gypt’s revenue is derived chiefly from the land-tax, the tax on date-trees, trade licenses, the customs, the tobacco duty, railways, and the Mukabalah (of which an account will be given), and village annuities. Of these the land-tax is the principal item, amounting to nearly half the total revenue; but this will be considerably reduced when the Mukabalah comes to an end (in 1885). The whole revenue may at present roughly be placed at £10,500,000. It is very difficult to estimate the exact amount of direct taxation on the population. One writer places it at 25s. per head per annum; whilst a recent report states that, including the Mukabalah, the annual payment of taxes has lately reached £4! It is certain the taxation at present exceeds the possible returns of the land, and that the felláheen are compelled to borrow money to pay the taxes. The items of expenditure may thus be roughly summarized:—general public administration, £1,300,000; civil list, €600,000; tribute to the Porte, £700,000; army, £700,000; the rest being devoted to the payment of the debt.
During the last fifteen years Egypt has acquired the enormous national debt of about £80,393,000. The attempt to Europeanize the country has entailed a vast expenditure. Public works have been carried out at an altogether unnecessary rate of speed, and European contractors have been employed who have not scrupled to drive bargains exceedingly favorable to themselves and ruinous to the Egyptian Exchequer. To these causes of expenditure must be added the dishonesty and extravagance of the Government officials, the waste of money on works which have proved unproductive and useless, and the heavy damages given against the khedive in the extraordinary award of the late Emperor Napoleon as arbitrator in the dispute with the Suez Canal Company. To meet the heavy expenses resulting from these causes five loans have from time to time been raised.
The first was borrowed by Said Pasha in 1862, and amounted to only £3,202,800 nominal, to be repaid in thirty years, interest 7 per cent. and sinking fund 1 per cent. The present viceroy then raised the 1864 loan of £5,804,200 nominal, with interest and sinking fund at 7 and 3.87 per cent., redeemable in 15 years. The next loan, of 1868, redeemable in 1898, was for £11,890,000 nominal (of which only £7,193,334 was received), with apparent interest and sinking fund of 7 and 1 per cent., really 11.36 and 1.68 per cent. on amount received, or altogether 1 ¼ per cent. annual charge. The loan of 1873 was for the nominal amount of £32,000,000 at 7 and 1 per cent. interest and sinking fund; but, as only £20,062,658 was received, the interest and sinking fund became really 11 and 1.62 per cent. The actual amount received was, however, slightly increased by part being paid in Egyptian Treasury bonds. Besides these, in 1866 a railway loan had been raised, of the nominal amount of £3,000,000 at 7 per cent. This was repaid in 6 annual instalments of £500,000 each, the last being in January, 1874. Two loans secured on the Daira estates of the khedive have been transferred to the state for value received; these are the Anglo-Egyptian loan of 1865 for £3,000,000 at 9 per cent. interest, with sinking fund of 3:27 per cent.; and the Mustafa-Pasha loan of 1867 for £2,080,000 at 9 and 3.4 per cent. interest and sinking fund. The khedive raised also a personal loan secured on his private estates (Daira) in 1870; £5,000,000 was received, for which £7,142,860 was to be paid back in twenty years, with interest at 7. per cent. on this nominal amount. “None of the Egyptian loans,” Mr. Cave observes, “cost less than 12 per cent. per annum, while some cost more than 134 per cent. per annum, and the railway loan even 26.9 per cent. per annum, including sinking funds.”
The Mukabalah
These loans hardly sufficed to meet the necessities for which they were raised, and the exorbitant interest charged on the nominal sums, of which the khedive received little more than half, effectually crippled the resources of the country. In 1871 another fatal step was taken. A measure was passed by which a landowner might redeem half his land tax in perpetuity by paying six years' tax in advance, either in one payment or in six yearly instalments. As, however, few but the wealthiest proprietors could afford this additional charge on their incomes, the six instalments were commuted into twelve, a discount of 8% per cent. being allowed on each instalment. This composition tax is called the “Mukabalah.” By this measure the Government, for the sake of the immediate possession of about £27,000,000, will sacrifice from 1885 onwards, about 4:2,500,000 annually of certain revenue. For the over-taxed felláheen the change is most advantageous, if only they can avail themselves of it; for the Government it nearly resembles suicide.
