Winning the capital, winning the war: retail investors in the First World War

by Norma Cohen (Queen Mary University of London)

 

Put_it_into_National_War_Bonds
National War Savings CommitteeMcMaster University Libraries, Identifier: 00001792. Available at wikimedia commons

The First World War brought about an upheaval in British investment, forcing savers to repatriate billions of pounds held abroad and attracting new investors among those living far from London, this research finds. The study also points to declining inequality between Britain’s wealthiest classes and the middle class, and rising purchasing power among the lower middle classes.

The research is based on samples from ledgers of investors in successive War Loans. These are lodged in archives at the Bank of England and have been closed for a century. The research covers roughly 6,000 samples from three separate sets of ledgers of investors between 1914 and 1932.

While the First World War is recalled as a period of national sacrifice and suffering, the reality is that war boosted Britain’s output. Sampling from the ledgers points to the extent to which war unleashed the industrial and engineering innovations of British industry, creating and spreading wealth.

Britain needed capital to ensure it could outlast its enemies. As the world’s capital exporter by 1914, the nation imposed increasingly tight measures on investors to ensure capital was used exclusively for war.

While London was home to just over half the capital raised in the first War Loan in 1914, that had fallen to just under 10% of capital raised in the years after. In contrast, the North East, North West and Scotland – home to the mining, engineering and shipbuilding industries – provided 60% of the capital by 1932, up from a quarter of the total raised by the first War Loan.

The concentration of investor occupations also points to profound social changes fostered by war. Men describing themselves as ‘gentleman’ or ‘esquire’ – titles accorded those wealthy enough to live on investment returns – accounted for 55% of retail investors for the first issue of War Loan. By the post-war years, these were 37% of male investors.

In contrast, skilled labourers – blacksmiths, coal miners and railway signalmen among others– were 9.0% of male retail investors by the after-war years, up from 4.9% in the first sample.

Suppliers of war-related goods may not have been the main beneficiaries of newly-created wealth. The sample includes large investments by those supplying consumer goods sought by households made better off by higher wages, steady work and falling unemployment during the war.

During and after the war, these sectors were accused of ‘profiteering’, sparking national indignation. Nearly a quarter of investors in 5% War Loan listing their occupations as ‘manufacturer’ were producing boots and leather goods, a sector singled out during the war for excess profits. Manufacturers in the final sample produced mineral water, worsteds, jam and bread.

My findings show that War Loan was widely held by households likely to have had relatively modest wealth; while the largest concentration of capital remained in the hands of relatively few, larger numbers had a small stake in the fate of the War Loans.

In the post-war years, over half of male retail investors held £500 or less. This may help to explain why efforts to pay for war by taxing wealth as well as income – a debate that echoes today – proved so politically challenging. The rentier class on whom additional taxation would have been levied may have been more of a political construct by 1932 than an actual presence.

 

From VOX – Short poppies: the height of WWI servicemen

From Timothy Hatton, Professor of Economics, Australian National University and University of Essex. Originally published on 9 May 2014

The height of today’s populations cannot explain which factors matter for long-run trends in health and height. This column highlights the correlates of height in the past using a sample of British army soldiers from World War I. While the socioeconomic status of the household mattered, the local disease environment mattered even more. Better education and modest medical advances led to an improvement in average health, despite the war and depression.

hattongraph
Distribution of heights in a sample of army recruits. From Bailey et al. (2014)

The last century has seen unprecedented increases in the heights of adults (Bleakley et al., 2013). Among young men in western Europe, that increase amounts to about four inches. On average, sons have been taller than their fathers for the last five generations. These gains in height are linked to improvements in health and longevity.

Increases in human stature have been associated with a wide range of improvements in living conditions, including better nutrition, a lower disease burden, and some modest improvement in medicine. But looking at the heights of today’s populations provides limited evidence on the socioeconomic determinants that can account for long-run trends in health and height. For that, we need to understand the correlates of height in the past. Instead of asking why people are so tall now, we should be asking why they were so short a century ago.

In a recent study Roy Bailey, Kris Inwood and I ( Bailey et al. 2014) took a sample of soldiers joining the British army around the time of World War I. These are randomly selected from a vast archive of two million service records that have been made available by the National Archives, mainly for the benefit of genealogists searching for their ancestors.

For this study, we draw a sample of servicemen who were born in the 1890s and who would therefore be in their late teens or early twenties when they enlisted. About two thirds of this cohort enlisted in the armed services and so the sample suffers much less from selection bias than would be likely during peacetime, when only a small fraction joined the forces. But we do not include officers who were taller than those they commanded. And at the other end of the distribution, we also miss some of the least fit, who were likely to be shorter than average.

FULL TEXT HERE

From The Royal Economic Society – Myths of the Great War

From issue no. 165, APril 2014, pp.17-196

 

Understandably, 2014 has seen (and will yet see) many reflections on the ‘Great War’ of 1914-18. In a lecture given to the Economic History Society Annual Conference on 28th March, Mark Harrison1 identified a number of widely-held myths about that tragic event. This is a shortened version of that lecture, which is available at: http://warwick.ac.uk/cage/research/wpfeed/188-2014_harrison.pdf.

Perceptions of the Great War continue to resonate in today’s world of international politics and policy. Most obviously, does China’s rise show a parallel with Germany’s a century ago? Will China’s rise, unlike Germany’s, remain peaceful? The Financial Times journalist Gideon Rachman wrote last year:

The analogy [of China today] with Germany before the first world war is striking … It is, at least, encouraging that the Chinese leadership has made an intense study of the rise of great powers over the ages – and is determined to avoid the mistakes of both Germany and Japan.2

The idea that China’s leaders wish to avoid Germany’s mistakes is encouraging, certainly.3 But what are the ‘mistakes’, exactly, that they will now seek to avoid? The world can hardly be reassured if we ourselves, social scientists and historians, remain uncertain what mistakes were made and even whether they were mistakes in the first place.

In this lecture I shall review four popular narratives relating to the Great War. They concern why the war started, how it was won, how it was lost, and in what sense it led to the next war.

Full article here: www.res.org.uk/view/art6Apr14Features.html