Page:EB1911 - Volume 09.djvu/47

 From the purely Egyptian point of view the most powerful restriction in this first category remains to be named. In 1883 the supervision exercised over the finances by French and British controllers was replaced by that of a British official called the financial adviser. The British government has declared that “no financial decision shall be taken without his consent,” a declaration never questioned by the Egyptian government. This restriction, therefore, is at the same time the chief safeguard for the purity of Egypt’s finances.

In the second category of restrictions, namely, those dependent on the London Convention, were the various commissions or boards known as Mixed Administrations and having relations of a quasi-independent character with the ministry of finance. Of these boards by far the most important was the Caisse. As first constituted it consisted of a French, an Austrian, and an Italian member; a British member was added in 1877 and a German and a Russian member in 1885. The revenue assigned to the debt charges was paid direct to the Caisse without passing through the ministry of finance. The assent of the Caisse (as well as that of the sultan) was necessary before any new loan could be issued, and in the course of a few years from its creation this body acquired very extensive powers. Besides the Caisse there was the Railway Board, which administered the railways, telegraphs and port of Alexandria for the benefit of the bondholders, and the Daïra and Domains commissions, which administered the estates mortgaged to the holders of those loans. Each of the three boards last named consisted of an Englishman, a Frenchman and an Egyptian.

During the two years that followed the signing of the London Convention, the financial policy of the Egyptian government was directed to placing the country in a position to resume full payment of the interest on the debt in 1887, and thereby to avoid the appointment of an international

commission. By the exercise of the most rigid economy in all branches this end was attained, though budgetary equilibrium was only secured by a variety of financial expedients, justified by the vital importance of saving Egypt from further international interference. By such means this additional complication was averted, but the struggle to put Egypt in a genuinely solvent position was by no means over. It was not until his report on the financial results of 1888 that Sir Evelyn Baring (afterwards Lord Cromer) was able to inform the British government that the situation was such that “it would take a series of untoward events seriously to endanger the stability of Egyptian finance and the solvency of the Egyptian government.” From this moment the corner was turned, and the era of financial prosperity commenced. The results of the labours of the preceding six years began to manifest themselves with a rapidity which surprised the most sanguine observers. The principal feature of the successive Egyptian budgets of 1890–1894 was the fiscal relief afforded to the population. From 1894 onward more attention was paid than had hitherto been possible to the legitimate demands of the spending departments and to the prosecution of public works. Of these the most notable was the construction (1898–1902) of the Assuan dam, which by bringing more land under cultivation permanently increased the resources of the country and widened the area of taxation.

With the accumulating proofs of the financial stability of the country various changes were made in connexion with the debt charges. With the consent of the powers a General Reserve Fund was created by decree of the 12th of July 1888, into which was paid the Caisse’s half-share in the

eventual surplus of revenue. This fund, primarily intended as a security for the bondholders, might be drawn upon for extraordinary expenditure with the consent of the commissioners of the Caisse. Large sums were so advanced for the purposes of drainage and irrigation and other public works, and in relief of taxation. The defect of this arrangement consisted in the necessity of obtaining the consent of the commissioners—a consent sometimes withheld on purely political grounds. At the same time it is believed that but for the faculty given by the decree of 1888 to spend the General Reserve Fund on public works, the financial system elaborated by the London Convention would have broken down altogether. Between 1888 and 1904 about £10,000,000 was devoted from this fund to public works.

In June 1890 the assent of the powers was obtained to the conversion of the Preference (Privileged), Domains and Daïra loans on the following conditions, imposed at the initiative of the French government:—

1. The employment of the economies resulting from the conversion was to be the subject of future agreement with the powers.

2. The Daïra loan was to be reimbursed at 85%, instead of 80%, as provided by the Law of Liquidation.

3. The sales of Domains and Daïra lands were to be restricted to £E.300,000 a year each, thus prolonging the period of liquidation of those estates.

The interest on the Preference stock was reduced from 5 to 3%, and on the Domains from 5 to 4%. As regards the Daïra loan, there was no apparent reduction in the rate of interest, which remained at 4%, but the bondholders received £85 of the new stock for every £100 of the old. The capital of the debt was increased by £1,945,000 by these conversions, while the annual economy to the Egyptian government amounted at the time of the conversion to £E.348,000. Further, an engagement was entered into that there should be no reimbursement of the loans till 1905 for the Preference and Daïra, and 1908 for the Domains. By an arrangement concluded in June 1898, between the Egyptian government and a syndicate, the unsold balance of the Daïra estates was taken over by the syndicate in October 1905, for the amount of the debt remaining, when the Daïra loan ceased to exist. The fund formed by the accumulation of the economies resulting from the conversion of the Privileged, Daïra and Domains loan was known as the Conversion Economies Fund. The fund could not be used for any purpose without the consent of the powers, and the money paid into it was invested by the Caisse in Egyptian stock. The fund therefore acted as a very expensive sinking fund, the market price of the stock purchased being above par. Up to 1904 the consent of the powers to the employment of this fund for any purpose of public utility was withheld. On the 31st of December of that year the fund amounted to £E.6,031,000. It may be added that besides the General Reserve Fund and the Conversion Economies Fund, there existed another fund called the Special Reserve Fund. This was constituted in 1886 and was chiefly made up of the net savings of the Egyptian government on its share of the annual surpluses from revenue. Of the three funds this last-named was the only one at the absolute disposal of the government. The whole of the extraordinary expenditure of the Sudan campaigns of 1896–1898, with the exception of £800,000 granted by the British government, was paid out of this fund—a sum amounting in round figures to £1,500,000.

Notwithstanding all the hampering conditions stated, the prosperity of the country became more manifest each succeeding year. During the four years 1883–1886, both inclusive, the aggregate deficit amounted to £E.2,606,000. In 1887 there was practical equilibrium in the budget, in

1888 there was a deficit of £E.53,000. In 1889 there was a surplus of £E.218,000, and from that date onward every year has shown a surplus. In 1895 the surplus exceeded, for the first time, £E.1,000,000. The growth of revenue was no less marked. “In 1883—the first complete year after the British occupation—the revenue was slightly under 9 millions. This sum was collected with difficulty. The revenue steadily rose until, in 1890, the figure of 10 millions was exceeded. In 1897 a figure of over 11 millions was attained. Continuing to rise with ever-increasing rapidity, a revenue of close on 12 millions was collected in 1901 and 1902, in spite of the fact that during the latter of these two years the Nile flood was one of the lowest on record. In 1903 the revenue amounted to 12 millions, and in 1904 the unprecedented figure of £E.13,906,000 was reached.” Yet during this period the amount of direct taxation remitted reached £E.1,900,000 a year. Arrears of land tax to the extent of £E.1,245,000 were cancelled. In indirect taxation the salt tax had been reduced by 40%, the postal, railway and telegraph rates lowered, octroi duties and bridge and lock dues abolished. The only increase of taxation had been on tobacco, on which the duty was raised from