[395] 'Travelling in the West of Canada, I have visited only one farm of less than a thousand acres. According to the census of the Dominion of Canada, in 1881, when the census was taken, no more than 9,077 farmers occupied 2,384,337 acres of land between them; accordingly, the share of an individual (farmer) amounted to no less than 2,047 acres--in no state of the Union is the average anywhere near that' (Sering, op. cit., p.

376). In the early eighties, farming on a large scale was admittedly not very widely spread in Canada. But already in 1887, Sering describes the 'Bell Farm', owned by a limited company, which comprised no fewer than 56,700 acres, and was obviously modelled on the pattern of the Dalrymple farm. In the eighties, Sering, who regarded the prospects of Canadian compet.i.tion with some scepticism, put the 'fertile belt' of Western Canada at three-fifths of the entire acreage of Germany, and estimated that actually only 38,400,000 acres of this were arable land, and no more than 15,000,000 acres at best were prospective wheat land (Sering, op. cit., pp. 337-8). The _Manitoba Free Press_ in June 1912, worked out that in summer, 1912, 11,200,000 acres were sown with spring wheat in Canada, as against 19,200,000 acres under spring wheat in the United States. (Cf. _Berliner Tageblatt, Handelszeitung_, No. 305, June 18, 1912.)

[396] Sering, op. cit., pp. 361 ff.

[397] Ernst Schultze, '_Das Wirtschaftsleben der Vereinigten Staaten_', _Jahrb. f. Gesetzg., Verw. u. Volkswirtschaft 1912_, no. 17, p. 1724.

[398] Article 9.

[399] 'Moshesh, the great Basuto leader, to whose courage and statesmanship the Basutos owed their very existence as a people, was still alive at the time, but constant war with the Boers of the Orange Free State had brought him and his followers to the last stage of distress. Two thousand Basuto warriors had been killed, cattle had been carried off, native homes had been broken up and crops destroyed. The tribe was reduced to the position of starving refugees, and nothing could save them but the protection of the British government which they had repeatedly implored' (C. P. Lucas, _A Historical Geography of the British Colonies_, part ii, vol. iv (Geography of South and East Africa), Oxford, 1904, p. 39).

[400] 'The Eastern section of the territory is Mashonaland where, with the permission of King Lobengula, who claimed it, the British South Africa Company first established themselves' (ibid., p. 72).

_CHAPTER x.x.x_

INTERNATIONAL LOANS

The imperialist phase of capitalist acc.u.mulation which implies universal compet.i.tion comprises the industrialisation and capitalist emanc.i.p.ation of the _hinterland_ where capital formerly realised its surplus value.

Characteristic of this phase are: lending abroad, railroad constructions, revolutions, and wars. The last decade, from 1900 to 1910, shows in particular the world-wide movement of capital, especially in Asia and neighbouring Europe: in Russia, Turkey, Persia, India, j.a.pan, China, and also in North Africa. Just as the subst.i.tution of commodity economy for a natural economy and that of capitalist production for a simple commodity production was achieved by wars, social crises and the destruction of entire social systems, so at present the achievement of capitalist autonomy in the _hinterland_ and backward colonies is attained amidst wars and revolutions. Revolution is an essential for the process of capitalist emanc.i.p.ation. The backward communities must shed their obsolete political organisations, relics of natural and simple commodity economy, and create a modern state machinery adapted to the purposes of capitalist production. The revolutions in Turkey, Russia, and China fall under this heading. The last two, in particular, do not exclusively serve the immediate political requirements of capitalism; to some extent they carry over outmoded pre-capitalist claims while on the other hand they already embody new conflicts which run counter to the domination of capital.

These factors account for their immense drive, but at the same time impede and delay the ultimate victory of the revolutionary forces. A young state will usually sever the leading strings of older capitalist states by wars, which temper and test the modern state's capitalist independence in a baptism by fire. That is why military together with financial reforms invariably herald the bid for economic independence.

