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fin a n c e d d o m e s tic a lly ; o n t h e o t h e r ha n d, In d ia n c a p it a l form a tion a p p e a re d h e a v ily d e p e n d e n t u p o n B ritis h s a v in g s .* 5 A s w e sh all see in th e f i r s t s e c t io n o f th e fo llo w in g c h a p te r , th e b ro a d p a ra llelism am ong th e c y c lic a l flu c tu a t io n s in th e home in v e s tm e n t o f th e fo u r c o u n tr ie s w a s t o a g r e a t e x t e n t , i f n o t p u r e ly , a c o in c id e n c e .2* On th e o t h e r h a n d , th e p a tte r n o f v a r ia t io n s in th e l e v e l o f In d ia n home in v e s tm e n t w a s p ro b a b ly n o t d e te rm in e d as a u to n o m o u sly as in th e fo u r in d u s t r ia l c o u n tries , in v i e w o f In d ia 's d e p e n d e n c e u pon B rita in f o r c a p ita l.
T h e c y c lic a l in flu e n c e s g e n e ra t e d b y th e f o u r in d u s tr ia l c o u n tr ie s w e r e tra n s m itte d t o th e r e s t o f th e w o r ld b y tr a d e ch a n n els: t h e US in c re a s e d h e r im p o rts fro m th e u n d e v e lo p e d w o rld b y £28m d u r i n g th e boom a n d d e c r e a s e d b y £3m d u r in g th e slum p, w h ich m ay b e com pared w ith t h e £54m in c r e a s e a n d £7m d e clin e in German im p o rt s , w ith th e £57m in c r e a s e an d £2m d e c lin e in B ritis h im p o rts, a n d fin a lly w ith t h e £20m in c r e a s e a n d £9m d eclin e in F re n c h im p o r t s fro m p rim a r y p ro d u c e r s . In F ig 11-15 is show n a r a t h e r u n iq u e s tr u c tu r e o f C y c le IV.
C y c le V , 1902/4 - 1908/9, w a s le d b y th e U S, G erm a n y, A r g e n tin a an d C a n a d a (T a b le I I- 4 ). I f th e tw o in d u s t r ia l le a d e rs w e r e fin a n c ia lly s e lf- s u f f ic ie n t , t h e tw o p rim a ry p r o d u c e r s ha d t o h a ve r e c o u rs e t o f o r e ig n , m ostly B r it is h , s a v in g s t o a c o n s id e r a b le e x te n t in u n d e r g o in g in v e s tm en t c y c l e s : as m en tion ed e a r lie r , in A r g e n tin a b e tw e e n o n e th ird and o n e h a lf o f n e t p h y s ic a l in v e s tm en t was fin a n c ed b y fo r e ig n c a p ita l, w h ere a s in 1905-09 f o r e ig n s a v in g s 25 D. T h o rn «r( 1961) p.391
26 I t w o u ld b e r e le v a n t to n o t e h e r e th a t a t th e t w o t u r n in g p oin ts c o n n e c te d w it h th is tr a d e c y c l e , i.e . th e t r o u g h in t h e mid-1890s and th e p ea k a r o u n d 1900, th e maxim um d is c r e p a n c y am on g th e tu r n in g p o in ts o f o u r e ig h t econ o m ies w a s g r e a t e r th a n a t o t h e r tu r n in g p oin ts.
a tt r a c t e d to C anada a c c o u n te d f o r 35.7% o f C anadian g r o s s d o m estic c a p ita l form a tion .*7 T h e b ro a d a g re e m e n t b e tw e e n th e c y c lic a l flu c tu a t io n s in th e U S a n d G erm an home in v e s tm e n t d id n o t a p p e a r to r e s u lt fro m c lo s e lin k a g e s b e tw e e n th e tw o t h ro u g h c a p ita l o r t r a d e flo w s.** I t is , o n th e o t h e r hand, p o s s ib le th a t th e flu c tu a t io n s o f th e tw o in v e s tm en t e c o n o m ie s in flu e n c e d t h e l e v e l o f c a p ita l fo rm a tio n in A r g e n tin a an d C anada b y a ffe c t in g B rit is h o v e r s e a s le n d in g .
