611.8331/101

The Egyptian Chargé (Rady) to the Secretary of State

No. 570

The Chargé d’Affaires ad interim of Egypt presents his compliments to the Honourable the Secretary of State, and acting on official instructions has the honour to submit the following for the kind attention of Mr. Hull:—

The Egyptian Ministry of Finance has observed a falling off in the exportation of cotton during this year, although harvest yields have increased and are increasing year by year due to the betterment of conditions of culture, the selection of varieties and the extension of land under cultivation which is being changed as a result of irrigation and drainage projects. For this reason the Egyptian authorities are anxious to increase the amount of cotton exported to foreign countries—particularly to those countries which have reduced their importation of cotton or which are importing insignificant quantities thereof in comparison with the amount of their exportations to Egypt.

The United States of America is among these countries. The following is a brief sketch of the commercial relations with them.

Until the middle of 1930 the United States was numbered among the large purchasers of Egyptian cotton, as will be seen from the following: statistics:

Year Quantity of Egyptian
cotton imported
Cantars
1925 1,038,700
1926 1,044,300
1927 1,226,300
1928 977,300
1929 1,277,100

However, after the passing of the Smoot–Hawley Tariff Act of 1930,1 which placed a seven cents per pound tax on long fibre cotton, [Page 706]exportations of cotton to the United States of America were considerably reduced, as will be seen from the figures given hereunder:

Year Quantity of Egyptian
cotton imported
Cantars
1930 373,000
1931 186,500
1932 405,000
1933 375,350
1934 358,400
1935 270,600
1936 261,100
1937 257,750

In addition, it is observed that the commercial balance with Egypt showed a surplus nearly every year, as will be seen from the following figures for the last eight years:—

Year In favour of Egypt
L. E.
In favour of the U. S. A.
L. E.
1930 249,000
1931 676,000
1932 462,000
1933 408,000
1934 21,000
1935 300,000
1936 329,000
1937 487,000

The only reason it was in favour of Egypt in 1937 was because the Royal Egyptian Ministry of Finance sold a quantity of gold to a large London house and this was exported directly from Egypt to the United States of America.

But, on deducting the price represented by the sale of this gold, which amounts to L. E. 1,069,000 from the total exportations from Egypt because of its purely accidental character, we find the normal commercial balance revealed—that is to say it was in favour of the United States for the sum of L. E. 582,000.

The Egyptian Government has already taken official steps with a view to persuading the American Government to rectify this heavy tax on cotton, onions and manganese but without result; although American industries themselves have made representations for a reduction in the interest of the tire industry.

In the circumstances the Egyptian Government hopes that the American Government will be prepared to exert its friendly cooperation with a view to re-establishing the commercial balance through appropriate measures which would increase the bulk of importations of Egyptian products, with particular reference to cotton, and thus strengthen and render more fruitful the good relations which so happily exist between the two countries.

[Page 707]

It should be added that with the exception of moderate protection accorded to certain rising industries, Egypt has taken no restrictive measures in respect of importations from any country whatsoever. But, having regard to actual economic conditions and to the restrictions to which her products are subjected abroad, she endeavours to maintain equilibrium of the commercial balance by appropriate measures and to keep intact her relations with the countries in which her products find an important market. Moreover, these countries are all concerned in her views in this regard, not only because of Egypt’s search for mutual interest, but also owing to the fact that the Egyptian products which are exported are for the most part raw materials used in supplying industry and trade in these countries.

In conclusion, the Royal Egyptian Government is convinced that in this manner a particularly favourable solution will be found, obviating the necessity of having recourse to such measures which interest in preserving the commercial balance would inspire.

The Chargé d’Affaires will appreciate it very much indeed if Mr. Hull will kindly inform him of the point of view of the United States Government in regard to this question; and avails himself [etc.]

  1. 46 Stat. 590.