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was effected in 1898. From 1894 onwards it was thought desirable to pay more attention than heretofore to the legitimate demands of the spending departments. Accordingly, money was devoted to remunerative objects, such as irrigation works, railway extension, and also to others, such as the construction of hospitals, prisons, and other public buildings, the improvement of education, &c., which, although not directly remunerative, are equally necessary to the well-being of the country. In 1896 the decision of the British Government to undertake the expedition to Dongola, leading by the natural progress of events to the reconquest of the Sudan, subjected the finances of Egypt to a severer strain than had been experienced since they had been placed on a sound footing. The endeavour to obtain assistance towards the cost of the military operations from the general reserve fund, with the co-operation of the Caisse de la Dette, failed, owing to an adverse decision of the Mixed Tribunals as to the legality of such a course. Nevertheless, with a certain amount of financial aid from the British Government, the Egyptian treasury was able to meet the expenditure of the campaign without recourse to extraordinary expedients. The conduct of the war was quite as remarkable from a financial as from a military point of view, and there have been few instances in history of such great results being obtained at such comparatively small cost. The total amount expended for the whole campaign, from the commencement of the Dongola expedition to the capture of Omdurman, was in round figures two millions. Of this about £E.900,000 was spent on railway and telegraph construction, works of permanent utility, the balance of £E. 1,100,000 representing the purely military expenditure. After the conclusion of the campaign a further sum of £E. 300,000 was granted for the extension of the railway to Khartum. The British Government gave a grant-in-aid of £800,000, and the balance was borne by the Egyptian treasury out of its half-share in the annual surpluses. So far, then, the finances of the country triumphantly stood the test to which they were subjected. But a graver problem preoccupied the minds of those who were responsible for the financial administration of Egypt, and that was whether the resources of the country could support the annual burden of the occupation and government of so large an area without detriment to the normal development of Egypt itself. It was wisely decided to leave no room for doubt on this point, by at once taking steps to increase those resources on a large scale in the the debt in 1887, and thereby to avoid the appointment of immediate future. A vast scheme for the construction of an international commission. By the exercise of the most a reservoir at Assuan for the storage of the waters of rigid economy in all branches this end was attained, though the Nile had long been under consideration. In 1898 a budgetary equilibrium was only secured by a variety of financial arrangement was concluded whereby the execufinancial expedients, justified by the vital importance of tion of this project, which will enormously increase the saving Egypt from further international interference. By productive powers of the country, was at once put in hand. such means this additional complication was averted, but The original estimate of the cost of the works was two the struggle to put Egypt in a genuinely solvent position millions, and the Egyptian Government arranged to meet was by no means over. It was not until his report on the the expenditure by the payment of an annuity of £160,000 financial results of 1888 that Sir Evelyn Baring (afterwards a year for thirty years, beginning from the 1st July 1903. Lord Cromer) was able to inform the British Government This important undertaking was brought to a successful that the situation was such that “ it would take a series termination in 1902, and the actual expenditure incuned of untoward events seriously to endanger the stability of amounted to about £E.3,250,000. The difference between Egyptian finance and the solvency of the Egyptian Govern- the sum originally provided and the ultimate cost was ment.” From this moment the corner was turned, and granted by the Caisse de la Dette out of the general reserve the era of financial prosperity commenced. The results of fund. In the course of 1899 a great financial reform, the labours of the preceding six years began to manifest the desirability of which had long made itself felt, was themselves with a rapidity which surprised the most seriously taken in hand, namely, the reassessment of the sanguine observers. The principal feature of the suc- land-tax. The existing assessment, which was made before cessive Egyptian budgets from 1890 was the fiscal relief the British occupation, had long been condemned by all afforded to the population. This period may be said to competent authorities, but the inherent intricacies and have been brought to a close in 1894, though a sub- difficulties of the problem had hitherto postponed a solusequent reduction of the land-tax by £E. 216,000 a year tion. After careful study and a preliminary examination

1900 it amounted to £E.6,195,000. The effective administrative expenditure has always exceeded the amount fixed by the London convention, and of late years the growing wants of a country in process of development have naturally had a tendency to increase this excess. Any excess can, however, only be met out of the halfshare of the eventual surplus which is at the free disposal of the Government. Consequently, in order to meet new expenditure necessitated by the new requirements of the country, just double the amount of revenue must be raised. One - half of the new revenue increases the Government share of the surplus, and thereby pays for the new expenditure. The other half goes for the moment into the general reserve fund, and would ultimately, when that fund has attained its maximum, be employed in reducing the debt. This limitation of administrative expenditure is the great blot in the system designed by the authors of the London convention, and now that the resources of the state are greatly on the increase, it has become a serious obstacle to the development of the national prosperity. The London convention left the permanent rate of interest on the debt, as fixed by the law of liquidation, unchanged, but in order to afford temporary relief to the Egyptian exchequer, a reduction of 5 per cent, on the interest of the debt was granted for two years, on the condition that if at the end of that period payment, including the arrears of the two years, was not resumed in full, another international commission was to be appointed to examine into the whole financial situation. Lastly, the London convention empowered Egypt to raise a loan of nine millions, guaranteed by all the Powers, at a rate of interest of 3 per cent. For the service of this loan an annuity of £315,000 is provided in the Egyptian budget for interest and sinking fund. This sum was sufficient to pay the Alexandria indemnities, to wipe out the deficits of the preceding years, to give the Egyptian treasury a working balance of £E. 500,000 and thereby avoid the creation of a fresh floating debt, and to provide a million for new irrigation works. To the wise foresight which, at a moment when the country was sinking beneath a weight of debt, did not hesitate to add this million for expenditure on productive works, the present prosperity of Egypt is largely due. During the two years that followed the London convention, the financial policy of the Egyptian Government directed to placing the country in a posi1885-1899. was tion to resume fup payment of the interest on