J. C. (James Carlile) McCoan.

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only one between the Danube and the Indus which has
broken with the fanatical conservatism of Islam, and
placed itself in frank rapport with Western civilisation.
That it is so entirely personal is, of course, an element of
weakness ; but, apart from the fact that the heir-apparent
is a Prince of liberal education, and of already approved
administrative ability, a governing staff has been created,
in whose hands the traditions of the present reign may
be safely trusted to lose none of their force. The change
in the succession put an end to the scramble for selfish
aggrandisement during a single viceroyalty, and substi-
tuted a dynastic interest in the welfare of the country,
which is, perhaps, its best guarantee for good govern-
ment in the future.



Ueremie and Expenditure Forty Tears ago — Situation at Commencement of
the Present Eeign — -Present Main Elements of Egyptian Finance — What
the Revenue now consists of — The Expenditure — Explanation of its In-
crease — History of the State Debt — The Crisis of Last Year — Mr. Cave's
Mission, and his Report — The French Unification Scheme — Its Failure —
The GOschen-Joubert Scheme — Its Merits and Defects — Its Acceptance
by the Khedive — The New Financial Administration — Its Guarantees —
The Essential Solvency of the Country.

The finances of Egypt liave followed the same law
of growth which has ruled in nearly every economical
feature of the country during the past forty years. In
1835 the revenue was estimated at 2,600,000?., and the
expenditure at about 2,300,000?., without any public debt
whatever. In 1862, the last year of Said Pasha's reign, the
figures had risen respectively to 4,929,000?. and 4,380,000?.,
with a debt of 3,292,300?. ; while last year's Budget
claimed an income of 10,772,611?., against an outlay (ex-
clusive of interest on the floating debt) of 8,981,862?.,
with a total State debt since fixed by the Goschen-Jou-
bert scheme at 76,000,000?. Of these large aggregates,
the first is sufiiciently explained by the development in
the trade and productive industries of the country, the
second mainly by the cost of an improved administration
ar.d the charges on the national debt, and the gross total
of this last itself in great part by a heavy outlay on pub-
lic works which within the past sixteen years has, in this
respect, placed Egypt on a level with most second-rate
European States, but largely also by a vicious system of


financing wMcli has burtliened tlie country witli a mass of
debt beyond its fair capacity to bear.

It will be convenient to consider these three main ele-
ments of Egyptian finance in separate detail.

I. The Hevenue may be grouped under the five heads of
(1) Direct and (2) Indirect taxes, (3) the Moukabala and
VUlage Annuities, (4) Kailway profits, and (5) MisceUa-
neous Receipts.

Of these the first include (a) the land taxes, (5) the tax
on date-trees, and (c) trade licenses. As regards the first of
these, the latest official report states the total area of land
under cultivation at 4,805,107 feddans (acres), of which
3,580,239 pay a rent-charge {miri) averaging about 22*.
per feddan, and the remaining 1,224,868 — held under the
privileged tenure explained elsewhere — only a tithe or
quit-rent {ousTiur) of about Is. per feddan aU round.*
The revenue from both these taxes last year amounted
roundly to 4,305,000?., and may be fairly expected to
reach 4,500,000?. within the next four or five years,
when new land already reclaimed falls under taxa-
tion.! While the heavier of these taxes, too, may be

* This total acreage of tax -paying land is an increase of 743,131 feddans over
the area in Said Pasha's time ; in addition to which 353,350 feddans ioushury)
have also recently been brought under cultivation, and will shortly be as-
sessed for taxation, as will also a further 367,000 feddans which have not yet
been included in the cadastre. This total of nearly 1,363,000 feddans
amounts to 33} per cent, of the whole cultivated land of the country fourteen
years ago. There are, besides, 1,097,999 feddans of land registered during
the reign of Mehemet Ali, but still uncultivated, and about 1,500,000 fed-
dans not yet registered, in the provinces of Garbieh, Sharkieh, Behera, and
Dakalieh, most of which may be similarly reclaimed.

