Thursday,21 February, 2019
Current issue | Issue 1339, (6 - 12 April 2017)
Thursday,21 February, 2019
Issue 1339, (6 - 12 April 2017)

Ahram Weekly

When history repeats itself

The problem of debt has been with Egypt since at least the later 19th century

The charm of the past would be wonderful if it was simply employed on the study of the arts and politics. To remain living in the past is a real problem. Another question arising from the past is whether history repeats itself, to which the answer is that it does but under different circumstances. Events and human instincts can be very similar at different times in history.

During the early days of the rule of the khedive Ismail in the later 19th century, for example, the financial and commercial activities of foreigners had increased in general, with Jews in particular playing leading roles in the country’s economy. The cotton famine, or “cotton panic”, as a result of the American Civil War in the 1860s led to an increase in the demand for Egyptian cotton and an increase in cotton prices.

Jewish businessmen lent money to Egyptian farmers to plant more cotton. With the end of the American Civil War, American cotton returned to world markets, and the new Egyptian cotton-growers became redundant, their cotton being less in demand and Egyptian cotton falling in price on world markets.

Reading the history of Egypt since the days of Said and Ismail Pasha in the 19th century, one sees the role played by Jewish financiers in the formation of Egypt’s national debt. Two years before the British occupation of Egypt in 1882, the Mosseri Bank, the Suares Bank, and the Egyptian Land Bank, all Jewish banks, were established, all of them making significant investments in Egyptian agriculture and real estate. These banks benefited from the system of foreign concessions in Egypt at the time.

1898 was later a landmark year in the history of Egypt’s economy, as the country’s then nominal ruler, Abbas Helmi II, rubber-stamped a decree creating the National Bank of Egypt. Sir Ernest Cassel represented British interests, and a group of Jewish-Egyptian financiers represented Egypt, among them the Suares brothers of Cairo and Constantine Salvagos of Alexandria. The establishment of the National Bank of Egypt was encouraged by Lord Cromer, Britain’s representative in Egypt and the country’s real ruler at the time. What made the bank different from others was the fact that its charter gave it the exclusive right to issue banknotes and to redeem them in gold, giving Britain full control over the Egyptian economy.

The earlier negotiations over the Egyptian debt were written up by Sir Charles Rivers Wilson, appointed the country’s minister of finance by the British, in his later memoirs, with Chapter XVI covering the crucial period between 1879 and 1881. This book, entitled Chapters from my Official Life, is crucial to understanding how the British took control of the Egyptian economy, and for this reason it should be translated into Arabic.

The prominent Egyptian historian Younan Labib Rizk (1933-2008) later revealed the role Rivers Wilson had played in the financial crises that took place in late 19th-century Egypt, discovering that his memoirs, published just before his death in 1916, were also published in excerpts in Al-Ahram in February 1917. Rizk showed the role Rivers Wilson played in enabling Britain to colonise Egypt.

Wilson’s first visit to Egypt was in 1876, and his appointment as a financial adviser to the khedive Ismail and later as a director of the Suez Canal Company was only the beginning of his involvement in the country. In 1878, he was selected as vice president of the commission to enquire into the Egyptian national debt. Further investigations were made, and a report was produced that led to a khedival decree that started a new period in Egypt.

The Goschen-Joubert Report, named after the British and French officials that produced it, recommended that foreign powers take control of Egypt’s finances in order to restore the country’s credit. The result was the establishment of Anglo-French control over the government, strengthening the already existing foreign-controlled Caisse de la Dette (national debt), and culminating in Ismail making over his estates to the nation and accepting the position of a constitutional sovereign, with Nubar Pasha as prime minister, Wilson as finance minister, and Ali Mubarak Pasha as minister of public works and education.

Nubar Pasha had earlier been responsible for transport and had been instrumental in the completion of the railway line between Alexandria and Suez. As prime minister, he sought to give Ismail the right to conclude treaties with foreign countries, to take out loans, and to increase the size of the country’s military. It was reported by his opponents that he received commissions during the negotiations of loans, leading in 1875 to his exclusion from the negotiations between Egypt and Britain over the sale of the Suez Canal shares.

Egyptians seem to love to honour the memory of their rulers, and today Nubar Pasha is the name of a major street in downtown Cairo. He has also given his name to new urban areas such as “New Nubaria”. People in the old days used to say that a statesman should be satisfied by seeing his name given to a street or a school. That, they said, should be enough.

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