The confilct of the East and West in Egypt ...

Contents

•Chapter.

I. Feobi Mehemet Ali to Ismail,

Page. 1

CHAPTER II. Ismail's Ambitious Designs

Ismail, the son of Ibrahim, the son of Mehemet Ali, succeeded Said. It is said that Abbas, long before, had been very jealous of him. He must, at least, have disliked him heartily ; for the two men had nothing in common, and everything that the one shunned the other courted. While Abbas was ruling Egypt with a rigorous economy, Ismail sought the more congenial atmosphere of Paris. He obtained, in one capital and another, an intimate acquaintance with the civilization of the "West, and stored his mind with all those pictures of European development that, though the result of centuries in Europe, he thought might be reproduced in Egypt within his lifetime. Having secured thus " a European education,' ' Ismail returned to Egypt, after the accession of Said, and received from him a governmental portfolio. He seems to have had the entire confidence of the Viceroy, for twice he acted as regent. He commanded, also, the year before Said's death, an expedition to the Sudan. On his accession in 1863, therefore, Ismail was a man of experience — such experience as should have given him excep" tional qualification for a ruler. But greater than all the wisdom was the ambition that his observation had begotten.

It seemed as if Ismail's dreams of wealth and power were to be realized immediately upon his accession. Our Civil War was to furnish the means to this end. Europe had depended upon our Southern States for her cotton, and when, by the war, the supply was cut off, there followed throughout Europe what has been called " a cotton famine." Especially in England the want threatened to become & great distress. The factories were closing, and legislators and economists were puzzled to find a way out of the danger. The shrewd Ismai], at this juncture, was not slow to perceive that the seed introduced into Egypt by his grandfather might bring him the coveted wealth, and he bent his entire energies to the production of cotton, borrowing money to buy the implements and tools, to secure the proper irrigation, and planning for work on a grander scale than the fellah at his chaduf had ever dreamed of. Ismail's success was greater than he could have expected in his most visionary moments. The soil of the Nile valley seemed admirably suited to the new industry, and every yield was enormous. The fellahin, the most conservative people under the sun, forsook their lentils, their millet, and their wheat, and hastened, in their humble way, to acquire wealth after the manner of their lord and ruler. And they prospered as their race never has been known to prosper from the time when their remote ancestors were the pyramid-builders of the Pharaohs down to the present day. It was the Golden Age of modern Egypt. In three years the exports rose from four and a half millions to more than thirteen millions sterling. As is usually the case with those who enjoy unaccustomed and unexpected affluence, neither the Viceroy, nor the great pashas, nor the lowly fellahin, made wise use of their prosperity. Their extraTagances increased with their wealth. The Viceroy thought that the influx of gold would be permanent, and he spent and wasted accordingly ; the pashas believed that the vast estates that favoritism had bestowed upon them would continue to produce in luxuriance the white flower that was so easily convertible into yellow gold, and they lived their voluptuous life of Parisian and Oriental excess in their Daira palaces ; and the fellahin thought not and cared not, so long as their burdens were light and they could enjoy the sensual life that tiie Prophet Mohammed allowed them.

They had all counted in vain. Our Civil War had come to an end, and the Southern States were again supplying the markets of Europe ; the nliturally fertile valley of the Nile, denied the necessary rotation of crops or the chemical fertilizers that the agricultural science of to-day substitutes, had been ruinously exhausted ; and as a double consequence the Golden Age was ended. All the extravagances reacted upon the fellahin. The Viceroy could not or would not contract his expenses, and, of necessity, he turned to the money-lenders and the task-masters. The latter ground down the fellahin to a life that was nothing more than existence. Exorbitant taxes were forced from them with the aid of the kurbash, and their condition was more miserable than before their recent prosperity. At this time the cattle murrain made its appearance in the Nile valley, and the loss was overwhelming, and, of itself, sufficient to impoverish the people for a time. The Egyptian Government, slow usually to give such assistance, was obliged to expend five million pounds to aid the suffering fellahin. But, to offset the gift and in lieu of unpaid taxes, the land of the unfortunates was appropriated, not by the Government, but by the Viceroy himself. In the years that followed he became master, in this fraudulent manner, of one-fifth of the cultivable land of Egypt.

