2 and other debts were collected, and tlie restriction of commercial credits contributed to place the import trade on a healthier basis than before the war.

These conditions continued to manifest themselves in a more and more accentuated form throughout the duration of the war. The price of cotton rose higher each year, with the result that the value of the exports steadily increased, notwithstanding reductions in the output, due partly to unfavourable climatic conditions and damage by pests, partly to restriction on the area planted in cotton in 1915 and 1918. The 1918 cotton crop was purchased by the British and Egyptian Governments at a price more than double that which prevailed before the war. Military demands operated with greater pressure on the labour and products of the country, which were jiaid for at enhanced prices. The incj‘ease thus brought about in the spending power of the population could not find its normal outlet in expenditure on imports, owing to the restrictions in force in other countries on the export of many important commodities. The value of the imports showed, it is true, a rein'arkable expansion, due 2Jartly to increase in prices all round, partly to increased quantities of goods, such as cotton fabrics, in which commerce was unrestricted, and partly to supplies destined for the army. But this expansion fell far short of that which took place in the purchasing power of the country.

The general financial development thus outlined has not materially altered in tendency during the year 1919. Military expenditure has declined with the removal of troops, but on the other hand the price of Egyptian cotton has risen to unprecedented heights, being now (April 1920) in the neighbou-ihood of ten times its pre-war value. The result of the year is to show a further considerable excess of exports, visible and invisible, over imports and foreign charges, and thereby to add to the reserve of purchasing powder accumulated by the country during the war. This reserve of purchasing power is either held by the people in the form of notes, or is deposited with banks, or has been employed in repayment of debt, or, finally, has been remitted abroad direct for investment. In reality, however, all these forms of employment of money resolve themselves into that of investment abroad. Thus the note circulation, the expansion of which is set foi'th in detail in the following section of this report, is almost entirely covered by British Treasury bills; and the considerable funds deposited in banks have been remitted by the latter to London and Paris, and there invested in war loans and shortterm securities. Large sums also have been employed in repayment of debt to banks, mortgage companies and others, who, in default of demand for fresh accommodation, have been unable to re-employ the money in the countiy. It has consequently been either deposited in banks, and invested by the latter in the manner a,bove mentioned, or invested abroad direct by the holders themselves. Finally, direct investment has been effected on a considerable scale, chiefly in British war securities, but also to some extent in French and Italian loans, while Egyptian Government stocks and shares in Egyptian companies have, in addition, been bought up on the London and Paris markets for Egyptian account. The Government has invested sums out of its surplus revenues, the Public Custodian out of the proceeds of sale of enemy property, private companies and persons out of their profits and savings. Since, then, the entire savings of the country have been, directly or indirectly, invested abroad, no better measure of these savings can be found than the total of the foreign investments effected on Egyptian account since the beginning’ of the war. An inquiry which has been made in connection with these investments shows that they c.an be roughly estimated at a sum not inferior to £E. 150,000,000. chiefly in the form of British Treasury bills and other short-term securities.

It wdll be evident that the large balance thus accumulated in favour of Egypt can by no means be considered as consisting entirely of profits. It is due to a consiaerable extent to forced reduction in consumption of imported commodities, to the compulsory use of paper currency in place of gold, to the postponement of maintenance and renewals of public wmrks, railways, &c., and to the large inroads which have been made in the country’s resources in material of innumerable kinds for military purposes. Heavy liabilities have been accumulated in respect of many of these items which will have to be met in the near future. A further large portion of the accumulated surplus will no doubt be devoted to the purchase of more or less necessary commodities of all kinds, of which the importation was restricted during the war, while, if free gold exports are again permitted from the United Kingdom, gold wdll be demanded to replace a great part of the notes in circulation.

It also follows from these considerations that, although Egypt is now a creditor in respect of this large balance, the latter cannot l3e regarded for practical purposes House of Commons Parliamentary Papers Online. Copyright (c) 2006 ProQuest Information and Learning Company. All rights reserved.