§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)I rise, Sir, to ask the permission of the House to carry out what was arranged at the beginning of the Sitting—namely, that I should make a statement now explaining what has been done with respect to the agreement as to Egyptian finance. If the House will allow me to proceed with such a statement, I will do so as shortly as I can. The agreement which has been arrived at consists, in the first place, of a Declaration by the Great Powers and Turkey; secondly, of a Convention, also by the same Powers; and, in the third place, of a project or Decree to be issued by the Khedive of Egypt. The Declaration was signed yesterday by all the Powers except Turkey, whose full powers, I am authorized to say, are on the way. The Convention has been signed this afternoon, and the Khedive has undertaken to sign the Decree. 1657 These three instruments will be accompanied in the Parliamentary Papers by the Diplomatic Correspondence. The instruments themselves will, I hope, be circulated to-morrow, or at latest on Friday morning. We will endeavour to have them out to-morrow, and the Correspondence will, I hope, be circulated on Monday. The statement which I am now about to make is not one in the technical order of the Declaration, Convention, and Decree; but I will give their general effect and result in a manner which will, I think, be convenient to the House. I may premise it by observing that in 1882, after the events at Alexandria, it was evident that, in order to restore the finances of Egypt, that country must pass beyond the powers and limits imposed by the Law of Liquidation, and that it would be necessary to raise a large loan. The Controllers General in 1882, Sir Auckland Colvin and M. Brédif, estimated that the amount required would be £8,000,000; and they proposed, in order to obtain the necessary interest, that the Sinking Fund should be suspended. The Papers on this subject will be found in the Blue Book of 1883. In 1883 and 1884 the condition of Egyptian finance reached a very critical stage, and was the subject of careful inquiry by those who represented this country in Egypt, and by us at home; and in the early part of 1884, as this House will remember, we proposed that a Conference of the Great Powers should take place on the subject. The Conference met in the summer of 1884, and it was then agreed on all sides that an £8,000,000 loan was necessary to restore the finances of Egypt. There was also general agreement as to the amount of expenditure requisite for normal administrative purposes in Egypt; but there was a difference among the Powers as to the proper amount of Egyptian revenue, we thinking that the present scale of land tax was excessive, and that, consequently, some of the interest on the existing loans required abatement, while the French thought that the present scale was satisfactory, and that no abatement was necessary. All the Powers agreed as to the necessity of suspending the Sinking Fund. The Conference, as the House will remember, was adjourned sine die, and last autumn Lord Northbrook went out 1658 to Egypt to make further inquiries on this most difficult subject, and he devoted extreme care to an investigation on the spot of the questions in controversy. The results of his inquiry were most valuable, and on his return we reopened negotiations with the Powers on the subject; and after very patient discussion, lasting not over weeks, but months, of the several proposals, the course of which will be seen in the Correspondence to be circulated, I hope, on Monday, the Powers arrived yesterday at a settlement which I will describe in a few words. All the Powers again agree as to the normal administrative Expenditure in Egypt, fixing the figure, subject to certain adjustments, at £5,237,000 a-year; and that figure, I may say, contains one item of expenditure which will be of special interest to us—namely, £200,000 for the maximum cost of the Army of Occupation. They agree that the sum to be raised on the facts now before them should be £9,000,000 instead of £8,000,000. The Powers also admit, what we strongly urged, that the system of taxation in Egypt should be extended to foreigners; and machinery for this purpose is provided in the instrument in which the Agreement is expressed. It was also arranged that two years should be given during which we in England are to make exhaustive inquiries as to the revenue of Egypt, not only as to the proper figure of the land tax, but also as to other branches of revenue; and during these two years our proposals as to abatement of interest on the bonds have been met to this extent—namely, by a 5 per cent deduction from all coupons and a reduction of ½ per cent from the interest on our Suez Canal investment, subject in each ease to repayment at the end of two years, if the result of our inquiry shows that the revenue can bear it. If at the end of two years we find that a continued deduction from the coupons is necessary, the Khedive is to summon an International Commission like that of 1880, which settled the Egyptian finance at that time, and that Commission is to renew the general inquiry as to the Egyptian finance. I will advert for a moment to the loan. The Powers proposed to us that the loan should be the subject of an international guarantee. We did not ask for any such guarantee; we were willing to undertake it our- 1659 selvs; but neither