Financing of international trade

In the nineteenth century, the rapid growth of British industry, commerce and shipping under the stimulus of the industrial revolution made Britain the market as well as the workshop of the world. It became the site for the chief world market in raw materials, freight, insurance, and precious metals. A sound commercial banking system and a flexible system of central bank control have been built up, while specialized institutions – such as discount houses, merchant banks, accepting houses, the stock exchanges, investment trusts and finance corporations have evolved to satisfy particular needs for short-term or long-term finance. The facilities provided by merchant banks and accepting houses, for example, have long been used to finance shipments of goods not only to and from Britain, but also between overseas countries themselves.

At the same time, the banks which were already engaged in financing trade naturally developed to become channels for finance for longer-term ventures. British capital invested in overseas countries has assisted their development, increased their output and exports, and provided markets for manufactured goods. A number of specialized institutions have also been established in recent years to assist the provision of financial services for overseas countries.