As the condition of the fellahin grew worse, the extravagances of Ismail seemed to increase. In 1866, at a time when he should have economized to the last degree, not only to relieve his country but to pay his own debts, which were already of a threatening size, Ismail, yielding, as ever, to his inordinate ambition, purchased the title and rank of Khediv-el-misr (King of Egypt) from his Sultan. The firman that granted these honors and raised the limit of the Egyptian army from eighteen thousand to thirty thousand men, cost Egypt the increase from three hundred and seventy-six thousand to six hundred and seventy-five thousand pouilds of yearly tribute to the Porte. From this time on the Khedive Ismail, through the most prodigal use of money-bribes and presents, seciired a succession of firmans from the Porte. A firman of 1867 empowered him "to make laws for the internal government of Egypt, and to conclude conventions with foreign Powers as to customs duties and the police, postal and transit services. A firman of 1872 conceded to the Khedive the power of contracting loans without the Sultan's authorization " * — a power how used and abused ! — and established the law of primogeniture in his family. I A firman of 1873, "which Ismail obtained by bribery

* "England's Duty in Egypt." Rj Join Westlake, Q,C,, LL.D. The Contemporary Review, December, 18S2.

t This part of ttie firman, as it reads, " establishes the line of succession by order of primogeniture in Ismail's family— his eldest living brother, or this brother's eldest soli, succeeding in case of failure of direct male issue, to the exclusion always of the female line. In the case of the heir being a minor (i. e., under eighteen) on the Khedive's death, he is at once to assume the vice-regal title under a council of regency. If, in his will, the late Khedive have not nominated this council, the Ministers of the Interior, of War, of Foreign Affairs, of Justice, the Commander-in-Chief of the Army, the Inspector-General of the Provinces, in power at his death, will form the council of regency, and will elect a regent from theii- body. Should the votes be equally divided in favor of two names, the regency falls to the minister holding the more important department, who will govern with the council of his colleagues, when their powers have been confirmed at Constantinople by an Imperial firman. The regent and the council of regency are immovable before the legal expiration of their powers, i. e., before the majority of the Khedive. Should one of the council die, the survivors have power to elect a successor. Should the regent die, the council will elect another from their body and a successor to the place he will leave vacant in the council." (" Egypt Under Ismail Pasha," pp. 71, 72.) This law reads well, and remains unchanged to-day. It did not provide, however, for such a forced abdication as occurred in 1879.

at Constantinople on a more than ordinary scale, removed all limit from the numbers of his army, and empowered him to conclude conventions with foreign States concerning all internal and other affairs of Egypt in which foreigners might be concerned."* So much for Ismail's expensive relations with his suzerain. They had brought him, it is true, a power such as Mehemet Ali had dreamed of after the fall of Acre, but they had helped drag him deeper into the meshes of a financial snare, from which he was destined to escape, only with the loss of ail the powers he had inherited or so dearly purchased.

Ismail's extravagances at home were equally enormous. When cotton was no longer recognized as king in the Nile valley, the Khedive quickly proposed to substitute the culture of sugar. Not only did he proceed to cultivate the cane, but he planned to manufacture the sugar. For this purpose he built nineteen factories and refineries, and imported the best of machinery from Europe. This attempt to convert agricultural Egypt into a manufacturing country must always be regarded as the crowning farce of Ismail's reign. The country may be said to be absolutely v/ithout fuel ; there are no coal mines, and the tax-paying trees are too few and far too valuable to serve as fire-wood. With all his advanced ideas, the Khedive seems not to have learned the first principles of political economy. Besides the building of the factories, a railroad was required to make them accessible. This was constructed from Cairo to Assiut at vast expense. Canals, also, were needed for the proper irrigation; and they, of course, involved another great outlay. But there was never any hesitancy on account of expense ; and, the money being borrowed, the works were pushed ahead.