f Up to the time of Said Pasha, the vicious Turkish system was followed
of collecting the land-tax in kind ; but amongst his other reforms that
Prince substituted payment of the tax in money, allowing the cultivators to
Bell their produce in the market direcii to the European traders, instead of,
as formerly, to the Government at its own price. As a rule, therefore, both
the miri and the ouihur are now collected twice a year in money ; but, by
mutual arrangement with the sarafEs, payment is sometimes made in kind at


regarded as moderate in a country in whici. the gross
yield of cultivated land ranges from 81. to 121., or even
151. an acre, tlie fact that one-fourth of the whole pays
only the minor charge shows how large a taxable reserve
the Government possesses in this main source of its
revenue. On the other hand, as most of these privileged
estates belong to members of the Viceregal family or
other influential persons, there is not much present likeli-
hood of their being brought under the higher assessment.
The tax on date-trees — at the average rate of lOd. each
on 4,467,000 trees — represents a receipt of about 189,000?.,
beiug an increase of 3,000?. on the previous year's Bud-
get. This particular impost, however, admits of but
little extension, and the margin for further productive-
ness is less than this difference would seem to suggest.
It is even probable that any re-adjustment of taxation
may rather reduce than augment the sum received from
this source, as the tax is in reality a second impost levied
from land which already pays either miri or ousTiur.
Trade Licenses, on the other hand, which last year
yielded 422,000Z. against 286,500?. in 1874, may be safely
reckoned on for an increase, not probably at this high
ratio, but iu fair proportion to the growth ia the trades
and skilled industries of the country, on which this tax
of less than 1?. 8*. per head of those engaged in these
avocations is the only direct impost levied.

The Indirect Taxes comprise the Customs and Tobacco
d( ties ; octrois and various other toUs falling under the
head rather of miscellaneous local, than of general taxa-
tion. The Customs, although hitherto very badly man-
aged, last year produced 639,000?. from an ad valorem
tariff of nominally 8 per cent, on imports, and 1 per cent,
on exports, fixed by the existing commercial treaties with
the Porte an early jnodification of the tariffs of which ia


probable under the new powers of the Khedive. As it is,
the revenue of the department during the past fifteen
years has supplied a fair gauge of the contemporary
prosperity of the country. Thus, while m 1861 the total
value of exports and imports (iacluding gocds in transit)
on which duty was paid — there is no accessible record of
the actual receipts — was only 6,M5,M5l., iq 1863, when
the cotton famine had abnormally stimulated the growth
and export of that staple, the Customs revenue of the year
rose to nearly 1,240,000?., and in the reaction that ensued
feU in 1867 to 482,780?. A stationary period foUowed
from the latter year to 1871, since which, without any ex-
ceptional activity, and notwithstanding the diversion of
almost the whole Indian traffic to the Suez Canal, a nearly
regular annual improvement has taken place. A measure
of the extent to which bad administration has hitherto
checked this is suggested by the fact that, while the
receipts of the Alexandrian Custom House for 1872
should, according to an authoritative calculation, have
amounted to 658,787?., those from the whole of the ports
reached only 541,215?., or 17,510?. less than what ought to
have been the year's revenue from Alexandria alone.*
Under the new European management, the abuses which
explain this anomaly wUl doubtless diminish, if they do
not altogether cease, and the department may be regarded
as one of the most expansive sources of Egyptian rev-
enue, irrespective of the probable increase of the present
low rate of 1 per cent, on exports when the existing treaty
expires. Similarly, as regards the tobacco duty, which,
when fixed five or six years ago, was reckoned to produce
600,000?. a year, but has as yet not exceeded 264,000?.
The deficit on this item has no doubt been largely caused
by smuggling, for the estimate itself is a moderate one

* Mr> Cave's "Report," p. 4.


for an almost universally smoking population of nearly
6,500,000, and may be fairly expected to be approached,
if not fully realised, under a more efficient system of cus-
toms and excise control. The tax on which it is based is
only 20 piastres per oke, or about Is. 6d. per lb. — less
than half our English duty — and as the yearly importa-
tion, over and above what is used of native growth, ex-
ceeded 3,800,000 okes (=7,700,000 lbs.), a revenue of
600,0001. would stUl leave a margin of more than 10 per
cent, for reduced consumption or other causes. For the
present, however, the proceeds of this tax faU slightly
below 264,000?. a year.

