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United States Department of State / Papers relating to the foreign relations of the United States, transmitted to congress, with the annual message of the president, December 4, 1876

Egypt,   pp. 594-605 PDF (934.1 KB)

Page 599

and it is but just that she should retain a predominating influence over
the canal.
 The Khedive is still entitled to 15 per cent. of the excess profits after
paying the statutory 5 per cent. on the shares, and owns also 2,500 founder's
shares which also participate in these surplus profits. He owns jointly with
the company large tracts of land all along the canal, and finally the whole
property reverts to him at the expiration of ninetynine years from the date
of the company's concession, about eighty years from now.
 The Khedive's government thus remains the preponderating influence in the
affairs of the canal. England now possesses an important interest in the
original capital of the company; but out of a capital which has to be paid
off out of the profits of the company before the expiration of the lease,
amounting to about £13,000,000, or, according to some estimates, nearly
£16,000,000, she has only what is equivalent, £3,532,000, the
par value of the 176,602 shares. To give her complete control of the canal,
however, she has only to buy the balance of the 400,000 shares, say 223,398
shares, as only the holders of the original
400,000 shares have the power of voting at the meetings.
 The value of these shares to England is not to be measured by a money standard
entirely. The transaction is significant of the fact that the influence of
France in Egypt has given way to, and been in a great measure supplanted
by, that of England. France has only herself to blame for not being the owner
of these 176,602 shares to-day, as they were first offered to her on far
more favorable terms than Egypt finally made with England. On November 12,
the French house of Dervien & Co. were asked to negotiate the affair,
forty-eight hours only being given for consideration.
 The Egyptian government offered 10 per cent. for the nineteen years during
which the coupons were detached. The next day, November 13, 11 per cent.
was offered by the finance minister. Messrs. Dervien & Co.
submitted the operations to a group of Paris bankers, who listened to, debated,
and rejected it. The Egyptian government extended the time to the 14th November,
and another group of the leading Paris bankers was invited to co-operate,
but with no success. On the 19th November, the representative of Messrs.
Dervien & Co. at Alexandria telegraphed to Paris that the Khedive did
not wish to sell his shares; that he only desired an advance of 85,000,000
francs for three months, guaranteed by the deposit of his shares, and the
transfer of 15 per cent. of the subsidy which the Suez Company allot to the
Egyptian government. If at the end of three months the repayment was not
made, the pledge became the property of the lenders.
 Messrs. Dervien & Co. accepted the proposition on condition that the
financial groups at Paris would support them. They, however, seemed to have
received no support or encouragement whatever, and the time for ratification
expired on the 26th November, at 12 o'clock. In the mean time England was
not ignorant of the situation, and was kept fully informed by telegraph by
General Stanton, her agent and consulgeneral in Egypt, of the stage of the
negotiations with the French bankers. On the final failure of the negotiations
England was prepared to purchase the Khedive's shares, paying therefor the
market-value, 600 francs, instead of the par value, 500 francs, and accepting
5 per cent., instead of 10 and 11 per cent. offered to the French bankers.
 England has thus treated Egypt fairly and justly in this transaction, while
at the same time she has made a most advantageous arrangement for herself,
both politically and financially. Egypt has done exceed-

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