Measuring the performance of British business in Asia from the late 1800s to the present is difficult. Profits offer one measure, but collecting and comparing the profits and dividends (shares of profits distributed to stockholders) of thousands of enterprises present problems of data and interpretation. British overseas banks, for example, all maintained large hidden reserves to which transfers were made before published profits were declared. The actual dividends paid to stockholders were subject to factors such as taxation policy or exchange fluctuations or other factors. For example, the high dividends paid in India by many British managing companies in the early 1920s were more a response to stockholders' demands for short-term profit-taking of earnings the companies had retained from the First World War years—coupled with low rates of dividend taxation in India and a highly favorable currency exchange rate for the Indian rupee against British sterling—than the result of spectacularly successful enterprise during the period 1919 to 1921. Comparisons between different industries in different Asian countries present further difficulties.

Perhaps a more satisfactory measure of business performance is market share. In the late 1800s, British enterprise was dominant in many Asian countries; in Iran as late as the 1920s, the entire modern business sector was under British control. Although it declined at different rates in different countries, by the 1980s British business no longer played such a central role in the market of any Asian country.

The passage suggests which of the following about the high dividends paid in India by many British managing companies during the early 1920s?

They were made possible by the long-term profits gained by British business in India prior to the 1920s.

They furnish evidence that undermines the accepted view of the results of low dividend-taxation rates on British business in India.

They were unusually high because the exchange rate was more favorable for the rupee against the sterling than at any other time during the twentieth century.

They were commensurate with the dividends paid by British managing companies in other Asian countries during the same period.

They provide a misleading picture of the performance of British business in India from 1919 to 1921.


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