8 as the reserves of purchasing power in the country are amply sufficient to counteract the effect of any limitation in the issues of fresh currency. It is to be remembered, in any case, that the rise which has taken place here, as elsewhere, is far greater than that in the value of gold relatively to paper money. In the United States, where gold is on a parity with paper, wholesale prices stand at 120 per cent, over pre-war level. Even in India, where the value of the silver standard has risen considerably relatively to gold, retail prices have risen more than 50 per cent.

The export of gold and silver coin and bullion has been prohibited save under licence, and the import of gold coin and bullion was also pronibited with the same reservation. This latter prohibition has, however, now been withdrawn. Gold coin has commanded a premium for the purpose of conversion into ornaments, which has been carried on on a considerable scale for the last few years. The premium rose recently to as much as 75 per cent,, but since the renewal of the prohibition of import it has fallen to 40 per cent.

Although the substitution of notes for gold in the circulation under the rdgime of forced currency has been accepted by the people without undue difficulty, the notes cannot compare in popularity with coin, especially for hoarding purposes. In the absence of gold the predilection for coin manifested itself frona the outset in the shape of an extraordinary demand for subsidiary currency, especially silver, similar to that which was observed in many other countries at the same time. This demand increased in intensity each year, probably stimulated by decreased confidence in the notes as the issue of the latter expanded without metallic cover and as the premium on gold appeared. The total amount of Egyptian silver coin held by the public at the moment of the outbreak of war was £E, 2,500,000. It now stands at £E. 6,600,000. In this total is included silver issued not only for Egypt, but for the Soudan and for the occupied territory in Syria. The world-wide demand for silver for currency purposes made it more and more difficult to obtain and mint the increased quantities required, and various expedients were adopted from time to time to meet file situation. For example, 25 lakhs of rupees were obtained from India in 1916, and the rupee was made legal tender in Egypt. British silver coin was provided for use in the Soudan, where, in the outlying districts, notes were unacceptable, and coin was found to be indispensable for the purchase of cattle and other supplies for military purposes. The British silver was made legal tender for the purpose in the Soudan at the rate of 5 piastres to the shilling. At length, in the summer of 1918, the pressure on the world’s silver supplies became so great that the Government found it impossible to continue minting silver coin, and recourse was had to issues of paper currency of small denominations in its place.

These small notes passed current without much difficulty, notwithstanding their inconvenience, but they naturally had the effect of driving the existing silver coin out < of circulation. It is significant that the total issues of 25, 10 and 5-piastre notes, which now constitute the entire subsidiary circulation, amount to no more than £E. 1,800,000. A comparison of this figure with that of the previous issues of silver coin indicates to how great an extent the latter is hoarded. The issue of small notes naturally provoked an enhanced demand for coins of the smallest denominations, and for some time the scarcity of these coins caused considerable inconvenience. A continued supply of nickel coins sufficient to meet requirements seems now, however, to be assured.

On the whole, and having regard to the preference of the population for a metallic currency, there is reasonable cause for congratulation on the success of the war currency measures adopted in Egypt.

3. Government Finance.

The depressing effects on the prosperity and activities of the country which followed immediately on the outbreak of war in 1914 reacted seriously on the State revenues, especially on the receipts from Customs, Railways, Ports and Judicial fees. The heavy decrease under these heads rendered imperative both a revision of expenditure, for which purpose a special commission was appointed, and the finding of fresh sources of revenue.

In addition to meeting the deficiency in its finances, the Government was called upon to finance or to guarantee various' emergency measures. As I have already stated, advances were made to cultivators under Government guarantee to enable them to hold their cotton during the crisis in the cotton market, and from the smaller Icultivators cotton was bought outright by the Government. The Government was House of Commons Parliamentary Papers Online. Copyright (c) 2006 ProQuest Information and Learning Company. All rights reserved.