THE SUEZ CANAL PURCHASE.

Globe, Volume V, Issue 531, 1 March 1876, Page 3

THE SUEZ CANAL PURCHASE.

(Economist.) The English Government have undertaken to give £4,000,000 for 176,602 shares of £2O each in the Suez Canal which belong to the Egyptian Government, and Messrs .Rothschild are to find the money—or as much of the money as the Khedive requires—immediately. As far as the money market is concerned, we do not apprehend it will have very much effect. Very little of the Khedive’s pressing debts are in Egypt itself ; most of them are in London or Paris, or elsewhere iu Europe, and the £4 000,000 will be used to pay off these. The effect, as far as it goes, will be to raise the value of money here, for the foreign holders of Egyptian debt paid by this means will have the power of taking money from England. But this will be only one item in the general exchange account of the country; it will not cause a drain of gold, and, therefore, will not be much felt. Of the consequences to our own finances we cannot speak fully till the bargain has been fully described. It is a much more complex one than the first bare announcement would lead us to imagine. The 176,602 are part of 400,000 shares of £2O each constituting the capital of fh's Canal company, but they have been dealt with very curiously. The Khedive wished to assist the company in 1869 in raising money, and therefore “cut off” as the phrase is, the coupons for twenty-five years and gave them to the company. The company then issued assignments (delegations is the French word, and the operation was a French operation) of these coupons, which are now running. We believe these coupons carry the whole income of the shares for twfnty-five years, but we cannot be quite sure, for that income is, by the constitution of the company, dealt with in a very complex way. First, it goes to pay 5 per cent interest on the capital; secondly, to pay off' a certain part of the shares annually, so that in ninety-nine years from the beginning they might be all paid off, the holders still retaining the right to dividend, however, to the end of the ninety-nine years ; thirdly, to pay a dividend, of which 13 per cent g( es to the Egyptian Government, 10 per cent to the founders, 2 per cent to the administrators, 2 per cent to the employees, and the rest, or 71 per cent, to the shareholders. And w r e are not sure if the pledged coupons take with them more than the 5 per cent, though we believe they do. As yet the shares have never paid as much as 5 per cent, so that the question has not arisen. As the English Government buy shares with an income thus alienated for twenty-five years, it might be inferred that they could get little or nothing for that time, but we are informed that the Khedive is really to pay us 5 per cent on our advances till we get an income from the shares. And the Khedive relinquishes also the reversion to them ; the right to dividends is not to be extinguished at the end of ninety nine years in their case as in that of the others ; they are to be perpetual, as far as the right to dividend is concerned, like English railway shares. So long, therefore, as the Khedive is able to pay 5 per cent we have a good interest for our advance ; and, as we have before shown, the shares are good holding property. As we elsewhere show, the Khedive has now an opportunity of reforming his finances ; if he does so, we need not fear any loss of money ; but the degree in which we are concerning ourselves in his affairs, and the extent to which we are “ indorsing him,” are very serious.