No. 630.
Mr. Comanos to Mr. Evarts.

No. 340.]

Sir: In his dispatch No. 310, of July 3, 1879, Mr. Farman submitted to the Government of the United States, for its approval, the draft of a [Page 993] decree, composed of two articles, which the Government of the Khedive proposed to issue, with the assent of the powers signatory to the treaties of Egyptian judicial reform, and which related to the non-seizability, from the 1st of February, 1870, of the real properties mortgaged and given in pledge to the Messrs. Rothschild, for the so-called domanial loan of £8,500,000 contracted for on the 31st October, 1878. Mr. Farman at that time recommended that our government give its assent, and he requested a telegraphic reply.

In a private note to me, dated the 1st of October, 1879, of which I herewith inclose translation, His Excellency Mustapha Fehmi Pasha, the present minister of foreign affairs, refers to the above-mentioned draft of a decree, incloses the draft of an additional or third article—of which I herewith transmit copy and translation—and urgently requests me to solicit the United States Government to communicate to me its decision upon the draft of decree as composed of ali three articles. His excellency also says he has reason to believe that England, France, and Italy will at once approve of the proposed decree, if the third article be added to it.

I therefore beg you to inform me by cable what reply to give to the Egyptian minister of foreign affairs on this subject.

In addition to what Mr. Farman has already remarked in his dispatch No. 310 referred to above, the following statement, taken by me from the Phare d’Alexandrie, a semi-official paper, will set forth the straits in which the Egyptian Government is placed by reason, partly, of the steady refusal of Messrs. Rothschild to pay the balance of the loan in question without an international promise to respect the validity of the mortgage made in their favor.

I. The floating debt of Egypt will, by the end of October, 1879, amount approximately to the sum of £12,500,000, composed thus:

Owning to the great syndicate £4,500,000
Owning to Greenfield & Paponot 1,000,000
Salaries, pensions, and a part of the civil list of the Khedive 1,100,000
European creditors:
(a) Judgments rendered up to end of August, 1879 3,200,000
(b) Pending claims, upon which judgment is sure to be rendered by end of October, 1879 300,000
(c) Balance of debt not having judgments 400,000
Private native individual creditors 400,000
10,900,000
Owing to the Daïras, to the civil list, &c 1,600,000
Total floating debt 12,500,000
II. Available, i. e., assets:
Unified debt bonds deposited (nominal value) £6,600,000
Value of original shares of founders of Suez Canal 800,000
Price of water works of Alexandria city 300,000
Balance still unpaid on the Rothschild or so-called domanial loan 3,200,000
10,900,000
To be deducted: Difference between nominal and market value of the £6,600,000 of unified debt bonds (not worth more than 50 per cent) 3,300,000
Total available 7,600,000
Deficit, October 31, 1879 4,900,000
12,500,000

III. But if Messrs. Rothschild do not pay the balance of the domanial loan (i. e., £3,200,000) this deficit will be £8,100,000—and they do refuse [Page 994] to pay any part of that balance until all the powers signatory to the treaties of judicial reform in Egypt signify their formal assent to the issuing of a Khedival decree that shall secure the validity of the mortgage to them of the real properties ceded by the Khedival family to the Egyptian State, and by it given in pledge to secure the said loan.

Since receiving the private letter of Mustapha Fehmi Pasha, I have seen him personally, and he begged me to earnestly solicit the Government of the United States to give its early attention to this question, and to telegraph me its decision.

I am, &c.,

N. D. COMANOS,
Vice-Consul-General in Charge.
[Inclosure 1 in No. 340.—Translation.]

Private letter from Egyptian minister of foreign affairs to Mr. Comanos

My Dear Comanos: The Government of the United States has as yet given us no information as to its views upon the Rothschild decree, which we submitted for its approval in our circular of the 2d of July last.

It is nevertheless a matter of most serious interest to us that this question receive a solution as early as possible, and the creditors of the floating debt have therein an interest not less than our own.

I have reason to believe that England, France, and Italy will forthwith give their approval if to the two articles of the proposed decree that was presented to the powers a third article be added, a copy of which I now send you.

I shall be greatly obliged if you will urge upon your government the necessity of notifying me as early as possible the decision it shall have arrived at as to the addition of the third article.

Accept, &c.,

MUSTAPHA FEHMI.
[Inclosure 2 in No. 340.—Translation.]

Article 3.

In order to give a guarantee that the available balance of the domanial loan will be entirely employed in regulating the Egyptian debt, the Egyptian Government delegates, from now on, to the commission of the public debt, all its rights over the sums that it may still dispose of out of the product of the domanial loan, in execution of the conventions agreed to by it (the government) and by the Rothschild houses.

Consequently Messrs. Rothschild shall accept as good and valid discharges the receipts that shall be given them by the commission of the debt in exchange for the payments which they shall be able to make to it (the commission) in the execution of their contract.

The commission of the public debt will hold the sums thus paid over by MM. Rothschild as a sequester, not to be disposed of save according to the instructions that shall be given to it by the commission of liquidation that shall be constituted by virtue of an international agreement, and, in default of this latter commission, according to the instructions that shall be given to it by the Khedive with the concurrence of the powers.