EGYPTIAN FINANCE. "Egypt has been the plunder-ground of Europe." " NOTY OTWITHSTANDING the repeated commissions of inquiry and official reports on Egyptian finance in the past five or six years, mostly in the interests of bondholders, the English public have a confused idea of the subject. Nor is it surprising, since the reports were often contradictory, and the whole question, until the Liquidation Law of 1880, was as much a puzzle as the Sleswig-Holstein difficulty of twenty years ago. No fewer than 835 despatches and six voluminous reports, on this subject, are to be found in the Blue-books of Great Britain, France, Austria and Italy, attesting the interest that European Governments felt in the matter; and in order rightly to understand it the careful political student must not omit a single despatch, nor an item of statistics, in the whole collection. The following précis may be useful to those who want time or patience for examining the copious details. I. THE EGYPTIAN DEBT. At the accession of Ismail Pasha, in 1863, the debt was £3,300,000, and when he was deposed, in 1879, it amounted to 100 millions-that is, it rose in sixteen years from 15s. to £18 per inhabitant. It is almost needless to say that the Khedive did not get 100 millions from the bondholders. The total received by the three Khedives-Said, Ismail, and Tewfik-down to the present, has been 50 millions, of which Ismail got 42 millions. The following table shows the nine loans, including those which were more properly mortgages on the Khedive's personal estates: The Goschen loans were the least onerous, the interest on the net amount being 81 per cent. per annum, but they were well secured, the railways, telegraphs, &c., being " affected" to them. The Anglo-Egyptian Bank obtained 11 per cent. interest, and two years later the Imperial Ottoman charged the same. The road to ruin began soon afterwards, the Oppenheim loans involving 12 per cent. interest, which were followed by advances from the Anglo-Egyptian Bank at 18 per cent., and afterwards 28 per cent., besides commission charges. As for the Bischoffsheim and Rothschild loans the interest was only 10 per cent. But although the Goschen loans bore the lightest interest, they inevitably precipitated confusion by reason of the heavy sinking-fund, which was on one loan 17 per cent. per annum. In fact the Egyptians might have been able to pay their way, but for the unwise haste of the bondholders to get back their money. In 1870 the outstanding funded debt (including Bischoffsheim's loan) amounted to £32,923,000, and the annual charge was almost 12 per cent., viz.— As a natural consequence, the Khedive soon found himself entangled with interest and compound interest, borrowing money on the security of wheat and sugar, every effort to extricate himself only plunging him deeper in the morass of indebtedness. The works that he was carrying out cost 80 per cent. extra, as the contractors required this margin for the risk of irregular payment. In 1873 the country was virtually bankrupt; but even then the finances could have been reconstructed by suspending all sinking-funds if the Khedive had had an able Minister of the stamp of Mr. Goschen or Sir Rivers Wilson. He was unfortunately in the hands of Sadyk Pasha, who held a position equal to that of Joseph under Pharaoh, without Joseph's integrity. The Oppenheim loan of 1873 was disastrous, the Khedive giving bonds for 32 millions sterling, for which he received only 11 millions in cash, and 9 millions in depreciated scrip, worth 65, or at most 70 per cent. This scrip he was forced to accept at the rate of 93 per cent. of its nominal value. The net product, therefore, was not 20 millions, as Mr. Cave stated, but less than 18 millions, and for this amount the Khedive saddled himself with a fresh annual burthen of £2,560,000. After this the condition was hopeless, the financial system having scarcely any other object than to stave off bankruptcy as long as possible. In 1874 the Rouznameh Internal Loan was ordered, for a sum of £5,125,000, the subscribers to receive a perpetual annuity of 9 per cent. ; but in spite of the bastinado the Mudirs were unable to place more than 2 millions. In 1875 Sadyk Pasha proposed a general conversion of debt, and after some pourparlers with the Anglo-Egyptian bank, it was agreed to give that bank the preference in launching a new loan, the bank advancing 3 millions sterling on various securities at 15 per cent. interest and 2 per cent. commission. Matters were in this state when Lord Derby sent out the first commission of inquiry under the Right Hon. Stephen Cave, who was well received by the Khedive. Mr. Cave's report, dated March, 1876, took a flattering view of Egypt, and concluded with the assurance that the country could easily pay interest on all existing debts. He assumed that the revenue from 1876 to 1885 would average £10,689,000, and the cost of administration £4,000,000, but he had to content himself with such figures as the Khedive gave him. While the bondholders in England were flattering themselves on Mr. Cave's report Sadyk Pasha performed a coup de main, in May, 1876, by suddenly converting all kinds of debt into what he termed Unified, the grand total amounting to £91,000,000. The holders of floating debt received £100 scrip for £80 of their claims, and the bonds of the Goschen loans were reduced to a level with the rest. This caused such indignation in England that the Right Hon. G. J. Goschen