THE SUEZ CANAL

Evening Post, Volume CXXVII, Issue 3, 5 January 1939, Page 8

THE SUEZ CANAL

FINANCE AND OPERATION

SIXTY-NINE YEARS OLD

THE BRITISH SHARE

The Suez Canal is sixty-nine years old, writes N. P. Macdonald in the "Christian Science Monitor." But its most important birthday will be in 1968, when it reaches the age of 99 and the concession granted by the Egyptian Government to the Canal Company expires. What will then happen to this strip of water which is sometimes called the lifeline of the British Empire? Or will its future have been decided long before that by the pressure of political events in Europe?

By the terms of the Anglo-Egyptian Treaty of 1936, the Suez Canal is to be protected by British armed forces until such iime as the Egyptian army and air force are able to undertake this' task. During the war in Ethiopia, tension between Britain and Italy led to rumours, which the Egyptian Press would not deny, that Britain was building fortifications in the Canal Zone.

The political situation in Egypt itself makes the future of ; the Suez Canal uncertain. Britain will never abandon the canal to an unfriendly Egypt, and she cannot, therefore, afford .to let the Egyptians adopt too independent a foreign policy. As each of the shares in the Canal Company is now. worth approximately 24,000 francs, the expiry of the concession in thirty years' time causes some anxiety to the shareholders,' and also to the French management of the company in their office at No. 1 Rue d'Astorg, Paris. PROPOSAL DEFEATED. It was once proposed that the Egyptian Government should extend the concession for another forty years, to 2008. According to this plan, which concession for another forty years, to 2008. According to this plan, which was put forward in 1910, Egypt was to be paid £4,000,000 in cash, and receive, after 1921, a proportion of ihe net profits on a rising scale. For 1937 this proportion would have been between £600,000 and £700,000. . - ... The Egyptian Government approved the scheme in principle, but it was defeated in the General Assembly by 66 votes to 1, Zaghloul Pasha being leader of the Opposition. A Suez Canal was planned, and even begun, by King Seti, in 1340 B.C. In the 3269 years that elapsed between the Kirig's engineering efforts and the final opening of the waterway in 1869, when the Empress Eugenic sailed through the canal on November 17 in the French Imperial yacht, many had planned the cutting of a canal, including Napoleon. But, where they had failed, the Frenchman Ferdinand de Lesseps succeeded, and the sea route between London and Bombay was shortened by 4500 miles as a result. De Lesseps's success with Suez made his subsequent failure and dis-i grace in the Panama Canal project the more tragic. THE DISRAELI PURCHASE. At the outset, the Egyptian Government had a financial interest in the Suez Canal, but they surrendered it in 1875. when Disraeli, who borrowed the money from the Rothschilds, paid the Khedive Ismail £4,000,000 for 176,602 of the total 400,000 shares in the Canal Company. Although much criticised at the time, Disraeli's investment has proved abundantly worthwhile for Britain, the shares in 1937 having been worth approximately £78,000,000. It is widely believed that Britain controls the Suez Canal. Actually, as a single holder of shares, she has 25 votes, the maximum number allowed to the possessor of more than 25 shares, and she is represented on the board by only ten directors out of a I total of 32, against nineteen Frenchmen, two Egyptians, and one Dutchman. • Among, fhe British directors are Sir lan Malcolm, Lord Cromer, the British Government representatives, and Lord Cadman, chief of the AngloIranian Oil Company. The oil tankers of this concern provide much of the canal traffic. The French directors include General Maxime Weygand, former Chief of the French General Staff. Suez Canal directorships are most desirable, for 2 per cent, of the company's annual profits is set aside for remunerations of the directors, each of whom has, in recent years, received between £3000 and | £4000 a year. ' • ' RISE IN TONNAGE. The total tonnage which passed through the canal in 1937 showed an| increase of 12.7 per cent, being 36,491,000, or 4,112,000 more than in 1936. Of this total, British ships accounted for 17,254,000 tons, being followed by Italy with 5,866,000 tons, and Germany with a tonnage of 3,313,000. The largest users of the waterway in 1937 were the Lloyd Triestino, with 3,913,000 tons; the -British Tanker Company, 3,019,000 tons, and the P. and O. and associate lines with 2,913,000 tons. Britain's share of traffic through the Suez Canal, generally considered to be a good barometer of world trade, decreased from 54 per cent, of the total in 1934 to 46 per cent, in 1936, the balance being supplied by 21 other nations. During 1935 and 1936, 381 fewer ships flying the Red Ensign passed through the canal, a decrease of 7.5 per cent, on the normal total. The 1936 figures, largely owing to the tensiqn between Britain and Italy at that time, were the lowest recorded since 1926, except for 1932, when world depression was at its depths. But, although the number of ships decreased, the war in Ethiopia provided co.*ipensa.tion to the Canal Company for the loss of more normal traffic. Each week during the campaign the Italians paid £50,000 in dues for troopships and supply -vessels bound to and from East Africa. CONVENTION PROVISIONS. The war caused many people to wohder whether the canal should be closed to Italy, declared by the League of Nations to be the aggressor State. According to the Convention reached at Constantinople in 1888, between Great Britain, Germany, Austria, Spain, France, Italy, Holland, Russia, and Turkey, it was agreed that the canal should "always be free and open in time of war as in time of peace" to warships and merchant vessels of all nationalities.

During the Spanish-American War of 1898 some warships set out from Barcelona for the Philippine Islands and on arriving at Port Said sought permission to refuel. In the interests of neutrailty, this permission was refused, since the ships had sufficient fuel aboard to enable them to return to Barcelona, which they were forced to do.

"When Russia fought Japan early in this century, it was proposed to close the Suez Canal to Russian warships. Nothing came of this, and the Tsar's

fleet sailed through the waterway to its defeat in the Pacific.

The volume of products which passes through the waterway includes much of the world's rubber and tea, i 60. per cent, of' its tin and wolfram, 80 per cent, of its supply of raw silk, i and 35 per cent, of its wool. ! TAX ON PASSENGERS. All ships passing through the j canal have to declare the number of passengers, and the tonnage of cargo they are carrying. For each passenger a tax of 6s has to be paid, and a similar sum for each ton of cargo (Suez Canal ton equals 100 cubic feet). For ships in ballast the charge is 3s per ton. These dues are paid either in English currency or Egyptian piastres. It is often said that the Canal Com-' pany makes abnormally high profits. But out of these profits 100 pilots arid 2000 other employees have to be paid, and a waterway 100 miles long has to be kept open, in good repair, arid constantly improved. Since the Suez Canal was built, the company has spent 1,000,000,000 gold francs in improving it.

In any case the canal dues have little effect, on the ultimate retail prices of commodities passing through it. The wholesale price of wool would be only .3 , per cent lower if it travelled by a longer route; sugar, which is bulky, would be 2.8 per cent. cheaper, rice 3.1 per cent., and jute only 1.6 per cent, lower in cost.