FINANCIAL PANICS: THEIR IMPLICATIONS FOR THE MIX OF FOREIGN AND DOMESTIC AND FOREIGN INVESTMENTS OF GREAT BRITAIN, 1880-1913.

This article presents information on a study which analyzed the factors that shaped the mix of domestic and foreign investments in Great Britain. The questions to which this paper addressed itself have now, for the most part, been answered. The percentages of national income allocated to foreign and domestic investment do show a negative correlation for the period, but this correlation is not carried through to the amounts of home and foreign investment, either in money or real terms. Cairncross's approach offers an explanation of their relationship in that the short-run factorB of fluctuation seemed to be those that operated in the same manner on the two series, while long-run trends affected the two inversely. Although this model has more intuitive appeal than theoretical rigor, it does provide an adequate long-run function for both foreign and domestic investment.