J J Reports by His Majesty’s High Commissioner OQ the Finances, Administration and Condition of Egypt and the Soudan ibr the period 1914-1919.

No. 1.

Field-Mcbrshal Viscount Allenhy to Earl Curzon.—[Received June 22.)

My Ix)rd, Cairo, June 14, 1920.

I HAVE the honour to transmit herewith my report for the year 1919 on the work of the Egyptian administrative departments.

As regards the Soudan, I enclose a despatch which has been addressed to me by the Governor-General.

I have, &c.

ALLENBY, FM, EGYPT.

Enclosure 1 in No. 1.

I.—FINANCE.

1. The Financial and Economic Situation. AT the time when the last report by His Majesty’s agent and consul-general was written,’ early in 1914, the country had not entirely recovered from the efiects of the period* of over-speculation and extravagance, provoked chiefly by the rise in price of cotton, which culminated in the economic crisis of 1907. Notwithstanding a series of j)lentiful harvests, realised at high prices, the liabilities which remained as a legacy from that period weighed heavily on private finances, while the higher standard of living set up during that period showed little tendency to diminish.

The outbreak of war, which occurred at the moment when the cotton crop of 1914 was about to be harvested, caused a crisis in the cotton market, and reduced the price of that commodity by at least one-third. The country was thus deprived at one sti’oke of the increase of revenue which it had enjoyed for some twelve years past. The sudden diminution of the country’s purchasing power by many millions reacted severely on economic activity, created unemployment, reduced consumption, and left little margin for the payment of debt charges. Imports fell oil by an amount even greater than the reduction in the value of the exports. A small portion of the accumulated gold hoards was brought forth and disposed of as bullion in the market. Many debts were left undischarged, and the mortgage banks succeeded in recovering only a fraction of the very large annuity due to them. Emergency measures were .adopted to meet the immediate necessities of the situation. The IMational Bank of Egypt’s notes were made temporarily legal tender and inconvertible, and a general moratorium was proclaimed, subject to a reservation in favour of bank depositors. By these means an incipient panic was arrested and an emergency currency was provided in the absence of the possibility of procuring gold from abroad. Assistance was extended to cultivators in the shape of advances on their cotton guaranteed by the Government, and in the case of the smaller cultivators, in the shape of actual purchase of the cotton by the Government. These and other measures of less importance were, however, only palliatives for a situation which, had it continued, would have been fraught, with very serious consequences for the economic future of the country. Fortunately, it was' not prolonged for many months. The price of cotton, stimulated by the demand for war purposes, gradually recovered until by the end of 1915 it stood as high as before the war. At the same time, the presence of a large body of British troops involved considerable expenditure on labour and material for military works and on commodities of all kinds, which was defrayed by the British Government, thus contributing further to the rehabilitation of the country’s financial position. The combined result of forced economy, the recovery in the price of cotton and military expenditure, was to leave the country with a substantial balance in its favour by. the end of 1915. Arrears of mortgage annuities [3437 y-2]—4018 B House of Commons Parliamentary Papers Online. Copyright (c) 2006 ProQuest Information and Learning Company. All rights reserved.