There has been a continued increase in the receipts of the Suez Canal Company each year since its canal was opened to commerce, without any increase of expenses, and it may now he considered as fully demonstrated that this great enterprise is a complete financial success for the stockholders of the company, as well as the most important work yet accomplished for the promotion of the commerce of the Eastern hemisphere.
The completion of this canal effected a great geographical change, that of uniting two seas, and marked the commencement of a new era in the commerce of the east. But it was not until some time after it was finished that its great maritime importance was universally recognized,
At one time during the progress of the work shares of the canal stock of 500 francs sold at from 100 to 150 francs each; and at about the time of the opening of the canal fears of drifting sands, and the effects of currents, and the want of confidence in its practicability were so general that the stock was worth only from 200 to 300 francs a share. It is now quoted at 717 francs, and a close examination of the official statements of the receipts and expenses of the company, and its present financial condition, shows that this is not above its real value.
The company has always paid to its stockholders, even during the long period that its work was in progress, interest at the rate of 5 per cent, per annum on their stock. This interest was, however, from the 1st of July, 1871, to the 1st of July, 1874, paid in the company’s bonds, which now form a part of its indebtedness.
The whole cost of the canal, including expenses of enlargements and other improvements, exclusive of cleaning and repairs, to the end of the year 1877 was 472,921,799 francs ($92,273,907). Of this amount 114,000,000 francs were received from the Egyptian Government during the progress of the work in payment for certain concessions taken back, which had been originally gratuitously granted to the company by Said Pasha, the immediate predecessor of the Khedive. The items composing this sum were as follows: 38,000,000 francs were paid as damages on account of the refusal of the Egyptian Government to furnish laborers in accordance with (as was claimed by the company) the original acts of concession; 10,000,000 francs on account of the expenditure of the company in constructing a fresh-water canal from Ouady to Ismailia and Suez for its use in furnishing water along the line of the Suez Canal, the company ceding this canal with the exclusive right of its navigation to Egypt, but reserving for its use a perpetual daily supply of 70,000 cubic meters of water, an amount more than sufficient for all its needs; 30,000,000 francs on account of the retrocession of 150,000 acres of uncultivated lands given to the company and which it was expected would be rendered capable of cultivation by means of the fresh water obtained from this canal, and the canal from Cairo to Ouady; 6,000,000 francs on account of the retrocession of the exclusive right of the navigation of these two canals; 20,000 000 francs on account of certain other retrocessions and in satisfaction of all other claims; and 10,000,000 francs on account of the retrocession of other lands and property. The first four items were paid in accordance with an award made in 1864 by the Emperor Napoleon as sole arbiter between the company and the Egyptian Government, and the last two in fulfillment of a contract.
At the time of the award by Napoleon, about one-half of the labor necessary for the construction of the canal had been completed. If we take as a basis this award, the labor that had been already furnished by the Egyptian Government was worth about 38,000,000 francs more than it had cost the company; so that, had the company constructed the canal wholly by laborers hired in the ordinary way, and not had any grants from the Egyptian Government, except the right of way and the necessary lands for its stations along the line of the canal, it would have cost 510,921,799 francs. There would have been necessarily added to this amount the expense of the construction of the fresh-water canal from Cairo to Ouady, which was constructed by the Egyptian Government at a cost of over 50,000,000 francs, to intersect and supply the fresh-water canal constructed by the company. This would have made the total cost of the maritime canal, 99 miles in length, and its accessories, in a country where ordinary labor was worth less than ten cents a day, the laborer boarding himself, a little more than 560,000,000 francs ($108,080,000). The actual cost to the company, exclusive of the aid from Egypt as above stated, was 358,921,799 francs ($69,271,907).
The stock of the company consists of 400,000 shares of 500 francs each, of which the British Government purchased of the Egyptian Government, in November, 1875, 176,602 shares for £ sterling 3,972,624, being about 568 francs a share. The interest coupons of these shares up to the year 1894 had been detached in 1869 and surrendered to the company in payment of the last item of 30,000,000 francs above mentioned. As the coupons were taken on the basis of allowing ten per cent, for the use of the money, it required for the payment of this sum the coupons of twenty-five years, amounting to 110,376,250 francs. The Egyptian Government at the same time surrendered with these coupons, without any further consideration, its right to the net revenues of the [Page 995] canal that might accrue on these shares during this period of twenty-five years. The net revenues up to 1877 were very small, hut if they continue to equal the amount of that year—and they may very much exceed that sum—they will amount on these shares, up to 1894, to about 25,000,000 francs. All that was obtained by this sacrifice of coupons and revenues was of little or no value to Egypt, and they might properly be considered as a gift to the company.
By its contract, the Egyptian Government is to pay to England the interest, at the rate of 5 per cent, per annum on the purchase-money of its canal shares during the time represented by the detached coupons, that is, up to and including the year 1894.