T h e in v e s tm en t c y c l e s in th e US an d G erm an y made th e m s e lv e s f e l t in th e u n d e v e lo p e d w o r ld v ia th e s h if t s in e x p o r ts fro m th e la t t e r t o th e fo rm e r: US im p o rt s fro m th e p e r ip h e r y r o s e an d f e l l b y £81m a n d £29m in th e C y c le V boom a n d slum p, w h ere a s a £119m in c r e a s e and a £37m d e c r e a s e w e r e o b s e r v e d in German im p o rts fro m th e u n d e v e lo p e d w o rld . O n th e o t h e r h a n d , th e c y c lic a l c h a n g e s in th e im p o rts o f th e tw o c o u n t r ie s fro m B rita in p la y e d a k e y r o le in g e n e r a t in g an e x p o r t - le d c y c l e in B rita in : th e c y c lic a l v a r ia tio n s in B ritis h e x p o r ts to th e US a m ou n ted to 7.3% a n d 19.6X o f th e r is e a n d fa ll in to ta l B ritis h m e r c h a n d is e e x p o r ts , a n d th e c o r re s p o n d in g r a t io s f o r B ritis h e x p o r t s to G e rm a n y w e re 12.7% a n d 18.6%. T h e B r it is h fin a n c e d in v e s tm en t flu c t u a t io n s in A r g e n t in a an d C anada fo rm e d fu r t h e r m ajor s h o ck s t o t h e B ritis h e c o n o m y : th e c y c lic a l r is e a n d fa ll in B ritis h e x p o r t s t o A r g e n tin a a c c o u n te d f o r 9.2% an d 6.1% o f to ta l exp a n sio n an d c o n t r a c t io n in B ritis h e x p o r ts , w h ils t 6.4% a n d 4.8% w e r e th e c o r r e s p o n d in g ra tio s f o r C anada. T h e flu c tu a t io n s o f th e B ritis h econ o m y, t o g e t h e r w ith th e c y c lic a l in flu e n c e s fro m th e U S an d G erm an y, w e r e e s s e n t ia l in c r e a t in g th e F re n c h e x p o r t c y c le . A s a re s u lt o f th e flu c tu a t io n s in B rita in an d F ra n ce, c y c lic a l m ovem en ts o f th e u n d e v e lo p e d w o rld w e r e r e in fo r c e d : B rita in ex p a n d e d h e r im p o rts fr o m th e p e r ip h e r y b y £H 0m d u r in g t h e 27 A. I . B lo o m field(1 9 6 8 a ), M. C. U rq u h a rt(1 9 8 6 )
28 S ee S ectio n 1, C h a p te r I I I .
%
u p s w in g a n d c o n tra c t e d th en b y £36m d u r i n g th e d o w n s w in g , w h ile £45m an d £18m w e r e th e c o r r e s p o n d in g f i g u r e s f o r F ra n c e . I n F ig 11-16 a r e d is p la y e d m a jo r c y c lic a l s h o ck s in th e C y c le V y e a r s .
I t w o u ld now a p p e a r p o s s ib le t o su m m a rize a common s tr u c tu r e u n d e r ly in g th e f i v e p re-W W I tr a d e c y c l e s i n th e fo llo w in g w a y : th e in v e s tm e n t flu c tu a tio n s in in d u s tr ia l c o u n t r ie s , t y p ic a lly U S and G erm an y, p r o v id e d in it ia l c y c lic a l s h o ck s ; th e s e w e r e s e n t t o v a r io u s p a r ts o f t h e w o rld t h r o u g h t r a d e c h a n n e ls ; a t th e sam e tim e, the p ro s p e c ts o f fo r e ig n in v e s t o r s , t y p ic a lly B rita in , w e r e a ls o a ffe c t e d , w h ich in tu r n had a s ig n ific a n t im pa ct u p o n th e c a p ita l fo r m a tio n in th e p e r ip h e r y ; b o th th e o r ig in a l s h o c k s v i a t r a d e c h a n n e l a n d the t r a d e flo w e f fe c t s c o n n e c te d w ith th e in v e s tm e n t flu c t u a t io n s in the p e r ip h e r y p ro d u c ed an e x p o r t - le d c y c l e in th e le n d in g econom y, w h ich fo r m e d an a d d itio n a l c y c lic a l in flu e n c e u pon th e p e r ip h e r y . I f home an d f o r e ig n in v e s tm e n t w a s t h u s a t th e b o tto m o f the in t e r n a tio n a l t r a d e c y c le s in 1870-1914 e r a , th e w o r k in g o f th ese u n d e r ly in g fo r c e s , th a t o f fo r e ig n in v e s t m e n t in p a r tic u la r , w a s most c le a r ly v is ib le in C y c le I I I , w h ich w e s h a ll examine in g r e a t e r d eta il in la te r c h a p te r s . B e fo re th a t, w e f i r s t t u r n to th e e x a m in a tio n o f th e d e te rm in a n ts o f th e flu c tu a tio n s in hom e an d f o r e i g n in v e s tm en t