/ SECOND STAGE OF INTERVENTION Ismail proposes a compromise to the creditors of Egypt and issues a decree appointing Cpmmission of the Public Debt — Proposal accepted by France, Austria, and Italy — England refuses to nominate a member of the Commission —Compromise rejected by French bondholders — International courts declare compromise invalid — Egyptian defeat in war with Abyssinia — Action of Nubar Pasha in Europe — Appointment of Commission of Inquiry— Publication of article in Nineteenth Century — True causes of Egyptian debt.

The respite afforded to Ismail Pasha by the Goschen-Joubert settlement proved of very short duration.

The settlement had made no provision for some ;50,ooo,ooo of unfunded debts. In as far as I can learn, the theory on which the distinction between the funded and unfunded debts was based, was that the former were contracted, however imprudently, for State purposes, and that the latter were incurred to meet the private requirements of the Khedive.

But, if I have made my meaning clear, Egypt and the Viceroy were so completely identified with one another, .under the system first established by Mahomet Ali, that no power, short of omniscience, could decide where the liabilities of Egypt ended or where the liabilities of the Khedive commenced. Messrs. Goschen and