest economic change of this generation. Every advanced industrial nation is tending to place a larger share of its capital outside the limits of its own political area, in foreign countries, or in colonies, and to draw a growing income from this source.

No exact or even approximate estimate of the total amount of the income of the British nation derived from foreign investments is possible. We possess, however, in the income-tax assessments an indirect measurement of certain large sections of investments, from which we can form some judgment as to the total size of the income from foreign and colonial sources, and the rate of its growth.

Income from Foreign Investments Assured to Income-Tax












From Indian public revenue






Indian rails






Colonial and foreign public securities, &c.






Railways out of United Kingdom






Foreign and colonial investments












From this table it appears that the period of energetic Imperialism has been coincident with a remarkable growth in the income from external investments. The income from these sources has nearly doubled in the period 1884-1900, while the portion derived from foreign railways and foreign and colonial investments has increased at a still more rapid rate.

These figures only give the foreign income which can be identified as such. To them must be added a large amount of income which escapes these income-tax returns, including considerable sums which would appear as profits of businesses carried on in the United Kingdom, such as insurance companies, investment trusts, and land mortgage companies, many of which derive a large part of their income from foreign investments. How rapid is the growth of this order of investment is seen from the published returns of investments of life insurance companies, which show that their investments in mortgages outside the United Kingdom had grown from about £6,000,000 in 1890 to £13,000,000 in 1898.

Sir R. Giffen estimated the income derived from foreign sources as profit, interest and pensions in 1882 at £70,000,000, and in a paper read before the Statistical Society in March 1899 he estimated the income from these same sources for the current year at £90,000,000. It is probable that this last figure is an underestimate, for if the items of foreign income not included as such under the income-tax returns bear the same proportion to those included as in 1882, the present total of income from foreign and colonial investments should be £120,000,000 rather than £90,000,000. Sir R. Giffen hazards the calculation that the new public investments abroad in the sixteen years 1882-1898 amounted to over £800,000,000, “and though part of the sum may have been nominal only, the real investment must have been enormous.”

Mr. Mulhall gives the following estimate of the size and growth of our foreign and colonial investments since 1862:



Annual Increase



Per Cent













This last amount is of especial interest, because it represents the most thorough investigation made by a most competent economist for the Dictionary of Political Economy. The investments included under this figure may be classified under the following general heads:


Million £


Million £


Million £

















Mines, &c.








In other words, in 1893 the British capital invested abroad represented about 15 per cent. of the total wealth of the United Kingdom: nearly one-half of this capital was in the form of loans to foreign and colonial Governments; of the rest a large proportion was invested in railways, banks, telegraphs, and other public services, owned, controlled, or vitally affected by Governments, while most of the remainder was placed in lands and mines, or in industries directly dependent on land values.

Income-tax returns and other statistics descriptive of the growth of these investments indicate that the total amount of British investments abroad at the end of the nineteenth century cannot be set down at a lower figure than £2,000,000,000. Considering that Sir R. Giffen regarded as “moderate” the estimate of £1,700,000,000 in 1892, the figure here named is probably below the truth.

Now, without placing any undue reliance upon these estimates, we cannot fail to recognise that in dealing with these foreign investments we are facing by far the most important factor in the economics of Imperialism. Whatever figures we take, two facts are evident. First, that the income derived as interest upon foreign investments enormously exceeds that derived as profits upon ordinary export and import trade. Secondly, that while our foreign and colonial trade, and presumably the income from it, are growing but slowly, the share of our import values representing income from foreign investments is growing very rapidly.

In a former chapter I pointed out how small a proportion of our national income appeared to be derived as profits from external trade. It seemed unintelligible that the enormous costs and risks of the new Imperialism should be undertaken for such small results in the shape of increase to external trade, especially when the size and character of the new markets acquired were taken into consideration. The statistics of foreign investments, however, shed clear light upon the economic forces which are dominating our policy. While the manufacturing and trading classes make little out of their new markets, paying, if they knew it, much more in taxation than they get out of them in trade, it is quite otherwise with the investor.

It is not too much to say that the modern foreign policy of Great Britain is primarily a struggle for profitable markets of investment. To a larger extent every year Great Britain is becoming a nation living upon tribute from abroad, and the classes who enjoy this tribute have an ever-increasing incentive to employ the public policy, the public purse, and the public force to extend the field of their private investments, and to safeguard and improve their existing investments. This is, perhaps, the most important fact in modern politics, and the obscurity in which it is wrapped constitutes the gravest danger to our State.

