CHAPTER 21 
GREAT Britain, II. THE TERMs oF TraDE, 1880-1914 
I TURN now to a series of movements for which the data are more 
precise, and for which something in the nature of a specific test of 
theory is more nearly possible. The period covered is that from 
about 1880 to the outbreak of the Great War in 1914. 
As already observed, the excess of imports over exports by this 
time was definitely established. Once established, we might 
have expected that it would grow; and grow, if not at a constant 
rate, at least with a continuing upward movement from year to 
year. But what we find in fact is a very irregular movement, by 
no means a steady maintenance of an upward trend. The pay- 
ments from other countries to Great Britain on account of the 
“invisible items,” as reflected in the excess of her imports over 
exports, showed for a number of years in the early part of the 20th 
century a decrease, not an increase. Between 1904 and 1914 
the annual excess of imports declined heavily — from £177 million 
a year in the quinquennium 1900-1904, to £145 million in 1905 
909, and to £137 million in 1909-1914. 
The explanation of this unexpected turn is to be found in a 
sudden burst of capital exports. This is the one item among the 
total of the invisible items that commonly shows, in a country 
that has reached the stage in which Great Britain found herself 
during the period in question, the greatest irregularity. It hap- 
pened then to exhibit quite extraordinary changes. A great and 
sudden enlargement of loans to foreign countries marked the years 
of expansion that preceded the Great War. The accompanying 
chart indicates how extraordinary was the outflow.! On that chart 
are indicated, on the three lower curves, the main items which 
! I have taken the figures on which the chart is based from Mr. C. K. Hobson's 
Export of Capital, pp. 197, 204; adding, however, those showing the excess of 
merchandise imports.