The City of London, British Ethnic and National Identities, and Investment Decisions in the Anglophone New World, 1860–1914

The British experience of globalization was fundamentally different from that of Japan. In the seventeenth and eighteenth centuries, Britain created a global trading network, whereas Japan isolated itself from the world. By the nineteenth century, London was the world’s financial capital. Moreover, British people established overseas settlements that later helped to make English the language of global business. Another outcome of British colonization was that the legal systems of the United States and the British Dominions were derived from that of England and Wales. Law and finance economists such as Rafael La Porta and his colleagues regard Anglo-American common law as the legal tradition most conducive to the development of capital markets.1 By spreading English common law throughout the world, British colonization also helped to lay the foundations of the Anglo-Saxon model of capitalism, which closely resembles the liberal market economy identified by Peter A. Hall and David Soskice.2 Even in the twenty-first century, Britain’s linguistic and cultural ties to the New World continue to facilitate its international trade. Japan opened up to the world economy only in the middle of the nineteenth century and its efforts to establish Japanese colonies overseas came to an abrupt end in 1945. Japan’s failure to create any daughter nations overseas or to make its language the lingua franca of global commerce has made that country’s experience of globalization fundamentally different from that of Britain.