Abrupt change is not characteristic of the economic process in history. In most respects even the nineteenth-century world was working out, on a much larger scale, the logic of methods inherited from an earlier age. What distinguished the nineteenth century increasingly from earlier centuries and explains the pace, rhythm and scale of its economic growth was the extent to which international trade and investment came to transmit the very means of economic change themselves from the forward to the backward areas. The sale, or more often the loan, of capital equipment—railways, engines, rolling-stock, mining gear, pumps, machinery—accelerated the rate at which the economic arrangements and social structures of the less advanced nations were transformed. As trade came to imply not only the exchange of goods, but the permanent nexus of investment, a new type of politico-economic relationship emerged, rich in material promise and heavy with political risk. Much of the foreign trade of Britain, still the leading economic power in most respects in 1900, rested upon contracts designed (in the most simplified terms) to enable nations which could not afford to pay for capital equipment on current account to borrow it. The supposition underlying these transactions was that the opportunities they created would enable the borrower to pay a return to the lender.

This phenomenon was not new in 1870; but it owed its new prominence to the period of railway building which had begun in continental Europe before the mid-century. This was still going on vigorously in the fourth quarter, both through new construction and the replacement of old iron track by steel.