The Victorian Golden Age

Before 1914, despite the gorwth of nationalist movts in possesions as
different as Ireland and India, political independence still seemed a
remote prsopect for teh subject peoples.

Back then, the concept of self-determination as an unalienable right
was in fact, totally alien.
Recall that it only came abt at the end of WWI.
In this respect, the concept of universal self-determination can be
said to be less than 100 yrs old.
Great Britain was then, the Empire where the Sun Never Set.
Many Brits certainly expected their country to be pre-eminent
for years and years to come.

An economic reflection of this was their investments globally.
By 1914, they held a total of 4 billion pounds of global investments,
some 74 million of which was in Chinese securities.

Other factors also pointed to an era of prosperity:
1) Telecommunications had improved vastly.
Stuff like telegraphic messages meant one could send a msg from London
to New York in 30 seconds - the stuff of magic.

2) All of the major European central banks had committed themselves
to the Gold Standard - exchange rate fluctuations now seemed to be
a thing of the past.

3) Emerging mkt spreads were very low, almost all sovereign
bonds were paid no more than a 200 basis point spread compared
to the benchmark British consols.
Risk premiums were at an all time low.

Very many believed that war was a nigh impossibility.
When the War to End All Wars broke out, the financial system literally
went into a coma.

- Massive outbreak of liquidity preference, queues started forming
at the Bank of England.
- All the major stock exchanges simply closed shop; many did not open
until almost a year later.
- Gold convertibility was suspended in a number of countries.

In short, wad ppl had come to take for granted a few yrs prior
now essentially did not exist.