The Moukabala and Village Annuities are not prop-
erly taxation at all, but terminable receipts iuvolving,
eight years hence, a large permanent reduction of rev-
enue. The former — which means "compensation" — is
the name given to a measure iatroduced iu 1871 to redeem
half the land-tax, with a view to paying off the then float-
ing debt with the proceeds, without having recourse to a
foreign loan. At that time the great majority of Egyp-
tian landowners had no legally regular title-deeds to their
property, and ia consideration of their consentiug to pay
six years' land tax iu advance — either ia one payment or
ia six yearly instaUments — the Grovemment proposed to
give them indefeasible titles, and to reduce this tax by
one-half for all time. The measure was, however, found
to be impracticable. Only the wealthier proprietors
could afford to comply with its terms in either alterna-
tive, and after about 8,000,000Z. of the estimated total
of 27,825,000?. had been encashed, it was found necessary
to commute the proposed six installments into twelve
annual payments of about 1,530,000?. — reckoning a dis-
count of 8i per cent, to be allowed on each installment —
after the last of which, payable in 1885, half the tax.


wlietlier miri or oushur, wiU be forever redeemed. TMa
modification of the measure of course defeated its origi-
nal object, and saddled tlie Grovernment with, an engage-
ment wMch, however advantageous to the landowners
who could afford to bear the immediate burden, was
fiscally ruinous to the Treasury ; seeing that for a sum
of in all less than 27,000,000Z. spread over a dozen years,
it thence afterwards surrendered for aU time nearly
2,500,000Z. a year of its surest and most easUy collected
revenue. The money, however, was urgently needed, and
the measure was therefore upheld till May of last year,
when, the difficulties of the floating debt having culmi-
nated, the Government — yielding to the pressure and evil
counsels of the influential group of French financiers by
whom the large mass of its Treasury bonds was chiefly
held — decided on unifying the whole of its debt, funded
and floating, on terms which, amongst others, provided
for its redemption in sixty -five years. To enable it to
bear the heavy interest-charge which this arrangement
entailed, it was resolved not to reduce the land-tax, and
by the decree of May 7th the Moukabala was abolished,
the Government being left to make what compromise it
could, if any, with the proprietors who had already paid
under it up to that date. But the scheme of which this
was a feature having failed to meet with acceptance in
England, fell through, and on reconsideration the Gov-
ernment, after consulting the Assembly of Delegates, de-
cided on maintaining the Moukabala, and keeping faith
with the contributory landholders. Accordingly, when
the substituted project of Messrs. Goschen and Joubert
was negotiated six months later, the Moukabala formed
part of it, and is now again in revived operation, with
this modification, that the discount or bonus of 8i per
cent, by whose operation the half-tax was to be redeemed


witMa the twelve years is now withdrawn, and the whole
of the reduction will come into force at once in 1886.
The effect of this will be to augment the receipts from
the measure by about 135,000?. a year — at the expense,
of course, of those who previously received that amount
in rebate. But even with this increment the present
advantages derived from the item must be regarded aa
dearly bought at the cost of the sacrifice it will entail
eight years hence. This wOl no doubt be in great meas-
ure recouped by the taxation of new land and the general
expansion of revenue ia the meantime ; but that improve-
ment would have accrued in any case, and the necessity
for a measure which thus so largely discounts the future
is, therefore, none the less to be regretted. The Village
Annuities only resemble the Moukabala in being simi-
larly terminable. These date from 1870, when, in con-~
sequence of the sudden reduction in the price of cotton
which followed the temporary rise caused by the Ameri-
can civil war, the growers were unable to repay the large
advances made to them by the merchants and money-
lenders during the inflation of the market. The Grovern-
ment came to their relief, and, taking on itself the collec-
tive debt of about 1,000,000?., issued in payment of it in-
terest-bearing "Village Bonds" spread over seven years.
This term was subsequently extended to twelve years,
and the annuities wiU therefore expire in 1885, up tUl
which time the Treasury is being repaid by the original
debtors at the rate of 160,000?. a year. The termination
of both these items will, consequently, involve an annual
reduction in the revenue of about 1,820,000?. after 1885.