In 1875 the khedive procured a temporary respite from his difficulties by the sale of the Suez Canal shares to the British Government; and then, at last aware of the critical state of his finances, and of the incompetence of Easterns to mend it, His Highness requested the British Government to provide him with some experienced financier to carry out a thorough reform. In December the Right Honorable Stephen Cave, M.P., accompanied by Colonel Stokes, R.E., and clerks, was sent out, and after some months' examination wrote an elaborate report on the Egyptian Finances. But after Mr. Cave's departure, and the publication of his report, Egyptian credit fell still lower, till in 1876 the khedive, finding himself totally unequal to meet the demands of his creditors, and weary of renewing bonds at ruinous rates, suspended payment for a time. A French scheme was then urged upon him with so much insistance that on May 7 he adopted it in a decree which announced the consolidation of all the state and Daira loans and the distribution of a bonus of 25 per cent. to holders of treasury bonds. These bonds had then reached a sum exceeding £20,000,000, and were held chiefly by French firms. The arrangement speaks for itself. It was immediately quashed by the firm action of the English Stock Exchange; and the Right Honorable G. J. Goschen, M.P., and M. Joubert were sent out to attempt the adjustment of the affairs of Egypt.
Compensation for Disturbance. John Tenniel. Punch. (11 December ). Right Honorable G. J. Goschen, M.P. stands at right, Prime Minister W. E. Gladstone at left. Click on image to enlarge it.
The result was a scheme which the khedive accepted, and which may shortly be described as follows: the private Daira debt was separated from the state debt; the three small loans of 1864, 1866, and 1867 were reserved to be paid off by the Mukabalah; the bonus on the treasury bonds was cut down to 10 per cent.; and £17,000,000 was converted into a preference stock, secured on railways and harbor dues. The state debt was thus divided into three classes:—unified debt of 4:59,000,000, interest 7 per cent, reduced till 1885 by a sinking fund of 1 per cent.; preference stock, £17,000,000, interest 5 per cent.; and the three short loans, interest 7 per cent, redeemable at 80 instead of 100, and to be paid off by the Mukabalah. Besides these, there is the private Daira debt of the khedive. The scheme is perhaps the best that can be devised under the present perplexing conditions; and if the Egyptian Government can maintain its revenue and will hold to its engagements there is every probability that the debts will be paid off at the appointed times. When the Mukabalah falls in in 1885 the three short loans will (presumably) have been paid off. The preference debt is to be redeemed in 65 years by the operation of a sinking fund of £35,744 a year, and the unified debt in the same time and after a similar manner. With a view to insure the carrying out of these reforms, the khedive has appointed English and French comptrollers general, who are intrusted with the collection of the revenue and the appropriation of it to the purposes settled by the financial scheme. A European Commission of the Public Debt has also been appointed for receiving the revenue devoted to the payment of the debt charges; and another commission, composed of three Europeans and two natives, controls the railways and the port of Alexandria. So long as the present arrangement is held to, and if no unforeseen decrease takes place in the revenue, the financial position of Egypt may be considered hopeful. The khedive has been the subject of much censure at the hands of his bondholders. It must however be remembered that he received but half of the sums supposed to have reached him. Of the £45,000,000 he has paid back over £30,000,000 in interest, etc., and £10,000,000 went in the Suez Canal indemnity, so that only £4,000,000 could have been squandered. That the khedive is no financier is obvious; but he seems honestly determined to pay his debts, and if there was any dishonesty in the matter of the loans it was not on the khedive's side. [VII, 786-87]
Related material
Bibliography
“Egypt.” The Encylopædia Britanica or Dictionary of Arts, Sciences, and General Literature. Ninth ed. New York: Charles Scribners and Sons: 1888. XXIII, 458-560. Hathi Trust Digital Library online version of a copy in the University of California Library. Web. 16 August 2020.
Last modified 16 August 2020