The forward-thrusts of capital are approximately reflected in the development of the railway network. The permanent way grew most quickly in Europe during the forties, in America in the fifties, in Asia in the sixties, in Australia during the seventies and eighties, and during the nineties in Africa.[401]

Public loans for railroad building and armaments accompany all stages of the acc.u.mulation of capital: the introduction of commodity economy, industrialisation of countries, capitalist revolutionisation of agriculture as well as the emanc.i.p.ation of young capitalist states. For the acc.u.mulation of capital, the loan has various functions: (_a_) it serves to convert the money of non-capitalist groups into capital, i.e.

money both as a commodity equivalent (lower middle-cla.s.s savings) and as fund of consumption for the hangers-on of the capitalist cla.s.s; (_b_) it serves to transform money capital into productive capital by means of state enterprise--railroad building and military supplies; (_c_) it serves to divert acc.u.mulated capital from the old capitalist countries to young ones. In the sixteenth and seventeenth centuries, the loan transferred capital from the Italian cities to England, in the eighteenth century from Holland to England, in the nineteenth century from England to the American Republics and Australia, from France, Germany and Belgium to Russia, and at the present time [1912] from Germany to Turkey, from England, Germany and France to China, and, via Russia, to Persia.

In the Imperialist Era, the foreign loan played an outstanding part as a means for young capitalist states to acquire independence. The contradictions inherent in the modern system of foreign loans are the concrete expression of those which characterise the imperialist phase.

Though foreign loans are indispensable for the emanc.i.p.ation of the rising capitalist states, they are yet the surest ties by which the old capitalist states maintain their influence, exercise financial control and exert pressure on the customs, foreign and commercial policy of the young capitalist states. Pre-eminently channels for the investment in new spheres of capital acc.u.mulated in the old countries, such loans widen the scope for the acc.u.mulation of capital; but at the same time they restrict it by creating new compet.i.tion for the investing countries.

These inherent conflicts of the international loan system are a cla.s.sic example of spatio-temporal divergencies between the conditions for the realisation of surplus value and the capitalisation thereof. While realisation of the surplus value requires only the general spreading of commodity production, its capitalisation demands the progressive supercession of simple commodity production by capitalist economy, with the corollary that the limits to both the realisation and the capitalisation of surplus value keep contracting ever more. Employment of international capital in the construction of the international railway network reflects this disparity. Between the thirties and the sixties of the nineteenth century, railway building and the loans necessary for it mainly served to oust natural economy, and to spread commodity economy--as in the case of the Russian railway loans in the sixties, or in that of the American railways which were built with European capital. Railway construction in Africa and Asia during the last twenty years, on the other hand, almost exclusively served the purposes of an imperialist policy, of economic monopolisation and economic subjugation of the backward communities. As regards Russia's railroad construction in Eastern Asia, for instance, it is common knowledge that Russia had paved the way for the military occupation of Manchuria by sending troops to protect her engineers working on the Manchurian railway. With the same object in view, Russia obtained railway concessions in Persia, Germany in Asia Minor and Mesopotamia, and Britain and Germany in Africa.

In this connection, we must deal with a misunderstanding concerning the capital investments in foreign countries and the demand of these countries for capital imports. Already in the early twenties of the last century, the export of British capital to America played an important part, being largely responsible for the first genuine industrial and commercial crises in England in 1825. Since 1824, the London stock exchange had been flooded with South American stocks and shares. During the following year, the newly created states of South and Central America raised loans in London alone for more than 20,000,000, and in addition, enormous quant.i.ties of South American industrial shares and similar bonds were sold. This sudden prosperity and the opening up of the South American markets in their turn called forth greatly increased exports of British commodities to the Latin Americas. British commodity exports to these countries amounted to 2,900,000 in 1821 which had risen to 6,400,000 by 1825.

Cotton textiles formed the most important item of these exports; this powerful demand was the impetus for a rapid expansion of British cotton production, and many new factories were opened. In 1821, raw cotton to the value of m. 129 was made up in England, and in 1826 the amount had risen to m. 167.