What is true of Great Britain is true likewise of France, Germany, the United States, and of all countries in which modern capitalism has placed large surplus savings in the hands of a plutocracy or of a thrifty middle class. A well-recognised distinction is drawn between creditor and debtor countries. Great Britain has been for some time by far the largest creditor country, and the policy by which the investing classes use the instrument of the State for private business purposes is most richly illustrated in the recent history of her wars and annexations. But France, Germany, and the United States are advancing fast along the same path. The nature of these imperialist operations is thus set forth by the Italian economist Loria: –

“When a country which has contracted a debt is unable, on account of the slenderness of its income, to offer sufficient guarantee for the punctual payment of interest, what happens? Sometimes an out-and-out conquest of the debtor country follows. Thus France’s attempted conquest of Mexico during the second empire was undertaken solely with the view of guaranteeing the interest of French citizens holding Mexican securities. But more frequently the insufficient guarantee of an international loan gives rise to the appointment of a financial commission by the creditor countries in order to protect their rights and guard the fate of their invested capital. The appointment of such a commission literally amounts in the end, however, to a veritable conquest. We have examples of this in Egypt, which has to all practical purposes become a British province, and in Tunis, which has in like manner become a dependency of France, who supplied the greater part of the loan. The Egyptian revolt against the foreign domination issuing from the debt came to nothing, as it met with invariable opposition from capitalistic combinations, and Tel-el-Kebir’s success, bought with money, was the most brilliant victory wealth has ever obtained on the field of battle.” [18]

But, though useful to explain certain economic facts, the terms “creditor” and “debtor,” as applied to countries, obscure the most significant feature of this Imperialism. For though, as appears from the analysis given above, much, if not most, of the debts are “public,” the credit is nearly always private, though sometimes, as in the case of Egypt, its owners succeed in getting their Government to enter a most unprofitable partnership, guaranteeing the payment of the interest, but not sharing in it.

Aggressive Imperialism, which costs the tax-payer so dear, which is of so little value to the manufacturer and trader, which is fraught with such grave incalculable peril to the citizen, is a source of great gain to the investor who cannot find at home the profitable use he seeks for his capital, and insists that his Government should help him to profitable and secure investments abroad.

If, contemplating the enormous expenditure on armaments, the ruinous wars, the diplomatic audacity of knavery by which modern Governments seek to extend their territorial power, we put the plain, practical question, Cui bono? the first and most obvious answer is, The investor.

The annual income Great Britain derives from commissions on her whole foreign and colonial trade, import and export, is estimated by Sir R. Giffen [19] at £18,000,000 for 1899, taken at 2½ per cent, upon a turnover of £800,000,000. This is the whole that we are entitled to regard as profits on external trade. Considerable as this sum is, it cannot serve to yield an economic motive-power adequate to explain the dominance which business considerations exercise over our imperial policy. Only when we set beside it some £90,000,000 or £100,000,000 representing pure profit upon investments, do we understand whence the economic impulse to Imperialism is derived.

Investors who have put their money in foreign lands, upon terms which take full account of risks connected with the political conditions of the country, desire to use the resources of their Government to minimise these risks, and so to enhance the capital value and the interest of their private investments. The investing and speculative classes in general also desire that Great Britain should take other foreign areas under her flag in order to secure new areas for profitable investment and speculation.


If the special interest of the investor is liable to clash with the public interest and to induce a wrecking policy, still more dangerous is the special interest of the financier, the general dealer in investments. In large measure the rank and the of the investors are, both for business and for politics, the cat’s-paws of the great financial houses, who use stocks and shares not so much as investments to yield them interest, but as material for speculation in the money market. In handling large masses of stocks and shares, in floating companies, in manipulating fluctuations of values, the magnates of the Bourse find their gain. These great businesses – banking, broking, bill discounting, loan floating, company promoting – form the central ganglion of international capitalism. United by the strongest bonds of organisation, always in closest and quickest touch with one another, situated in the very heart of the business capital of every State, controlled, so far as Europe is concerned, chiefly by men of a single and peculiar race, who have behind them many centuries of financial experience, they are in a unique position to control the policy of nations. No great quick direction of capital is possible save by their consent and through their agency. Does any one seriously suppose that a great war could be undertaken by any European State, or a great State loan subscribed, if the house of Rothschild and its connections set their face against it?

Every great political act involving a new flow of capital, or a large fluctuation in the values of existing investments, must receive the sanction and the practical aid of this little group of financial kings. These men, holding their realised wealth and their business capital, as they must, chiefly in stocks and bonds, have a double stake, first as investors, but secondly and chiefly as financial dealers. As investors, their political influence does not differ essentially from that of the smaller investors, except that they usually possess a practical control of the businesses in which they invest. As speculators or financial dealers they constitute, however, the gravest single factor in the economics of Imperialism.

To create new public debts, to float new companies, and to cause constant considerable fluctuations of values are three conditions of their profitable business. Each condition carries them into politics, and throws them on the side of Imperialism.