Suez Canal stock is now worth in the market about 150 francs a share more than was paid by England, and, though the English shares are not worth quite as much as the others, because of their present non-participation in the net revenues, yet as the Egyptian Government pay 5 per cent, on the whole purchase-money instead of on the par value of the shares, this want of participation is partly made good, and England’s shares, taken with the contract of the Egyptian Government relating to the payment of interest, may be considered as of nearly the same value as the other shares, so that Lord Beaconsfield’s purchase, aside from its political and commercial importance, and the constant receipt of five per cent, upon the money invested, has a value to-day of nearly or quite £1,000,000 above what it cost, and the prospects are that this value will increase with the continual increase of the business of the canal, and the steady diminution of the company’s debts.
The balance of the company’s stock is in the hands of a large number of holders, principally in France.
The total debt of the company is now about 116,000,000 francs. This is being reduced at the rate of 2,500,000 francs per annum, and the company also appropriates 1,000,000 francs a year to permanent improvements, such as enlarging the canal in certain places, the enlargement of the old and the creation of new stations, basins, &c.
The revenue of the canal from the passage of vessels and passengers has increased from $995,752 in 1870, $1,735,790 in 1871, and $3,176,665 in 1872, to $5,575,056 in 1875, $5,785,174 in 1876 and $6,325,448 in 1877.
There are other revenues of the company from various sources amounting to about 1,000,000 francs a year.
The expenses, including interest on debt, sinking fund and management of lands, have been a little over 17,000,000 francs a year for each of the last five years, so that with the rapid and continued increase of revenues there is no increase of expenses. Over 11,000,000 of these 17,000,000 of francs are expended on account of interest and sinking funds.
The expenses of the various administrations of the company in France and Egypt, including the pay of its officers and its expenses on account of agencies, publications, and the health department, were for the year 1877, 1,135,009 francs; those of the service of transit and navigation 1,619,869 francs, and those of maintaining, cleaning, and repairing the canal and its accessories, including the annual appropriation for material, 2,283,388 francs.
It will be seen that the total expenses of the canal company, aside from interest and other sums applied in payment of its debts, are very small, being only about 5,000,000 francs per annum, while the total revenues for the year 1877 were 33,958,314 francs.
The entire annual expense of cleaning the canal, its basins, and the channel at the entrance of Port Saïd, and for repairs of the canal and its accessories, is only about 2,000,000 francs.
In the cleaning of the canal during the year 1877 there were removed with dredges from the channel at the entrance of Port Saïd 220,696 cubic meters of earth, and from the basin at Port Said 133,934 cubic meters, and from the canal between Port Said and Suez 721,830 cubic meters. This amount of dredging was sufficient to keep the canal at its established depth and width.
The small comparative cost of maintaining the canal arises from the fact that there are no locks and no lateral embankments to be broken. If any part of the canal were on a higher level than the sea, so as to require locks, lateral embankments would also be required, which would be liable, as is the case with canals generally, to be broken, and with a canal like that of Suez, which has sufficient depth and width to permit the safe passage of ships drawing 25 feet of water, such breaks would cause great damage. Except the ordinary cleaning of the canal, and the channel at the entrance of Port Saïd, which is gradually filled by the sediment which comes from the mouths of the Nile, and is drifted eastward along the coast, there is little to be done.
It does not seem that the canal is liable to any of those extraordinary expenses to which navigable canals are generally subject.
In a conversation last winter with the venerable projector of the Suez canal, Monsieur Ferdinand de Lesseps, on the subject of the proposed Panama Canal, he stated to the writer that of all the proposed routes, in his opinion, that only on which it was proposed to construct a canal on a level with the sea was worthy of serious consideration, and that he did not believe that a canal across the isthmus, running on different [Page 996] levels and with locks large enough for ocean steamers, would ever he made practicable, and much less remunerative.
It is worthy of remark that Monsieur de Lesseps, who was in his fiftieth year at the time of the first concession by the Viceroy Saïd Pasha in 1854, has from that day to the present time been at the head of this great enterprise. He encountered difficulties, political, financial, and material, that few men could have overcome. The completion of the canal seemed to depend upon the talent and energy of a single man, whose work was considered as the “futile attempt of a clever enthusiast.”
At the end of fifteen years of constant struggle he saw his efforts crowned with success. On the 17th day of November, 1869, the canal was opened to commerce, and the English Government, which had been the greatest obstacle in the way of the accomplishment of this great work, immediately found its sailing distance to Bombay shortened by 4,840 nautical miles, and from that day British commerce has been the principal recipient of the benefits of this new maritime route, two-thirds of all the vessels, passing through the canal being those sailing under the English flag.
M. de Lesseps not only saw his work finished, but has lived to enjoy the rewards of his well-earned success and to see the bitterest enemies of his project become its principal supporters; and so far as physical appearance indicates, he may still remain for many years at the head of the company he has created, enjoying, as he always has, the perfect confidence of its stockholders.