The situation was thus fraught with the elements of a crisis. Tugan Baranovski raises the question: 'But from where did the South American countries take the means to buy twice as many commodities in 1825 as in 1821? The British themselves supplied these means. The loans floated on the London stock exchange served as payment for imported goods. Deceived by the demand they had themselves created, the British factory-owners were soon brought to realise by their own experience that their high expectations had been unfounded.'[402]

He thus characterises as 'deceptive', as an unhealthy, abnormal economic phenomenon the fact that the South American demand for English goods had been brought about by British capital. Thus uncritically he took over the doctrine of an expert with whose other theories he wished to have nothing in common. The opinion had been advanced already during the English crisis of 1825 that it could be explained by the 'singular'

development of the relations between British capital and South American demand. None other than Sismondi had raised the same question as Tugan Baranovski and given a most accurate description of events in the second edition of his _Nouveaux Principes_:

'The opening up of the immense market afforded by Spanish America to industrial producers seemed to offer a good opportunity to relieve British manufacture. The British government were of that opinion, and in the seven years following the crisis of 1818, displayed unheard-of activity to carry English commerce to penetrate the remotest districts of Mexico, Columbia, Brazil, Rio de la Plata, Chile and Peru. Before the government decided to recognise these new states, it had to protect English commerce by frequent calls of battleships whose captains had a diplomatic rather than a military mission. In consequence, it had defied the clamours of the Holy Alliance and recognised the new republics at a moment when the whole of Europe, on the contrary, was plotting their ruin. But however big the demand afforded by free America, yet it would not have been enough to absorb all the goods England had produced over and above the needs of consumption, had not their means for buying English merchandise been suddenly increased beyond all bounds by the loans to the new republics. Every American state borrowed from England an amount sufficient to consolidate its government. Although they were capital loans, they were immediately spent in the course of the year like income, that is to say they were used up entirely to buy English goods on behalf of the treasury, or to pay for those which had been dispatched on private orders. At the same time, numerous companies with immense capitals were formed to exploit all the American mines, but all the money they spent found its way back to England, either to pay for the machinery which they immediately used, or else for the goods sent to the localities where they were to work. As long as this singular commerce lasted, in which the English only asked the Americans to be kind enough to buy English merchandise with English capital, and to consume them for their sake, the prosperity of English manufacture appeared dazzling. It was no more income but rather English capital which was used to push on consumption: the English themselves bought and paid for their own goods which they sent to America, and thereby merely forwent the pleasure of using these goods.'[403]

From this Sismondi drew the characteristic conclusion that the real limits to the capitalist market are set by income, i.e. by personal consumption alone, and he used this example as one more warning against acc.u.mulation.

Down to the present day, the events which preceded the crisis of 1825 have remained typical for a period of boom and expansion of capital, and such 'singular commerce' is in fact one of the most important foundations of the acc.u.mulation of capital. Particularly in the history of British capital, it occurs regularly before every crisis, as Tugan Baranovski himself showed by the following facts and figures: the immediate cause of the 1836 crisis was the flooding of the American market with British goods, again financed by British money. In 1834, U.S. commodity imports exceeded exports by m. 12 but at the same time their imports of precious metal exceeded exports by nearly m. 32. Even in 1836, the year of the crisis itself, their surplus of imported commodities amounted to m. 104, and still the excess of bullion imported was m. 1. This influx of money, no less than the stream of goods, came chiefly from England, where U.S. railway shares were bought in bulk. 1835/6 saw the opening in the United States of sixty-one new banks with a capital of m. 104, predominantly British. Again, the English paid for their exports themselves. The unprecedented industrial boom in the Northern States of the Union, eventually leading to the Civil War, was likewise financed by British capital, which again created an expanding market for British industry in the United States.

And not only British capital--other European capitals also made every possible effort to take part in this 'singular commerce'. To quote Schaeffle, in the five years between 1849 and 1854, at least m. 100 were invested in American shares on the various stock exchanges of Europe. The simultaneous revival of world industry attained such dimensions that it culminated in the world crash of 1857.--In the sixties, British capital lost no time in creating similar conditions in Asia as well as the United States. An unending stream was diverted to Asia Minor and East India, where it financed the most magnificent railroad projects. The permanent way of British India amounted in 1860 to 844 miles, in 1870 to 4,802 miles, in 1880 to 9,361 miles and in 1890 to 16,875 miles. This at once increased the demand for British commodities. No sooner had the War of Secession come to a close, than British capital again flowed into the United States. It again paid for the greater part of the enormous railroad constructions in the Union during the sixties and seventies, the permanent way amounting in 1850 to 8,844 miles, in 1860 to 30,807 miles, in 1870 to 53,212 miles, in 1880 to 94,198 miles, and in 1890 to 179,005 miles. Materials for these railways were also being supplied by England--one of the main causes for the rapid development of the British coal and iron industries and the reasons why these industries were so seriously affected by the American crises of 1866, 1873 and 1884. What Sismondi considered sheer lunacy was in this instance literally true: the British with their own materials, their own iron etc., had built railroads in the United States, they had paid for the railways with their own capital and only forwent their 'use'. In spite of all periodical crises, however, European capital had acquired such a taste for this madness, that the London stock exchange was seized by a veritable epidemic of foreign loans in the middle of the seventies. Between 1870 and 1875, loans of this kind, amounting to m.

