WAR BOOM IN EGYPT

Dominion, Volume 10, Issue 3183, 6 September 1917, Page 9

WAR BOOM IN EGYPT

ABNORMAL INCREASE IN WEALTH ADVENTITIOUS PROSPERITY A MENACE (By Victor MacClure.) [Authorised for publication by the j.War Office] Despite Uto disturbing conditions created by tile world war, Egypt is able, lo sbow a gratifying increase iu the financial resources of her people. She- has been sin-, gulurly fortunate. .Although invasion has threatened her territories, not only lias tho thrust of (ho enemy been parried, but behind her well-guarded frontiers her people have enjoyed an unexpected p.dditiou to their wealth. Tho increase iu tho capital resources of Egypt since August, 1914, as shown by tho Budget Note of April last, appears to bo IKtlo less than thirty million pounds. While it is itsistcd upon by the, Financial Advisor that tho unexpectedly favourable economic condition of tho country must lie sot among the abnormal effects of tho war, and while facts are indicated that lend to reduce the value ■of the increase, as it shows superficially, there is every reason for the Egyptian people lo feel optimistic. " King Cotton. Among the reasons accounting for tho very strong financial position, there is put forward the exceptionally high prices prevailing in the cotton market. Tho demand for cotton has been so' great .that, at one period of last year, the; prices given for the Egyptian variety doubled, and rose to heights never touched sir.to tho Civil War in America. With regard to the prospect for this present crop, it is calculated that although it is relatively inferior in yield, the sale will realise' above forty millions, or about doublo that of last year. Tho demand made on the resources of Egypt and tho Sudan, by the military situation and the continued presence of British troops, has stimulated the activities of tho population, and this constitutes the eecoml fnotor leading to. the development of the financial strength of the country. The figure of thirty million pounds increase is arrived at by several methods of calculation; by adding the figures of the balance of trade to the sums remitted, to the country for military purposes; by statistics of increased note circulation, bank deposits, and repayment of debts; or, by the increase of sums invested abroad. There nmst.nlTvays be an uncertain clement in such calculation, but, taking a conservative estimate into consideration, tho results are near enough to show the figur» stated as reasonable.

The Budget Note points out thot no developments in the country's economic resources can lie looked for from this accession of- wealth, owing to the difficulty of obtaining the necessary material. In fact, this difficulty hinders, to ■ a certain extent, the proper upkeep of existing works, with a consequent deterioration. Much is being done in, investing abroad from this extra wealth; thus reducing the indebtedness to foreign sources and alleviating tho annual drain on tho country's income. Not only so, hut among the people themselves' there has-been a decrease of civil cases in the courts, showing that the increased income is being used tor paying off pri-,-vate debt.

The value of the imports of tlie.couu■try has increased to the extent of 69 per cent.', but the actual quantity has de-creased,:-and, therefore, it must not be assumed 'that the ' people are indulging in lavish expenditure. Although the imports of luxuries has increased and that of articles which-might be used for the uevelopment of the country has decreased, there; arc, to he set against anv uneasiness on that ground, the facts of the high prices and the special needs of the military forces calling for what might be termed, luxurious commodities. The Allied countries, aa time goes on, will absorb more- definitely the energies of their factories for work on material to be expended in -warfare, and wilt deflect these energies from tho making oT goods normally sent overseas, it is to be eipecteS thai The import of necessities to Egypt will further 'diminish in consequence, and that the country will bo thrown more on its own resources. The material necessary for upkeep and development -will naturally become more scarce, but, at tho same time, there will be the accumulation of funds in the country available for the resumption of suspended work, and for 1 meeting contingencies at the end of the war.

Financial Uncertainty. The Egyptian fiscal system is so conceived that it limits tho share of the public revenues, in the increased wealt,li of tho country to what can bo obtained by indirect taxation, such as from the Customs, from the profits on State domains, and from the expansion of tho paper currency. Tho mainstay of the revenue is the land tax, : which is unalterable, and though the accession of financial strength to tho Government is considerable, it is in no way proportionate to tho increased general wealth of tho country. Under an incomo tax or othor proportional taxation-, a, legitimate source of ievcime would have Ijeen available: as it stands tho largo increments whidi have accrued to cultivators and to contractors have 1 been free from taxation, except by the house and land taxes. Tho Government has borno in the past the burden of the metft 'important- dcvolopmcnt schemes; it has had to defrny the cost ot these schemes, which have added so much 'fertility and consequent wealth io tho country, at tho expense of administrative reforms in other directions; this because of tlio limited source of revenue. It would havo been, perhaps, more beneficial to the country pencrnliy if the fiscal system lifi-d permitted the tapping of the increased financial resources, so Unit a fund could havo been accumulated for the furtherance of contemplated development work. The burden thrown on Iho rovonuo is considerable; there is much, In the way of arrears of uokeej> outstanding, and the Lrecrvo Fund, although some millions greater than before tho war, must iiavo set against it these arrears and sumo other ! certain debts, of which ifco redemption or the silver coinage is only one. . Much of the iimtnciul uncertainty is due, of course, to tho uuforcsecu wlucli mnv occur as the result of war conditions While the Government might lio better off than it is, Uiero are considerations which mitigate Iho situation there is every prospect that Dm country will have repaid a good dr.nLor private debt, will have reduced by investments abroad the balance-of tho country's indebtedJi'esj to foreign sources, and will have in hand a largo reserve ready to meet contingencies and future productive expenditure On the whole, it cannot; be s.iid 'thill the outlook for Egynt is anything but smiling. The people liavo thn warning of pnst speculation during ii.nofcliov financial boom in the country, and tho lesson taught by the disastrous resells of that wave of iinconsidcred speculation. Tt is unlikely that, with such an «- ainplc before them, the people will allow themselves to -waste the wealth that tho fortune of war has bestowed upon Uiem. It is more likely that'Hioy will conserve their wealth for iho benefit of tho country goncrally.