did we object to it, provided it did not involve international interference with the affairs of Egypt. We therefore assented to an international guarantee on the model of the Anglo-French Guarantee of the Turkish Loan of 1855, which was a purely financial arrangement. To this the six Powers agree, subject to a reservation, of no practical importance, on the part of Russia, which will be seen in the Papers. The guarantee is to be a joint and several guarantee of the six Powers, and is upon the sum of £315,000 per annum, until the whole of the loan is redeemed, and the loan is to be the first charge on the revenues assigned to the Debt and received by the Caisse. The maximum amount of cash that can be raised is to be £9,000,000. The difference between the interest in each year on the Debt outstanding and the £315,000 is to be carried to a sinking fund only applicable to the present loan. This sinking fund may be augmented to the extent of 1 per cent out of any future surplus in the receipts on the general revenue account. I must mention one other provision of the Agreement which is not purely financial—namely, that taking as a basis Lord Granville's Circular of the 3rd of January, 1883, as to the free use of the Suez Canal, the Powers have agreed that the details should be reported upon by delegates meeting in Paris before the end of this month with the view to an International Act being agreed to by all the Powers. I have now, Sir, stated, without any argument either for or against, the heads of the agreement which has been arrived at. Of course, if it is wished, even at this hour, to ask me any questions as to facts I shall be prepared to the best of my power to answer them; but I should decline on my part, and I hope the House will decline, to enter into any question of argument. I hope to-morrow morning that the Papers—not the Correspondence—but the instruments will be circulated to hon. Members.
§ MR. ARTHUR ARNOLDI wish to ask the Chancellor of the Exchequer one question as to a matter of fact. He has referred to the example of the Anglo-French Convention of 1855. I wish to ask the Chancellor of the Exchequer whether, following that example, the guarantee in this case is only for the interest on the loan, and not of the 1660 principal; and, also, whether, following that example, there is, apart from the Convention, any engagement between the contracting Powers as to their separate liability in case of default?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)My answer to the second part of the hon. Member's question is, that the guarantee is to be joint and several—that is to say, that each Power is responsible, with the reservation that I spoke of in the case of Russia, which is a somewhat difficult matter to explain; but it will appear in the Papers. With respect to the first part of the question, the guarantee is only with respect to the interest, but is with respect to the interest in this sense, that it is for a fixed sum of £315,000 a-year, the difference between that and the actual interest in any particular year on the outstanding loan going to the sinking fund.
§ MR. ARTHUR ARNOLDasked, whether the House was to understand that, following the example of the guarantee of 1855, there would be any engagement apart from the Declaration and the Convention? In 1855 there was an engagement.
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)No, Sir; the engagement is simply what I have stated it to be—namely, a guarantee of £315,000 per annum, and no other.
§ SIR JOHN LUBBOCKIn the case of any default, in what proportion will it be borne? What proportion will be borne by the different States? I would also ask what is the rate of interest?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)The rate of interest, according to the Convention, is to be at any rate not exceeding 3½ per cent. I did not catch the other part of the hon. Baronet's question.
§ SIR JOHN LUBBOCKIt is, in the event of default, in what proportion will it be borne by the guaranteeing States?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)If there should be a default each of the six Powers will be liable for the whole.
§ SIR STAFFORD NORTHCOTEI do not quite understand the statement with regard to the meeting on the subject of the Suez Canal. I wish to ask the right hon. Gentleman, with regard to the provision on the subject of the Suez Canal, has the Conference been 1661 absolutely determined and arranged so as to finally decide upon the matter, or is the Conference dependent on other considerations?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)The words of the Convention are—I am translating them from the French—
It is agreed between the Governments that a Commission, consisting of delegates named by the said Governments, shall meet at Paris on a day in March, to prepare and draw up an Act with respect to the free navigation of the Suez Canal, and the project drawn up by the Commission will be submitted to the said Governments, who will also obtain the accession of the smaller Powers.
§ MR. NORWOODasked, whether the Suez Canal arrangement would be submitted to the House for its sanction?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)It will have to be sanctioned by the different Powers.
§ MR. NORWOODasked, whether it would have to be sanctioned by that House?
§ THE CHANCELLOR OF THE EXCHEQUER (Mr. CHILDERS)No, Sir; it is not a financial arrangement.