260, were raised in London. The immediate consequence was a rapid increase in the overseas export of British merchandise. Although the foreign countries concerned went periodically bankrupt, ma.s.ses of capital continued to flow in. Turkey, Egypt, Greece, Bolivia, Costa Rica, Ecuador, Honduras, Mexico, Paraguay, Peru, St. Domingo, Uruguay, and Venezuela completely or partially suspended their payments of interest in the late seventies. Yet undeterred by this, the fever for exotic state loans burst out again at the end of the eighties--the South American states and South African colonies were lent immense quant.i.ties of European capital. In 1874, for instance, the Argentine Republic borrowed as much as m. 10 and the loan had risen to m. 59 by 1890.

England built railways with her own iron and coal in all these countries as well, paying for them with her own capital. In 1885, the Argentine permanent way had been 1,952 miles, in 1893 it was 8,557 miles.

Exports from England were rising accordingly:

----------------------------

1886

1890 ----------+--------+--------

m.

m.

Iron

218

316 Machinery

10

164 Coal

9

19 ----------------------------

British total exports (mainly to the Argentine) amounted to m. 47 in 1885 and to m. 107 a mere four years later.

At the same time, British capital flowed into Australia in the form of state loans. At the end of the eighties the loans to the three colonies Victoria, New South Wales and Tasmania amounted to m. 112, m. 81 of which were invested in railway construction. The permanent way of Australia extended over 4,900 miles in 1880, and over 15,600 miles in 1895.

Britain, supplying capital and materials for these railways, was also embroiled in the crises of 1890 in the Argentine, Transvaal, Mexico, Uruguay, and in that of 1893 in Australia.

The following two decades made a difference only in so far as German, French and Belgian capital largely partic.i.p.ated with British capital in foreign investments, while railway construction in Asia Minor had been financed entirely by British capital from the fifties to the late eighties. From then on, German capital took over and put into execution the tremendous project of the Anatolian railway. German capital investments in Turkey gave rise to an increased export of German goods to that country.

In 1896, German exports to Turkey amounted to m. 14, in 1911 to m.

565. To Asiatic Turkey, in particular, goods were exported in 1901 to the value of m. 06 and in 1911 to the value of m. 185. In this case, German capital was used to a considerable extent to pay for German goods, the Germans forgoing, to use Sismondi's term, only the pleasure of using their own products.

Let us examine the position more closely:

Realised surplus value, which cannot be capitalised and lies idle in England or Germany, is invested in railway construction, water works, etc. in the Argentine, Australia, the Cape Colony or Mesopotamia.

Machinery, materials and the like are supplied by the country where the capital has originated, and the same capital pays for them. Actually, this process characterises capitalist conditions everywhere, even at home. Capital must purchase the elements of production and thus become productive capital before it can operate. Admittedly, the products are then used within the country, while in the former case they are used by foreigners. But then capitalist production does not aim at its products being enjoyed, but at the acc.u.mulation of surplus value. There had been no demand for the surplus product within the country, so capital had lain idle without the possibility of acc.u.mulating. But abroad, where capitalist production has not yet developed, there has come about, voluntarily or by force, a new demand of the non-capitalist strata. The consumption of the capitalist and working cla.s.ses at home is irrelevant for the purposes of acc.u.mulation, and what matters to capital is the very fact that its products are 'used' by _others_. The new consumers must indeed realise the products, pay for their use, and for this they need money. They can obtain some of it by the exchange of commodities which begins at this point, a brisk traffic in goods following hard on the heels of railway construction and mining (gold mines, etc.). Thus the capital advanced for railroad building and mining, together with an additional surplus value, is gradually realised. It is immaterial to the situation as a whole whether this exported capital becomes share capital in new independent enterprises, or whether, as a government loan, it uses the mediation of a foreign state to find new scope for operation in industry and traffic, nor does it matter if in the first case some of the companies are fraudulent and fail in due course, or if in the second case the borrowing state finally goes bankrupt, i.e. if the owners sometimes lose part of their capital in one way or another. Even the country of origin is not immune, and individual capitals frequently get lost in crises. The important point is that capital acc.u.mulated in the old country should find elsewhere new opportunities to beget and realise surplus value, so that acc.u.mulation can proceed. In the new countries, large regions of natural economy are open to conversion into commodity economy, or existing commodity economy can be ousted by capital.