Profits on KaUways, the next important item, may be
credited with similar elasticity to that experienced in the
Customs, arising from a steady increase in the traffic,
gradual improvement _in _ the administration, and the


continTiiiig extension of tMs class of pnblio worka AH
three of these causes combine to explain the growth of
revenue from this source from 361, 300^. ia 1863, the first
year of the present reign, to 990,200?., the net amount
received from it by the Treasury last year. The cheap-
ness with which the lines are worked no doubt also con-
tributed to this result — ^the cost of working being only
about 46 per cent, of the receipts, or, if telegraph revenue
and other "rents" received by the department be in-
cluded, about 41 per cent., as compared with 53 per cent,
spent on most European lines. This low proportion of
working cost to revenue arises mainly from the moderate
rate of speed at which trains are driven, and from the
employment chiefly of native labor. Taking the aggre-
gate of the lines now open at 1,100 miles — a mUeage
which, in proportion to population, is greater than that
of either Austria, Hungary, or Spain — and estimating
their cost at the locally high average of 11,000?. a mile,
these net profits of last year represent a dividend of
nearly 8 per cent, on the capital spent on the system,
irrespective of its indirect effect on other branches of
revenue by promoting commercial activity and the gen-
eral prosperity of the country. That stUl better results
will be realised under the new European administration
of the lines may be confidently expected ; and although
the property in them is still retained by the Govern-
ment, the "privileged" stock to which their revenue
is now specially hypothecated, may, for aU practical
purposes, be regarded as high -class railway deben-

The remaining aggregate of receipts, grouped under
the head of "Miscellaneous," and amounting in the total
last year to about 2,100,000?., is made up of 519,000?.
received as octroi and other municipal dues in Cairo and

126 EGYPT AS IT 18.

Alexandria; of 202,000Z. collected as indirect taxes by the
provincial prefectures ; of 306,000Z. derived from the salt
monopoly; of 467,000?. of special crovra rents and duties
payable to the Ministry of Finance ; of 245,O0OZ, from
the Post Office, salt-fish farming, lock, canal, bridge, and
harbour tolls and dues (other than those of Alexandria) ;
of 143,000?. net revenue from tbe Soudan ; and about
220,000?. of arrear taxes.

This last item being deducted, the revenue for the year
was roundly about 10,500,000?., of vfhich rather less than
7,000,000?. was the proceeds of actual taxation, the re-
maiader representing the redemption of future taxes,
the payment of old ones, railway receipts, canal, bridge,
and other dues, which were not iu fact taxes in the ordi-
nary sense, but payment for equivalents received. The
whole positive taxation of the year, therefore, was about
25*. per head of the population, an amount which,
although not oppressive, is still relatively high for a
country in which the great mrjority of the people are
much poorer than the corresponding classes in Europe.
Indeed, the strain in this direction has reached a point
beyond which, for some years at least to come, it cannot
be safely carried, and the further growth of the Egyptian
revenue must, therefore, depend rather on the reclama-
tion of new land to cultivation and the general expansion
of trade than on any possible iucrease in the present
fiscal burdens of the country. It may be doubted,
indeed, whether under the humane and more equitable
system of assessment and collection which has been
recently iutroduced, last year's aggregate of receipts will
be even maiutaiued. The taxation of foreigners, who
still most laequitably enjoy their old fiscal exemption
under the Capitulations, might fairly be made to yield
200,000?. a year, but of this there is no present likelihood.


and from furtlier taxation in any direction there is there-
fore nothing to be reasonably hoped.

II. Passing from revenue to Expenditure, the latter, we
find, has grown rather more than pari passu with the
former — an unsatisfactory feature, which is however ex-
plained by the great outlay on public works and the
yearly increasing charges of the public debt. But this
side of the account is now simplified, and its figures for
the future controlled by the recent arrangement which
assigns a fixed sum for administration, and allots the
balance of the revenue, be it much or little, for t e
service of the debt. Previously there was no check upon
the former, and where the outlay on it and the annuities
on the debt exceeded the year's income, the deficit was
met by the vicious expedient of fresh borrowing at usu-
rious rates of interest, till borrowing became no longer
possible, and the inevitable crisis of last year ensued.
To this mischievous license the decree of November last
put an end, and so long as it remauis ia force the spend-
ing powers of the Government are limited — for the pres-
ent and next year to 4,259,350?. and 4,403,961Z. respec-
tively, and thence afterwards, till 1886, to 4,500,000?. a year.
Although, therefore, the Estimates on this side of recent
Budgets have now little more than an historical interest,
their chief items — which, more or less modified, are still
those of the current expenditure — ^ma,y be mentioned.
First comes 685,308Z. for tribute to the Porte. Up till 1866
this item was only 376,000Z., but in that year, in considera-
tion of the firman which changed the order of succession,
the payment was increased to 670,308?., to which 15,000?. a
year has since been added for the cession of Zeyla. The
Civil List of the Khedive (300,000?.), raised by grants
to the heir apparent, his Highness' s other sons, and the
numeroua families of the preceding Viceroys to 560,000?.



