Finance Imperialism in British India - Profits from Indian equity on the London Stock Exchange 1900-1930

Abstract

The theory of finance imperialism, according to common interpretations of Hobson and Lenin, posits that investments in formal empires should yield higher returns than investments in the imperial metropolis and foreign countries. The aim of this study is to test this theory on British India in the era of modern imperialism, by comparing British Indian profits to estimates of returns in the U.K. and other parts of the world. A total returns index is constructed, based on data from Global Financial Data and the Investor's Monthly Manual. A guide for interpreting and using these resources is outlined. Findings indicate that a strict interpretation of finance imperialism does not explain British presence in India well, unless bias against industrial investments on behalf of British finance is taken into account.