It would not be right, however, to attribute all the debts of Egypt, incurred during Ismail's reign, to his inordinate extravagance. The cattle murrain, for example, cost the Government and people dear, as has been seen, but not through any fault of Ismail. In another matter the Khedive laid a heavy burden on the Government, but at the same time he won, and deservedly, the gratitude of his people and the applause of civilized nations. Said Pasha had promised to furnish the Suez Canal Company with a

* "England's Duty in Egypt." By John Westlate, Q.C., LL.D. The Contemporary Review, December, 1882.

large amount of labor each year for the construction of the canal, and this labor was to be provided by the corvee, a system of forced service, in use as far back certainly as the age of the pyramid-builders. It was almost disastrous to the agriculture of the coimtry to have twenty thousand of the fellahin torn from their homes each month and forced to work on the canal. Ismail recoarnized this fact and abolished the corvee. It is generally admitted, also, that he was influenced by humanitarian motives. And well he might have been! Oar own most dreadful tales of slavery <}ould be paralleled with the sufferings and tortures of those miserable mortals who were wrested from what little they had to make them happy in the fertile valley to endure the privations and almost certain death of that desert highway. Whatever the motive here, Ismail must always be credited with having performed a noble action. The Canal Company, deprived of the promised assistance, naturally demurred. This and a few other ■disputed questions were finally referred to the Emperor Napoleon for arbitration, and he awarded the Company the somewhat exorbitant indemnity of three million, three hundred and sixty thousand pounds. This was in 1864. In 1866 Egypt re-purchased for the «»um of four hundred thousand pounds a domain that had been sold to the Canal Company five years before for seventy-four thousand pounds. It was a modest advance ! Of course such extraordinary expenses as these necessitated new loans. All the loans that Ismail raised are themselves so extraordinary that their details must be noticed as well as the methods that the Khedive employed in his endeavors to bear the burden of his obliga tions.

Before proceeding to the loans it will be well to form an idea of the revenue of Egypt under Ismail. To do this it will be necessary to consider the taxes somewhat in detail, although it is impossible, as Mr. Cave and Goschen and Joubert found, to get perfectly accurate and trustworthy statistics on the subject, owing to the unsystematic and dishonest methods of a treasury system that was nothing more nor less than a hierarchy of swindlers, in which each officer got as much from the one belov^ him and gave as little to the one above as was possible. What the amount of the taxes was before Ismail's time, one can only guess ; but we may be sure that they never varied much from the utmost that kurbash and extortion could raise.* The land-tax, immediatelyafter his accession, was increased by twenty-five per cent. This tax was again and again increased, until, in 1871, the famous Mukabala f was invented. This was a voluntary additional tax of fifty per cent, for six years, which, being paid, would free the land of the one assuming the self-imposed obligation from half the grain tax in perpetuity. The Mukabala was found to yield so readily to the demands of the moment — and Ismail lived in the present, borrowing no trouble from the thought of obligations to be met in the future — that it was enforced in 1876, and the period, at the end of which exemption should take place, was increased to twelve years. No tax ever met with such bitter denunciation as Mukabala did from its inception to the day of its abolition. It was bad for the payer and bad for the payee. "A ruinous financial device," says Blanchard Jerrold, "seeing that for a sum of in all less than twenty-seven million pounds, spread over a dozen years, is thence afterward surrendered for all time nearly two million five hundred thousand pounds of its [Egypt's] surest and most easily collected revenue." %

In order to form an idea of what the yearly revenue of Egypt was from 1870 to 1875, it is necessary to consult the reports that were made after that time; for up to 1875 there had been no attempt to estimate the revenue in detail. As the agricultui-al conditions did not vary much from year to year, the revenue during 1877, for example, would be approximately equal to the revenue during 1872 or 1873. This analogical reasoning is allowable, but not very satisfactory ; for, unfortunately, even the official estimates of Europeans appointed for the purpose are found to vary greatly. The official estimate of Mr. Goschen, made in December,

* That the condition of the tax-payer had not changed much in three thousand years may be gathered from a papyrus in the British Museum, contaming a par t of the correspondence between Ameneman, the chief librarian of Rameses the Great, and the poet Pentaur. Ameneman writes : " Have you ever represented to yourself, in imagination, the estate of the rustic who tills the ground ? Before he has put the sickle to his crop, the locusts have blasted part thereof; then come the rats and birds. If he is slack in housing his crops, the thieves are on him. The horse dies of weariness as it drags the wain. The tax-collector arrives ; his agents are armed with clubs ; he has Negroes with him who carry whips of palm-branches. They all cry : ' Give us your grain ! ' and he has no way of avoiding their extortionate demands. Kext, the wretch is caught, bound, and sent off to work, without wage, at the canals ; his wife is taken and chained, his children are stripped and plundered."— Quoted by Blanchard Jerrold, in " Egypt Under Ismail Pasha," p. 164.

t M'&kahala = compensation.

