d by the
Ministry of the Interior, Cairo, in 1898 and 1909.
(E. S. P.; S. L.-P.; F. R. C.)

_Finance._

The important part which the financial arrangements have played in the
political and social history of Egypt since the accession of Ismail
Pasha in 1863 is shown in the section _History_ of this article. Here it
is proposed to trace the steps by which Egypt, after having been brought
to a state of bankruptcy, passed through a period of great stress, and
finally attained prosperity and a large measure of financial autonomy.

In 1862 the foreign debt of Egypt stood at L3,292,000. With the
accession of Ismail (q.v.) there followed a period of wild extravagance
and reckless borrowing accompanied by the extortion of every piastre
possible from the fellahin. The real state of affairs was disclosed in
the report of Mr Stephen Cave, a well-known banker, who was sent by the
British government in December 1875 to inquire into the situation. The
Cave report showed that Egypt suffered from "the ignorance, dishonesty,
waste and extravagance of the East" and from "the vast expense caused by
hasty and inconsiderate endeavours to adopt the civilization of the
West." The debtor and creditor account of the state from 1864 to 1875
showed receipts amounting to L148,215,000. Of this sum over L94,000,000
had been obtained from revenue and nearly L4,000,000 by the sale of the
khedive's shares in the Suez Canal to Great Britain. The rest was
credited to: loans L31,713,000, floating debt L18,243,000. The cash
which reached the Egyptian treasury from the loans and floating debt was
far less than the nominal amount of such loans, none of which cost the
Egyptian government less than 12% per annum. When the expenditure during
the same period was examined the extraordinary fact was disclosed that
the sum raised by revenue was only three millions less than that spent
on administration, tribute and public works, including a sum of
L10,500,000, described as "expenses of questionable utility or policy."
The whole proceeds of the loans and floating debt had been absorbed in
payment of interest and sinking funds, with the exception of L16,000,000
debited to the Suez Canal. In other words, Egypt was burdened with a
debt of L91,000,000--funded or floating--for which she had no return,
for even from the Suez Canal she derived no revenue, owing to the sale
of the khedive's shares.

Soon after Mr Cave's report appeared (March 1876), default to