4.4 Summary and implications
Consider what we have learned about the structure of the Dundee jute industry. It was composed of many firms, most of them carrying out only one part of the process of buying, transporting, manufacturing and selling jute. New entrants gave the industry dynamism: they saw opportunities and took risks that might well end in disaster. Harry Walker may have started in this way, but by the 1890s the firm was no longer taking big risks. Reserves gave the firm resilience; experience of a highly competitive and volatile industry made it cautious. One might describe their strategy as prioritising survival (and waiting for opportunities – in 1914, the First World War broke out and the demand for sandbags soared).
Bruce Lenman and Kathleen Donaldson have suggested that the legacy of the jute industry was disastrous for Dundee. Big profits were made in jute, but these were invested overseas rather than in the local economy. From the 1870s on, investment trusts launched by Dundee businessmen channelled enormous sums into foreign investments and particularly into American railway, land and cattle companies. Dundee’s ‘jute barons’ preferred to invest in American stocks rather than in developing new industries in Dundee. The result left Dundee dangerously dependent on an industry in trouble (Lenman and Donaldson, 1971).
Interestingly, some of Harry Walker & Sons’ capital was held in American trust funds, which would have given a return of around 6 per cent. This suggests that the directors saw this as a better return (or at least a safer investment) than could be obtained at home. In this they were not alone: the wills of Dundee businessmen often reveal large overseas investments. And Britain as a whole between the 1870s and the First World War invested heavily abroad, in the empire (particularly Canada, South Africa and Australasia), but also in Latin America and, above all, the USA. One-fifth of all overseas investment in 1865–1914 went to the USA alone. On the whole, economic historians have calculated that this was of benefit to Britain – the return on investments overseas was higher than could have been obtained in the UK (Edelstein, 2004, p. 194). What of Harry Walker & Sons? Could they have invested more in Dundee? Remember how narrow was their business experience. The complicated networks built up to bring jute from Bengal, manufacture it, and sell the products to markets all over the world could not easily be switched to a new industry. Dundee did jute. For business families like the Walkers, the choice was jute or a safe investment overseas.