The public financial arrangements for the Philippine war put several millions of dollars into the pockets of Mr. Pierpont Morgan and his friends; the China-Japan war, which saddled the Celestial Empire for the first time with a public debt, and the indemnity which she will pay to her European invaders in connection with the recent conflict, bring grist to the financial mills in Europe; every railway or mining concession wrung from some reluctant foreign potentate means profitable business in raising capital and floating companies. A policy which rouses fears of aggression in Asiatic states, and which fans the rivalry of commercial nations in Europe, evokes vast expenditure on armaments, and ever-accumulating public debts, while the doubts and risks accruing from this policy promote that constant oscillation of values of securities which is so profitable to the skilled financier. There is not a war, a revolution, an anarchist assassination, or any other public shock, which is not gainful to these men; they are harpies who suck their gains from every new forced expenditure and every sudden disturbance of public credit. To the financiers “in the know” the Jameson raid was a most advantageous coup, as may be ascertained by a comparison of the “holdings” of these men before and after that event; the terrible sufferings of England and South Africa in the war, which is a sequel of the raid, is a source of immense profit to the big financiers who have best held out against the uncalculated waste, and have recouped themselves by profitable war contracts and by “freezing out” the smaller interests in the Transvaal. These men are the only certain gainers from the war, and most of their gains are made out of the public losses of their adopted country or the private losses of their fellow-countrymen.

The policy of these men, it is true, does not necessarily make for war; where war would bring about too great and too permanent a damage to the substantial fabric of industry, which is the ultimate and essential basis of speculation, their influence is cast for peace, as in the dangerous quarrel between Great Britain and the United States regarding Venezuela. But every increase of public expenditure, every oscillation of public credit short of this collapse, every risky enterprise in which public resources can be made the pledge of private speculations, is profitable to the big money-lender and speculator.

The wealth of these houses, the scale of their operations, and their cosmopolitan organisation make them the prime determinants of imperial policy. They have the largest definite stake in the business of Imperialism, and the amplest means of forcing their will upon the policy of nations.

In view of the part which the non-economic factors of patriotism, adventure, military enterprise, political ambition, and philanthropy play in imperial expansion, it may appear that to impute to financiers so much power is to take a too narrowly economic view of history. And it is true that the motor-power of Imperialism is not chiefly financial: finance is rather the governor of the imperial engine, directing the energy and determining its work: it does not constitute the fuel of the engine, nor does it directly generate the power. Finance manipulates the patriotic forces which politicians, soldiers, philanthropists, and traders generate; the enthusiasm for expansion which issues from these sources, though strong and genuine, is irregular and blind; the financial interest has those qualities of concentration and clear-sighted calculation which are needed to set Imperialism to work. An ambitious statesman, a frontier soldier, an overzealous missionary, a pushing trader, may suggest or even initiate a step of imperial expansion, may assist in educating patriotic public opinion to the urgent need of some fresh advance, but the final determination rests with the financial power. The direct influence exercised by great financial houses in “high politics” is supported by the control which they exercise over the body of public opinion through the Press, which, in every “civilised” country, is becoming more and more their obedient instrument. While the specifically financial newspaper imposes “facts” and “opinions” on the business classes, the general body of the Press comes more and more under the conscious or unconscious domination of financiers. The case of the South African Press, whose agents and correspondents fanned the martial flames in this country, was one of open ownership on the part of South African financiers, and this policy of owning newspapers for the sake of manufacturing public opinion is common in the great European cities. In Berlin, Vienna, and Paris many of the influential newspapers are held by financial houses, which use them, not primarily to make direct profits out of them, but in order to put into the public mind beliefs and sentiments which will influence public policy and thus affect the money market. In Great Britain this policy has not gone so far, but the alliance with finance grows closer every year, either by financiers purchasing a controlling share of newspapers, or by newspaper proprietors being tempted into finance. Apart from the financial Press, and financial ownership of the general Press, the City notoriously exercises a subtle and abiding influence upon leading London newspapers, and through them upon the body of the provincial Press, while the entire dependence of the Press for its business profits upon its advertising columns involves a peculiar reluctance to oppose the organised financial classes with whom rests the control of so much advertising business. Add to this the natural sympathy with a sensational policy which a cheap Press always manifests, and it becomes evident that the Press is strongly biassed towards Imperialism, and lends itself with great facility to the suggestion of financial or political Imperialists who desire to work up patriotism for some new piece of expansion.

Such is the array of distinctively economic forces making for Imperialism, a large loose group of trades and professions seeking profitable business and lucrative employment from the expansion of military and civil services, from the expenditure on military operations, the opening up of new tracts of territory and trade with the same, and the provision of new capital which these operations require, all these finding their central guiding and directing force in the power of the general financier.

The play of these forces does not openly appear. They are essentially parasites upon patriotism, and they adapt themselves to its protecting colours. In the mouths of their representatives are noble phrase, expressive of their desire to extend the area of civilisation, to establish good government, promote Christianity, extirpate slavery, and elevate the lower races. Some of the business men who hold such language may entertain a genuine, though usually a vague, desire to accomplish these ends, but they are primarily engaged in business, and they are not unaware of the utility of the more unselfish forces in furthering their ends. Their true attitude of mind is expressed by Mr. Rhodes in his famous description of “Her Majesty’s Flag” as “the greatest commercial asset in the world.” [20]


18. Loria, The Economic Foundations of Politics, p.273 (Sonnenschein).

19. Journal of the Statistical Society, vol.xlii. p.9.

20. It will be observed that this, like not a few other words of revelation, has been doctored in the volume, Cecil Rhodes: his Political Life and Speeches, by “Vindex” (p.823).

Last updated on 12.11.2006