X " Egypt Under Ismail Pasha."

1876, placed the year's revenue at £10,804,300. Mr. Cave's estimate for the same year was a little over ten and a half millions. Mr. Romaine gives the official revenue, month by month, for 1877, reaching a total of £9,350,274 for the year. The Cairene Committee, in 1878, placed the total income of the Khedive's Government at about eleven and a half millions ; but they considered this estimate low, and thought that, if it had been possible to count all revenues, the sum total would not have been less than thirteen millions sterling. This may readily be believed, if we may trust, approximately, the statement of Ismail Sadyk, the Miiffetish, or " Lord High Treasurer" of the Khedive, and one of the most notorious rascals that ever plundered a state and people, that he had raised by taxation in one year the sum of fifteen million pounds. But some estimates varied as widely in the other direction, and placed the revenue even as low as seven and a half millions. The extremes are far apart.

It will be interesting to dissolve one of the total estimates into its constituent parts ; and for this purpose we may take the report of the Cairene Committee- They placed

The land tax at £7,346,219

Date palm tax 211,046

House, shop, and mill tax .... 28,195

Licenses and patents! . .... 793,253

Miscellaneous Taxes.

(1) Succession or transfer duties on legacies,

mortgages, etc 103,685

(2) Stamp tax (no statistics).

(4) Octroi and road duties on produce, fod-

der, and building materials § . . 328,872

* This tax was divided into three classes, viz.: 40, 30, and 15 piasters. The collectors, however, were instructed to produce aa average of 30 piasters ($1.50) a head.

t These were imposed on all servants, operatives, tradesmen, and merchants.

t Nine piasters imposed on every man, woman, and child over seven years of age.

§ This figure the committee considered small, since irregular Governmental expenses were taken out of the octroi receipts, as, for example, the salaries of a corps de ballet ! When, later, Egypt came under European control, the Comptroller General encountered much opposition by his refusal to pay such salaries from such a fund.

(5) Customs ....

639,000

(6) Navigation dues

.

110,185

(7) Duties on fisheries

.

83,548

(8) Law taxes

.

44,392

(9) Tobacco tax

.

106,777

(10) Tax on cattle sales.

.

45,402

.

14,769

(12) Animal tax

.

8,479

18,000

(14) Payments of railways into Public Debt

Department

•

602,990

Total

. £11,470,016 *

From the foregoing notes and figures it will be seen that it is almost impossible to exaggerate the extortionate character of taxation in Egypt a decade ago. But it should be noticed in passing that the land of the natives only was taxed ; by a monstrous injustice — an injustice that continues to the present day, though there is just now a prospect of its being remedied! — ttie European property-holders have never paid so much as a brass farthing into the state treasury on the land they have held.

Whether, now, we place the yearly revenue at the lowest estimate, seven millions sterling, or at the highest, thirteen millions, or midway between the two, the fact always remains the same — that Ismail was unable to live within his income. With the same revenue Mehemet Ali would have made Egypt independent of Tui'key, and himself the champion of all Islam. Even the gay Said would have been at a loss for ways to squander such undreamed-of means. Bat with Ismail it was different. As we have seen, he could not forget the splendors of European Courts, or cease to envy the civilization of western countries ; nor could he contract the extravagances he had learned in the days when " cotton was . king " in Egypt. If he could not live and flourish and build and spend on the strength of his internal resources, he knew that there were bankers and money lenders iu Europe who would con-

* Otliei' taxes, as on Are engiaes, ferries, jewelry, burials, marriages, tolls on bridges, and exemption from military service, were not counted, owing to absence of trustworthy statistics.

t Vide seq.

sider the yearly overflow of the Nile the best of security. The story of his transactions with these unbelievers forms the most important chapter in the modern history of Egjpt ; but the story is devoid of romance ; it is as bold and bald and true as the working of a natural law. For the state, as for the individual, when debts are contracted to pay other debts, when further sums are borrowed to pay those, and when this system of discharging obligations is continued, the end is ruin. In the case of Egypt, the ever impending ruin has been long averted, owing as much — or more — to the political importance of the country as to its inherent wealth; but the burning question of that land to-day is the question of finance ; for the debts that are due to the follies of Ismail still stand, an unmanageable burden. And this is how the first Khedive brought about the financial disastei*, and his own downfall.