Railroad construction and mining, gold mining in particular, are typical for the investment of capitals from old capitalist countries in new ones. They are pre-eminently qualified to stimulate a brisk traffic in goods under conditions. .h.i.therto determined by natural economy and both are significant in economic history as mile-stones along the route of rapid dissolution of old economic organisations, of social crises and of the development of modern conditions, that is to say of the development of commodity economy to begin with, and further of the production of capital.

For this reason, the part played by lending abroad as well as by capital investments in foreign railway and mining shares is a fine sample of the deficiencies in Marx's diagram of acc.u.mulation. In these instances, enlarged reproduction of capital capitalises a surplus value that has already been realised (in so far as the loans or foreign investments are not financed by the savings of the petty bourgeoisie or the semi-proletariat). It is quite irrelevant to the present field of acc.u.mulation, when, where and how the capital of the old countries has been realised so that it may flow into the new country. British capital which finds an outlet in Argentine railway construction might well in the past have been realised in China in the form of Indian opium.

Further, the British capital which builds railways in the Argentine, is of English origin not only in its pure value-form, as money capital, but also in its material form, as iron, coal and machinery; the use-form of the surplus value, that is to say, has also come into being from the very beginning in the use-form suitable for the purposes of acc.u.mulation. The actual use-form of the variable capital, however, labour power, is mainly foreign: it is the native labour of the new countries which is made a new object of exploitation by the capital of the old countries. If we want to keep our investigation all on one plane, we may even a.s.sume that the labour power, too, has the same country of origin as the capital. In point of fact new discoveries, of gold mines for instance, tend to call forth ma.s.s emigration from the old countries, especially in the first stages, and are largely worked by labour from those countries. It might well be, then, that in a new country capital, labour power and means of production all come from the same capitalist country, say England. So it is really in England that all the material conditions for acc.u.mulation exist--a realised surplus value as money capital, a surplus product in productive form, and lastly labour reserves. Yet acc.u.mulation cannot proceed here: England and her old buyers require neither railways nor an expanded industry. Enlarged reproduction, i.e. acc.u.mulation, is possible only if new districts with a non-capitalist civilisation, extending over large areas, appear on the scene and augment the number of consumers.

But then, who are these new consumers actually; who is it that realises the surplus value of capitalist enterprises which are started with foreign loans; and who, in the final a.n.a.lysis, pays for these loans? The international loans in Egypt provide a cla.s.sical answer.

The internal history of Egypt in the second half of the nineteenth century is characterised by the interplay of three phenomena: large-scale capitalist enterprise, a rapidly growing public debt, and the collapse of peasant economy. Until quite recently, _corvee_ prevailed in Egypt, and the Wali and later the Khedive freely pursued their own power policy with regard to the condition of landownership.