—including 60,000Z. a year to Prince Halim Pasha— can-

Qot be considered excessive. But nearly 880,O0OZ. for tlie
Ministries of War and Marine migM be more easily re-
duced, without injury or peril to any interest of the
country; for, politically conditioned as Egypt now is,
with absolutely nothing to fear from within or without,
a standing army of 30,000 men and a navy to match, are
clearly in excess of its military wants.* The reduction
of the estimate for public works from 1,041,000?. in 1874,
and 512,500Z. in 1875 to 205,000?. for last year, shows how
purely optional had been the previous outlay m this
direction ; and but that the contracts for the Soudan
Railway, to which nearly the whole of this last sum is
allocated, have been taken, even that amount might have
been kept out of the year's Budget. As it is, barring
this inevitable item, fresh expenditure on this class of
works has been whoUy suspended, and for some years to
come is not likely to be resumed on the old scale. The
considerable item of 200,000Z. for the expenditure of the
Rouznameh on yearly gifts to Mecca, the cost of the
annual caravan, and other charitable outlay, vdll not
readily bear reduction in a country on three-fourths of
whose population the fervid national faith has stiU a
powerful hold. But for the recent large addition of
foreigners at high salaries to the staff of the chief Minis-
tries, sensible economies might have been effected in the
cost of nearly the whole by reducing the number of in
ferior native employes, who swarm superabundantly both
in Cairo and throughout the provincial administrations.
As it is, the most that can be hoped for is that the eco-

* Since tMs was written, several regiments have been virtually disbanded,
nearly their whole rank and file having been sent home to their villages on
unlimited furlough, and only the regimental cadres retained, [Later still,
these have been recalled to service, to make up the contingent requisitioaed
by the Porte.]


nomic winnowing of tlie one class will balance the new
additional expense of the other. The Ministers them-
selves and the higher native functionaries are not extrav-
agantly over-salaried, as in Turkey ; and in their case
little or no reduction can be fairly made. The interest
(198,829?.) on the Suez Canal shares, sold to the British
Government, is of course a settled item till the bonds rank
for dividend, in 1894, and was accordingly provided for in
the increased administrative Budget fixed by the decree of
November last. But one chapter of expense that weighed
heavily on this side of the national account is now, it
may be hoped, closed. Henceforth the Khedive may
quite safely refuse payment of the blackmail to Constan-
tinople, which, though officially unconfessed to, in some
years notoriously exceeded the nominal tribute. It will
be his own fault if he submits any longer to extortions
which have now no more excuse in policy than in treaty
right. This administrative first charge on the revenue
may, therefore, be regarded as ample for aU its purposes ;
and, except in the extreme event of another cattle mur-
rain, a destructive Nile, or some similar force majeure
necessitating extraordinary outlay, there is no reason to
apprehend either need or disposition on the part of the
Government to exceed the limit thus wholesomely im-

III. The Debt of Egypt has outstripped in rapidity of
growth the large totals of revenue and expenditure just
noticed. As settled by the decree of November last, it
now roundly amounts to 80,393,000?., and yet the fii'st
borrovsdng dates only from 1862,* when the commitments
of Said Pasha to the Suez Canal Company, and the press-

* Two small temporary loans had been previously contracted with Paris
bankers, the first in August, 1860, for 28,000,000 frs., and the second in
March, 1862, for 40,000,000 frs.. but neither was (quoted on the Bourse.



uie of — for those halcyon days — a heavy home debt,
compelled him to imitate the example of the Porte and
appeal to the European money markets for a loan of
3,292,800Z, A simple statement of the terms on which
this and the subsequent loans were effected will go far to
explain, the recent financial straits of the Egyptian Gov-

Online LibraryJ. C. (James Carlile) McCoanEgypt → online text (page 11 of 36)