was sent out, not by the Government, but by 2,500 bondholders, to remodel Egyptian finance on a different basis. a different basis. The Khedive yielded to Mr. Goschen's demands, and a decree dated November 18, 1876, reconstituted the debt as follows: The Preference Stock was specially created to cover the Goschen and Oppenheim loans of 1862 and 1868, the holders receiving a bonus. of 25 per cent., that is £3,400,000, in addition to 13 millions balance due on those loans. The Unified Stock was reduced to 6 per cent., with 1 per cent. sinking-fund, and the Daira was suppressed from the Budget, to be treated as a private mortgage on the Khedive's estates. This was a brilliant result, for which the bondholders gave Mr. Goschen an ovation on his return; but it was an impossible arrangement for Egypt, and lasted only a few months. Mr. Goschen had not reached England when the demands of Sir George Elliott and Messrs. Greenfield, in connection with the harbour-works of Alexandria, again reduced the I Khedive to straits. The Fellaheen were bastinadoed even more than before, and, in order to get money to pay the bondholders, the taxes were collected with energy, and in advance. "The Khedive," wrote Mr. Vivian, "is compelled to collect nine months' taxes in advance. fear this will cause the utter ruin of the peasantry, and that the bondholders will find out, perhaps too late, that they have destroyed the working-bees that made the honey." Messrs. Whitworth advanced £500,000, secured on crops, and ultimately in July, 1877, the Khedive handed over his Daira estates, with a net revenue of £450,000 a year, to meet the Daira coupons. The State revenues had been already handed over to Mr. Romaine, Baron Maloret, and Captain Baring, but were insufficient to meet the sums demanded by the Goschen arrangement. In February, 1878, Mr. Romaine proposed to reduce the Land-tax, but Captain Baring opposed on behalf of the bondholders, both agreeing, however, to abolish a number of village taxes, the collection of which cost about 90 per cent. of the product. In May, 1878, the bailiffs of the Alexandria courts attempted to seize the Khedive's furniture in his palace at Ramleh, but His Highness alleged that it belonged to his mother, and turned them out. Meantime Sir Rivers Wilson and M. de Blignières arrived from Europe, the former to assume the rôle of Finance Minister, the latter that of Public Works. The Khedive was willing to show the bondholders how far he would go to protect their interests, and to convince them that the Goschen demands were more than the country could satisfy. The report of Sir Rivers Wilson, in August, 1878, pointed out the evils that Egypt had suffered from, and proposed to increase the revenue by two ways-first, taxing all foreigners; secondly, increasing or equalizing the land-tax. Finding that the debt had risen to 92 millions, including the Daira and floating debts, he impressed upon the Khedive that it was necessary to raise another loan, and to retrench expenditure, especially in the army. The only resources unmortgaged were the domains of the Khedivial princes and princesses, covering 426,000 acres, with a rent-roll of £430,000 a year; they included 145,000 acres of the Khedive's mother, and 31,000 of Prince Tewfik, and all the various owners having ceded them to the State it was arranged that Sir Rivers Wilson should go to Paris to negotiate a loan with Messrs. Rothschild for 8 millions on the above security. It was concluded in November, 1878, at the rate of 73, as follows: Baron Rothschild, however, delayed paying the money on finding that a number of creditors at Alexandria had already obtained a lien on the "domains" in question, and this delay proved fatal to Sir Rivers Wilson and the Khedive. An émeute, which took place at Cairo in February, 1879, by 2,500 unpaid officers, would have resulted in the murder of Ismail Pasha and the massacre of all the Europeans, but for the timely prudence of the Khedive, who dismissed Sir Rivers Wilson and M. de Blignières. This was resented by Lord Salisbury and Mr. Waddington, and in June, 1879, the Sultan was induced to issue a Hatt deposing Ismail, and appointing his son Tewfik in his room. In the following year (July, 1880), the International Commission at Cairo converted the floating debt into Unified and Preference Stock,* and fixed the total obligations of Egypt as follows: The Moukabalah, about which so much has been written, was a forced loan, whereby the Fellaheen were compelled to pay some 10 millions of Jand-tax in advance, and to compensate them it was agreed to refund them. £150,000 a year for 50 years. If this item be deducted, the debt will be found to have fallen little short of 100 millions at the deposition of Ismail, in July, 1879. It has been, however, previously shown that he actually received only 42 millions, and it will now be interesting to inquire what he did with the money. II. WHAT BECAME OF THE MONEY. Although the bondholders have inculcated the impression that Ismail Pasha squandered the money which he obtained from Europe, it is beyond doubt that the public works constructed by him cost more than the total net proceeds of the loans. The following table does not include interest on contracts, but merely the amount expended in the works: After deducting value of shares sold. Price agreed by Paris Syndic. 5,200 Built 15 on Red Sea and Mediterranean. * The holders of Egyptian Funded Debt in April, 1878, were as follows: |