Europe and the East became clearly apparent during the early part of the nineteenth century, nothing was accomplished on account of the disturbed condition of Egypt growing out of the wars of Mehemet Ali. But in 1840 Mehemet was obliged by the Great Powers to give up his hope of independence and to remain in his previous position as Viceroy of Egypt and vassal of the Sultan of Turkey.

After this pacification of Egypt, there were soon presented to the attention of the Viceroy two rival schemes for piercing the isthmus-the one which had been brooding in the mind of the Frenchman De Lesseps, and which involved the construction of a shipcanal, the other advocated by the renowned Englishman, Robert Stevenson, which involved the construction of a railroad from Cairo to Suez. This latter scheme met with the approval of the now peaceful viceroy, Mehemet Ali, who was a hard-headed statesman and no dreamer of dreams. The railroad was consequently built; it brought great profit and involved no complications with foreign powers. The succeeding viceroy, Abbas Pasha, adopted the policy of his predecessor, and was contented with the benefits afforded by the trans-isthmian railway.

In 1854 the vice-royalty passed into the hands of Said Pasha, who became fascinated with the earlier scheme of De Lesseps. He had received his education in Paris, where he had developed a sympathy with Frenchmen and with French ideas.

In reviewing the early history of the Suez canal it will be impossible not to make some reference to the financial side of the project under Said Pasha. In spite of the fact that the canal itself has been one of the greatest commercial gifts to the modern

world, its construction involved one of the most gigantic swindles on record, and brought Egypt within the toils of European stock-jobbers.

The proposition which De Lesseps presented to the vivid imagination of the innocent Egyptian Pasha was alluring in the extreme. The Pasha was not to invest a single sou in the construction of the canal; he was to receive fifteen per cent of all the profits derived from its operation; and at the end of ninetynine years everything was to revert to the Egyptian government. All that was desired of him was to grant to De Lesseps the exclusive power to form a company for the purpose of constructing and operating the canal between the two seas, and, also the right to build at the cost of the Company a smaller parallel canal connecting with the Nile to supply the workmen with fresh water.

The prospect of adding so much to the material prosperity of Egypt with no financial burdens resting upon the government was too dazzling to be rejected; and the first concession, involving a ninety-nine years' lease, was granted by Said Pasha to De Lesseps, November 30, 1854. A second concession given January 5, 1856, detailed further specifications regarding the construction and operation of the canal. To prevent the importation of a large body of foreign laborers into his country, the Viceroy stipulated that the work should be done by the forced labor of the fellaheen, the Egyptian peasantry, who should be furnished by himself and be fed by the Company. The only provision which seemed to concern the interests of foreign Powers was contained in the fourteenth article of the Concession of 1856, which promised that the canal and its ports should be "open forever as

a neutral passage to all ships of commerce passing from one sea to the other," on payment of the dues established by the Company.

One of the important items in this concession was to the effect that the work should not be commenced until the approval of the Sultan of Turkey had been obtained. But after some delay the Viceroy was persuaded by De Lesseps that this approval was a mere formality, and that it would be proper to make preliminary surveys, and to begin the work without the formal approval of his nominal suzerain, the Sultan of Turkey. The Company was accordingly formed under the direction of De Lesseps, and the first stone of the canal was laid at Port Said, April 25, 1859.

These initial steps were accomplished by the first successful attempt to draw the confiding Viceroy into the financial meshes of the Company. The estimated cost of the whole undertaking was 200,000,000 francs. The efforts of De Lesseps and his associates to raise the money in Europe had thus far been fruitless. France and England had not fully recovered from the financial strain of the Crimean war; and German bankers were not captivated by the new scheme. De Lesseps accordingly appealed to the sympathies of the Egyptian viceroy, who kindly consented to loan the company various sums amounting to 2,395,000 francs; so that the construction of the canal was fairly begun with the money of the Viceroy,-who was not expected to contribute a sou.

The pliable temper of the Viceroy induced the Company now to seek for a new concession. This was the right to build a second fresh water canal along the banks of the main canal, whereby fresh water could be distributed along its entire course. This right

was granted to the Company, together with the privilege of selling the water for purposes of irrigation and also of appropriating the products of the fertilized district.

The Company thus found in Said Pasha a generous friend, while their subscription books remained open in Paris without subscribers. Should this magnificent project so successfully begun with the funds of the Viceroy now fail for want of financial support? was the query put by De Lesseps to the grantor of the concession. Said Pasha could not endure the thought of such a possibility, and he was induced to subscribe for 177,662 shares out of 400,000, the total amount of the Company's stock. This subscription, which represented a nominal value of over 17,000,000 francs, was the beginning of the Company's prosperity, as investors from that time were not wanting. As Said Pasha was himself now a pauper, and as Egypt had been thoroughly squeezed by his predecessor, he soon found it difficult to meet his obligations to the Company; but the ingenious De Lesseps suggested to him that his obligations to the Company could be easily met by his signing treasury-warrants, bearing ten per cent interest and payable in four annual installments, and this paper would be readily cashed by European bankers. This suggestion was accepted; but by calculating the interest on these warrants Said Pasha soon discovered that instead of owing the Suez Company over 17,000,000 francs, he was a prospective debtor to Europe for more than 24,000,000 francsand he recollected that the Suez canal was not to cost him a sou.

The studies in French financeering, thus inauspiciously begun by Said Pasha, were cut short by his

death in 1863, when he was succeeded by his nephew, Ismail Pasha, the grandson of the great Mehemet Ali. Ismail was a prince of immense fortune, and he used a part of his wealth in purchasing from the Sultan in 1866 the title of Khedive in place of the previous title of Viceroy. Whether the new Egyptian ruler would be as pliable to the machinations of the European promoters as was his predecessor, was for a time. a matter of speculation. This could be determined only by a trial. The canal managers assured Ismail that the concessions already granted to the Company were altogether too generous-that the second fresh. water canal was in fact not needed and that the Company would be willing to retrocede to him all rights therein, provided he would complete the first fresh water canal at his own cost, the right to its use still remaining with the Company. The generosity which seemed to inspire this proposal evidently presented to the mind of Ismail a reason for its acceptance. In this way, the new Egyptian ruler in addition to assuming the obligations of the treasury-warrants issued by his predecessor, amounting to some 24,000,000 francs, assumed the new obligation of constructing a part of the Company's work, which proved to be equivalent to putting 50,000,000 francs more into the Company's treasury.

This rehearsal of the financial methods adopted by the Suez canal company suggests but a small part of the troubles into which Egypt was plunged by the construction of the great canal.

§ 2. ENGLAND'S EARLY OPPOSITION TO THE PROJECT The financial troubles now became mixed up with diplomatic complications. England had not up to this