CHAPTEE III.

The Road to Ruin.

It will be remembered that Said had left a debt of about three millions sterling. To be exact, he had effected in 1862 a seven per cent, loan in the European market of £3,292,800.* Of course he

* For facts and figures I depend chiefly upon J. C. McOoan's "Egypt As It Is,' upon Mr. Cave's Report of 1S76, from which the follovv'ing concise table is taken :

and

LOAN OF

1862 1864 1866

1868 1873

Daira taken over by the State.

1866 1867

Daira Loan of Ismail.

1892 1879 1874

1881 1881

Nominal amount of Loan, but Keal Debt

of State.

55,887,000

3,000,000 2,080,000

7)142,860

Charge on Nomn'l Am't, pr c

7 7 7

Snk Fnd pre

1 8.87

3.27 3.4

7 2.35 9.35

Tot'l perc

8 10.87

12.27 12.4

Amount Realized,

4,864,063 2,640,000

7,193,334

20,740,077

35,437,474

3,000,000

2,080,000

5,080,000

5,000,000

KealCharges on Am't Realized.

Int.

perc

8.2

11.56 10.8

Sink ,, Fund per c

4.5

18.9

Total perc

12.7 26.9

13.24 12.36

12.27 17.04

Remarks.

No particulars of amount realized.

Railway Loan repaid by six annual payments of £500,- 000, equivalent to a Sinking F'nd of 18.9 per cent.

No particulars of amounts realized, but probably the whole.

did not receive this amount entire, for tlie commission rate of issue, etc., reduced tlie sum paid into tlie Egyptian Treasury to £2,500,000. But this loan did not prevent Said from leaving a further legacy of liabilities, which necessitated a second loan vs^ithin a year after his death. The amount of this one, which was raised in England, was £5,704,200. It yielded to the Treasury only £4,864,063. And still the indebtedness was not covered. Up to this time the financial troubles had come through no fault of Ismail's. But in 1866 he had begun to push the sugar industry; •and, not having laid by any of the enormous revenues from cotton, he was forced, in order to carry out his raih'oad scheme, to contract a seven per cent, loan of £3,000,000, which netted him £2,640,000. The cattle murrain, the abolition of the corvee, and his extravagances called for another loan only two years later. The nominal amount of this loan was £11,890,000; but heavier terms had to be made ; for, though a seven per cent, stock, it was issued at 75, and yielded, after the usual deductions, only £7,193,- 834. In other words, the total annual cost of this loan was more than thirteen per cent. "The Khedive, by this time," as Mr. McCoan remarks,* "was fairly on the road to ruin." But the national credit was still good, since the floating debt had been covered by this last loan.

Ismail seems not to have suspected the perils ahead. It was his aim to make a civilized country even out of uncivilized materials, and to develop trade even where natural resoui'ces were wanting, let the cost be what it might. It certainly was great ; it was enormous. The outlay, even if the revenue of the country had permitted it, would have been foolish extravagance; but, in view of Egypt's financial condition, it was nothing less than reckless robbery. The fellahin — the people of EgyjDt — were the sufferers. The kurbash exacted more extortionate payments than ever ; bvit all to no purpose. By 1873 the floating liabilities, paying nearly fourteen per cent, interest, amounted to about £26,- 000,000. The Messrs. Oppenheim, who had secured the loan of 1868, now proposed to fund the entii'e mass of debts in a seven per cent, loan of £32,000,000. This offer, disastrous in its results, was accepted. The Egyptian Government received in cash only £11,740,077, the remainder of the amount realized, £9,000,000,

*" Egypt As It Is," p. 142.

"being paid in bonds of tlie floating debt, wliicli the contractors bought up at a heavy discount and gave over to the Egyptian Government at 93. There was, to say the least, a good deal of Shylockism shown by the money-lenders of the "West in their financial relations with Egypt. But if they were knavish, Ismail was not altogether simple. Looking at the figures that tell the story of "this wicked waste of a country's resources," as Mr. McCoan calls it, we see that from loans amounting to £58,887,000, the Egyptian Government received only £35,437,474. At the end of 1875 the treasury had repaid £29,570,995 in interest and in sinking fund. Was so mach money ever paid for so little gain "?