These primitive conditions precisely offered an incomparably fertile soil for the operations of European capital. Economically speaking, the conditions for a monetary economy had to be established to begin with, and the state created them by direct compulsion. Until the thirties, Mehemet Ali, the founder of Modern Egypt, here applied a method of patriarchal simplicity: every year, he 'bought up' the fellaheen's entire harvest for the public exchequer, and allowed them to buy back, at a higher price, a minimum for subsistence and seed. In addition he imported cotton from East India, sugar cane from America, indigo and pepper, and issued the fellaheen with official directions what to plant and how much of it. The government again claimed the monopoly for cotton and indigo, reserving to itself the exclusive right of buying and selling these goods. By such methods was commodity exchange introduced in Egypt. Admittedly, Mehemet Ali also did something towards raising labour productivity. He arranged for dredging of the ancient ca.n.a.lisation, and above all he started the work of the great Kaliub Nile dams which initiated the series of great capitalist enterprises in Egypt. These were to comprise four great fields: (1) irrigation systems, in which the Kaliub works built between 1845 and 1853 take first place--quite apart from unpaid forced labour, they swallowed up m. 25 and incidentally proved quite useless at first; (2) routes for traffic--the most important construction which proved ultimately detrimental to Egypt being the Suez Ca.n.a.l; (3) the cultivation of cotton, and (4) the production of sugar cane. With the building of the Suez Ca.n.a.l, Egypt became caught up in the web of European capitalism, never again to get free of it. French capital led the way with British capital hard on its heels. In the twenty years that followed, the internal disturbances in Egypt were coloured by the compet.i.tive struggle between these two capitals. French capital was perhaps the most peculiar exponent of the European methods of capital acc.u.mulation at the expense of primitive conditions. Its operations were responsible for the useless Nile dams as well as for the Suez Ca.n.a.l. Egypt first contracted to supply the labour of 20,000 serfs free of charge for a number of years, and secondly to take up shares in the Suez Company to the tune of m.

35, i.e. 40 per cent of the company's total capital. All this for the sake of breaking through a ca.n.a.l which would deflect the entire trade between Europe and Asia from Egypt and would painfully affect her part in this trade. These m. 35 formed the nucleus for Egypt's immense national debt which was to bring about her military occupation by Britain twenty years later. In the irrigation system, sudden transformations were initiated: the ancient _sakias_, i.e.

bullock-driven water-wheels, of which 50,000 had been busy for 7 months in the year in the Nile delta alone, were partially replaced by steam pumps. Modern steamers now plied on the Nile between Cairo and a.s.suan.

But the most profound change in the economic conditions of Egypt was brought about by the cultivation of cotton. This became almost epidemic in Egypt when, owing to the American War of Secession and the English cotton famine, the price per short ton rose from something between 30 and 40 to 200-250. Everybody was planting cotton, and foremost among all, the Viceroy and his family. His estates grew fat, what with large-scale land robbery, confiscations, forced 'sale' or plain theft.

He suddenly appropriated villages by the score though without any legal excuse. Within an incredibly short time, this vast demesne was brought under cotton, with the result that the entire technique of Egyptian traditional agriculture was revolutionised. Dams were thrown up everywhere to protect the cotton fields from the seasonal flooding of the Nile, and a comprehensive system of artificial irrigation was introduced. These waterworks together with continuous deep ploughing--a novel departure for the fellah who had until then merely scratched his soil with a plough dating back to the Pharaohs--and finally the intensive labours of the harvest made between them enormous demands on Egypt's labour power. This was throughout the same forced peasant labour over which the state claimed to have an unrestricted right of disposal; and thousands had already been employed on the Kaliub dams and the Suez Ca.n.a.l and now the irrigation and plantation work to be done on the viceregal estates clamoured for this forced labour. The 20,000 serfs who had been put at the disposal of the Suez Ca.n.a.l Company were now required by the Khedive himself, and this brought about the first clash with French capital. The company was adjudged a compensation of m. 335 by the arbitration of Napoleon III, a settlement to which the Khedive could all the more readily agree, since the very fellaheen whose labour power was the bone of contention were ultimately to be mulcted of this sum.

The work of irrigation was immediately put in hand. Centrifugal machines, steam and traction engines were therefore ordered from England and France. In their hundreds, they were carried by steamers from England to Alexandria and then further. Steam ploughs were needed for cultivating the soil, especially since the rinderpest of 1864 had killed off all the cattle, England again being the chief supplier of these machines. The Fowler works were expanded enormously of a sudden to meet the requirements of the Viceroy for which Egypt had to pay.[404]

But now Egypt required yet a third type of machine, cotton gins and presses for packing. Dozens of these gins were set up in the Delta towns. Like English industrial towns, Sagasis, Tanta, Samanud and other towns were covered by palls of smoke and great fortunes circulated in the banks of Alexandria and Cairo.

