EGYPT IN DEFAULT.

New Zealand Times, Volume XXXIII, Issue 5243, 12 January 1878, Page 1 (Supplement)

EGYPT IN DEFAULT.

v (From the World, Nov. 7.) The readers of the World are quite prepared to expect from our previous warnings that Egypt would be unable to pay; but that her actual default is.now ah accomplished fact will doubtless be startling,, news to many. Egypt has officially notified that the payment on her Nine per Cent, drawn bonds is postponed for six months to May 22, 1878, and that the dividend on the unified debt, due by a recent arrangement on'November 1, is postponed for six weeks, until "December 15 next. This information has had at present but little effect on market : quotations, beyond making existing, prices-flat and; heavy. With regard to the Nine per Cents, the . bonds were drawn on May 22 last; and as they are to be paid off at 80, on which bonds the holder of the drawn Nine per Cents will lose one year’s interest, this will bring the redemption price down to 71. Why these bonds should be quoted at 75 in the market is simply inexplicable. The holder of a drawn Egyptian bond is in a very unfortunate position, as he holds a security on which all interest has ceased, and one which is no longer negotiable. Talcing into consideration the extreme doubt of its future payment, we should say that a Nine per Cent.. Egyptian drawn bond would now be well sold at 60, supposing it could be sold on any terms. • With regard to the Unified dividend, a new decree has been signed,, fixing the date of interest payment on November 1 and May I. The dividend due from July 15 last to November 1 amounts to 1J per cent. ; this on £59,000,000 of Unified comes to £1,032,500. According to the official return issued by the Council of Foreign Bondholders, received by them from the International Financial Commission, the balance in hand towards the Unified dividend, after paying the preference stock, amounted to £190,000, so that the sum wanted on November 1 to meet the Unified dividend is no'less than £812,500; to raise .this the dividend is postponed nntil December TS.next. By then, no. doubt, the money will •be , found ; for November and December are ■the two months in the year that the Egyptian revenue is most productive, and as the French finance companies only want to pay on the bonds held by the public, the coupons on their own stock could stand over. The next three months’ dividend on the Unified will, of hoarse, come duo on May 1 ; the next Railway ‘Preference dividend April 15. This will take, aay, £2,300,000 ; but as the Commission will only then have the collections for four and a half months, namely, from December 15 to May I, and then the most unproductive part of the year, we may safely predict that there will then be barely enough for the Railway Preference stock, and that for the Unified there will not then be one shilling in hand.

We suspect the facts will shortly reveal themselves that Egypt has not sufficient revenue to pay for her administration. Mr. Cave, Mr. Gosohen, Mr. Kivers-Wilson, and lastly, the appointed Financial Commission, have all stated they know nothing of the revenues of Egypt., Mr. Gosohen consolidated a mass of floating debt on the plan of our Great Northern Hailway Company's: that A, ,£60,000,0i)0 of Unified, get nothing until B, £l7 000,000 of Preference, receive 5 per pent., Couple this with a . scheme for the rapid extinction of the loans floated hy Friihling and Gosohen, and the reorganisation is complete. Now when the Khedive signed this reorganisation scheme on November 6, 1876, one year yesterday, he refused, unless Mr. Gosohen allowed the fresh issue of £2,000,000 railway Preference stock beyond the necessary - amount. Phis gave the 1 Khedive £1 000,000 cash a year back in hand to start with. Another million is wanted for interest and an aoknowloded deficit of £3,500,000, which the Commission say must be dealt with, but the settlement of which is deterred until April next. We discover that the indisputable 1 deficit in twelve months has amounted to £s,OOOJOOO,'which'is about the item that has been distributed in interest since Mr. Gosohen’s scheme came into force. Therefore, so far as Egypt is concerned, not a fraction of her,revenue, that we can discover, has been available for dividends. For the completion of every dividend that has been paid

during the past twelve months a lump sum has always been paid to the Commissioners by the Egyptian Finance Minister. He, no doubt, must have obtained it by piling up £3,500,000 of floating debt that must soon be dealt with. In plain words, the past dividends have all been borrowed. In face of all these difficulties, Egypt has this year had a deficient Nile, which means bad crops next year, and has an internal and an external war going on. Putting the threatened Abyssinian invasion down for nothing, Egypt must employ all her resources in the Russian war. She has 2ii,000 men in the field, under the command of Prince Hassau, and her fleet has played a most prominent part throughout the campaign—conveyed all the Turkish army that vacated Montenegro ; and as the Khedive is nothing more than a Turkish' pasha, he must stake his last soldier and liis last guinea in support of the Sultan. The Russian war is daily developing itself more and more into a contest between the Mahometan and Russian, Church ; and as the Khedive is the erfime de la erfime of a Mahometan and a Turo de pur sang, while in reality he is only governing, a Turkish province, it is a certainty that he will take a more prominent part in the war than he has hitherto done. . This is anything but a bright look-out for .Egyptian bondholders ; and we advise all our readers to get rid of their holdings whilst something is bid for them. The Times of Saturday contained a very elaborate summary of an article, translated from the Journal des Dihats, and written by M. Leon Say, a former Finance Minister. From this it appears . that the French-Egyptiau Syndicate, headed by the Crddit Foncier,. the Socidtd Gdhdrale, and a group of foreign bankers, have sunk some £60,000,000 (collected, from the French public in the shape, of deposits) in Egyptian bonds. The Crddit Foncier wished to pay its next dividend, not iii cash, but in Egyptian stock ; but the French Government stopped what M. Leon Say has since described as a swindle.' He concludes his review by advising all respectable and honest men to disconnect themselves with the Crhdit.Foncier,’s financial conjuring,and says the days of financial juggling must end. Strongeror more distinct remarks on the financial condition of a country we never yet read. All one hears advanced in favor of Egypt is an English occupation : this'could only occur in a general war. If England occupies Egypt it will be to retain her right of ' way to India, not to guarantee the Egyptian debt, for England does not even' guarantee the debts of her own colonies, therefore the bondholders could hope for nothing ■from this country; and she could not give Egypt a more imposing financial administration than the present International Financial Commission. ,