Report of the Special Mission to Egypt under Lord Milner, and related papers [‎9v] (18/473)

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Examination of the “ Suspense Account ” allowed that it included—
(a.) About 1,500,000/E. spent on railway developments. These works were to a
large extent related to the defence of Egypt itself against invasion (which
was not in immediate prospect when Sir John Maxwell's proclamation of
1914 was issued), and would seem to possess considerable value to the
Egyptian Government for peace purposes.
(6.) About 500,000/E. military expenditure on suppression of the rising in
Darfur. But the Treasury had already ruled in 1916 (against the view of
the Egyptian Government) that these operations, though connected with
the war, were not a part of “ the present war ” within the meaning of the
proclamation, but were a local concern of tbe Egyptian and Sudan Govern
ments.
(c.) About 500,000/E. for increased cost of civil administration arising out of war
conditions.
(d.) About 155,000/E. for maintenance of interned aliens, political prisoners, &c.,
while in Egypt. All expenditure on internment camps in Egypt not
directly attributable to these, aliens, &.c., and all expenses in Malta (to
which these aliens were removed) have been borne bj the British Government,
though in principle the latter at all events would seem chargeable to Egypt.
6. Unless, therefore, it is held that the proclamation was tantamount to a
guarantee to indemnify the Egyptian Government against all expenditure connected
with the war—even against such items as have fallen upon the Governments of neutral
States—the larger part of the so-called “contribution” consists of charges which
properly fall upon the Egyptian Exchequer; so that the expectations of a generous
contribution to the cost of the war have not been fulfilled.
7. In this connection the following extract from the Note of the Financial Adviser
(Sir Paul Harvey) on the Egyptian Budget of 1920-21 is of interest:—
Supplement au Journal Officiel No. 29 du Jeudi l er Avril, 1920.
Note of the Financial Adviser on the Budget of 1920-21.
The economic situation of Egypt at the present day presents a number of
features of considerable interest. Egypt is one of the very few countries in this
hemisphere which derived little but economic advantage from the war. While the
citizens of every nation in Europe, whether belligerent or neutral, have suffered
heavily, if not from the operations of war itself, at least from increased taxation,
high prices and restraint of trade, Egypt has on the whole received substantial
benefits. The price of its chief product has risen to heights previously unknown,
taxation has remained nearly stationary, and its adoption as a base for military
operations has been a source of much commercial profit.
Some measure of this additional wealth may be gathered from the statistics
of Egypt’s foreign investments during the period 1915-19—
£E.
Investments by Government and Public Custodian
Investments on account of bank-note issue...
Investments by banks and mortgage companies
Investments by companies and private individuals.
13,000,000
65,000,000
60,000,000
14,000,000
Total
152,000,000
B.— Military charges in connection with the Civil disturbances of 1919.
8. The retention in Egypt of British and Australasian troops owing to the riots of
the spring of 1919, caused extra expenditure during that year amounting to about
6 millions, of which about ^ million relates to Australian and New Zealand troops.
The extra charge is so heavy because tfe great majority of the troops concerned were
withheld from demobilization, so that their whole cost was extra. The Treasury, in
August 1919, expressed to the Foreign Office the view that this military expenditure
due to domestic troubles might properly be reclaimed from Egypt, and the matter has