But already in the year that followed, this cotton speculation collapsed with the cotton prices which fell in a couple of days from 27_d._ per pound to 15_d._, 12_d._, and finally 6_d._ after the cessation of hostilities in the American Union. The following year, Ismail Pasha ventured on a new speculation, the production of cane sugar. The forced labour of the fellaheen was to compete with the Southern States of the Union where slavery had been abolished. For the second time, Egyptian agriculture was turned upside down. French and British capitalists found a new field for rapid acc.u.mulation. 18 giant sugar factories were put on order in 1868-9 with an estimated daily output of 200 short tons of sugar, that is to say four times as much as that of the greatest then existing plant. Six of them were ordered from England, and twelve from France, but England eventually delivered the lion's share, because of the Franco-German war. These factories were to be built along the Nile at intervals of 62 miles (10 _km._), as centres of cane plantations of an area comprising 10 sq. _km._ Working to full capacity, each factory required a daily supply of 2,000 tons of sugar cane. Fellaheen were driven to forced labour on the sugar plantations in their thousands, while further thousands of their number built the Ibrahimya Ca.n.a.l. The stick and _kourbash_ were unstintingly applied. Transport soon became a problem. A railway network had to be built round every factory to haul the ma.s.ses of cane inside, rolling stock, funiculars, etc., had to be obtained as quickly as possible. Again these enormous orders were placed with English capital. The first giant factory was opened in 1872, 4,000 camels providing makeshift transport. But it proved to be simply impossible to supply cane in the quant.i.ties required by the undertaking.

The working staff was completely inadequate, since the fellah, accustomed to forced labour on the land, could not be transformed overnight into a modern industrial worker by the lash of the whip. The venture collapsed, even before many of the imported machines had been installed. This sugar speculation concluded the period of gigantic capitalist enterprise in Egypt in 1873.

What had provided the capital for these enterprises? International loans. One year before his death in 1863, Said Pasha had raised the first loan at a nominal value of m. 33 which came to m. 25 in cash after deduction of commissions, discounts, etc. He left to Ismail Pasha the legacy of this debt and the contract with the Suez Ca.n.a.l Company, which was to burden Egypt with a debt of m. 17. Ismail Pasha in turn raised his first loan in 1864 with a nominal value of m. 57 at 7 per cent and a cash value of m. 485 at 8 1/4 per cent. What remained of it, after m. 335 had been paid to the Suez Ca.n.a.l Company as compensation, was spent within the year, swallowed up for the greater part by the cotton gamble. In 1865, the first so-called Daira-loan was floated by the Anglo-Egyptian Bank, on the security of the Khedive's private estates. The nominal value of this loan was m. 34 at 9 per cent, and its real value m. 25 at 12 per cent. In 1866, _Fruehling & Goschen_ floated a new loan at a nominal value of m. 3 and a cash value of m. 2. The Ottoman Bank floated another in 1867 of nominally m. 2, really m. 17. The floating debt at that time amounted to m. 30. The Banking House _Oppenheim & Neffen_ floated a great loan in 1868 to consolidate part of this debt. Its nominal value was m. 119 at 7 per cent, though Ismail could actually lay hands only on m. 71 at 13 1/2 per cent. This money made it possible, however, to pay for the pompous celebrations on the opening of the Suez Ca.n.a.l, in presence of the leading figures in the Courts of Europe, in finance and in the _demi-monde_, for a madly lavish display, and further, to grease the palm of the Turkish Overlord, the Sultan, with a new baksheesh of m. 1.

The sugar gamble necessitated another loan in 1870. Floated by the firm of _Bischoffsheim & Goldschmidt_, it had a nominal value of m. 71 at 7 per cent, and its cash value was m. 5. In 1872/3 _Oppenheim's_ floated two further loans, a modest one amounting to m. 4 at 14 per cent and a large one of m. 32 at 8 per cent which reduced the floating debt by one-half, but which actually came only to m. 11 in cash, since the European banking houses paid it in part by bills of exchange they had discounted.

In 1874, a further attempt was made to raise a national loan of m. 50 at an annual charge of 9 per cent, but it yielded no more than m. 34.

Egyptian securities were quoted at 54 per cent of their face value.