The funds needed to finance development came from the public issue of loans, discussed in the previous chapter, but also from four further sources – private funds, other colonies, internal resources, and aid. The various ways in which the Agents extracted money from private investors and the City is the subject of the first section of this chapter, which also includes a brief discussion of corporate colonial investment. The means by which colonies lent money to other territories are investigated in part two, and the use of internal resources and the provision of aid are reviewed in sections three and four respectively. The impact these funds had on the UK economy and the manner in which they were distributed is then considered.

Private funds

In addition to publicly floating loans, the Agents tapped private funds through the sale of stock to the market, private institutions and colonial investment Funds, by borrowing from London and foreign banks, by issuing colonial treasury bills, and by providing purchasers of goods with credit, partly financed by banking and insurance companies. On top of this, colonies received the proceeds of guaranteed and municipal loans issued by the Bank of England and other issuing houses, and both British and foreign companies invested in their economies.

Sale of stock to the market/placings

From 1920 to 1969, the Agents sold to the market or placed £36.1m of stock in 45 issues (Figure 1.4). In order to gain a quotation, sales to the market had to involve at least £100,000 of securities, but, following Stock Exchange regulations, the amount sold could not exceed £250,000.