There were other loans than those above mentioned. The Dau^a, the immense personal estate of the Khedive, afforded excellent security for supplementary loans. The first of these was negotiated in 1866, its amount being £3,887,000. The following year the Khedive compelled his uncle Halim to sell to him his inherited estate ; and to pay for the property obtained by this enforced sale, the so-called "Mustapha Pasha Loan'' of £2,080,- 000 was negotiated. Still another Daira loan of more than seven millions sterling was raised in 1870 at seven per cent., the stock being issued at 75. Only five million pounds was handed over to the borrower. Thus the same story is told with the private as with the public loans.

The question now was. How long could the ruinous rate of interest be paid on these enormous debts'? Up to 1875 it was regularly paid, and the credit of Egypt was good. But the crisis was now near at hand. The stock of the great loan of 1873 was quoted at 53 in the London market, and the Cairene Treasury was almost empty. Even Ismail Sadyk, the Muffetish, with all his tortures and threats, could not get piasters enough from the fellaheen to meet the demands that were measured by hundreds of thousands of pounds. And yet he was ordered to find money to pay the December dividend. At this juncture the Khedive appealed to England to rescue Egypt from ruin ; and produced, as his last card, the 176,000 Suez Canal Shares, held by his Government. The Mviftetish was offering the same securities in negotiations with the bankers of Paris and Alexandria, and with the Credit Fonder of Prance, in his attempt to force upon them new Treasury bonds for £16,000,000 at fifteen per cent, interest.

After a series of advances and retreats on the part of tlie English and the French Governments, Disraeli's Government finally telegraphed to the Khedive, in December, 1875, that England would give four millions sterling for the shares in drafts on Rothschild. The offer was eagerly accepted, and the crisis was tided over. The shares of the '73 loan in London rose twenty points at a jump, but after a few days they were quoted at 61, midway between the points of utmost depression and inflation. England was now given a more vital interest in the affairs of Egypt than she had before possessed. She had gone thither, in the first place, to further the demands of her commerce; she had then maneuvered for the protection of the interests of the British bondholders ; and now, in addition to these undertakings, she was to guard the rights that this purchase gave her, and increase the obligations that it heaped upon Egypt.

Four million pounds, as Ismail soon found, could not stem the tide of disaster for long. Everything worth it had been mortgaged, and the Muffetish was offering treasury bonds to the extent of two hundred thousand and three hundred thousand and even four hundred thousand pounds in return for cash advances of one hundred thousand at twenty per cent. A few were taken, and with heavy sales of Daira sugar and corn the demands were satisfied for a time. The Khedive now invited England to investigate the financial condition of his country, and Mr. Stephen Cave, M.P., was sent out for this purpose. Nubar Pasha, the foremost of Egyptian statesmen, was called to the Cabinet, and at the beginning of 1876 everything had a reassuring aspect. But within three months Nubar had resigned, and Disraeli, to the consternation of bondholders, had announced in Parliament that the Khedive requested that Mr. Cave's report be not published for fear of its effect upon Egyptian finances. But this request was disregarded. The effect of the report, however, was more favorable to the Khedive than he expected, owing to the somewhat rose-colored view Mr. Cave took of the financial outlook. " Egypt," he wrote, " may be said to be in a transition state, and she suffers from the defects of the system out of which she is passing as well as from those of the system into which she is attempting to enter. She suffers from the ignorance, dishonesty, waste, and extravagance of he East, such as have brought her suzerain to the verge of rmn, and at the same time from the vast expense caused by hasty and inconsiderate endeavor to adopt the civilization of the West." He read the causes of Egyptian difficulty aright. But he was wrong in estimating that the yearly revenue from 1876 to 1885 would be more than double the cost of the administration. To meet the necessities of the Government he proposed another unification of all debts, exclusive of three of the earliest and smallest loans which were to be paid off by the operation of the Mukabala. The consolidated debt, amounting to £75,000,000, was to bear interest at seven per cent., and to be redeemable in 1926. The project, however, was not carried out.