It was obviously impossible for Egypt to provide for the
extraordinary expenses of the military operations out of revenue. The
Ministry of Finance therefore appealed to the Caisse de la Dette for a
grant from the general reserve fund. Here was an obvious case of
'extraordinary expenses.' The Egyptian Government asked for
500,000 Egyptian pounds (EP500,000).
The Caisse met in council. Six Commissioners - representing England,
France, Russia, Germany, Austria, and Italy - duly discussed the
application. Four Commissioners considered that the grant should be made.
Two Commissioners, those representing France and Russia, voted against it.
The majority decided. The grant was made. The money was handed to the
Egyptian Government and devoted to the prosecution of the war.
Egypt as a sovereign power had already humbly begged to be allowed
to devote part of the surplus of her own revenues to her own objects.
A greater humiliation remained. The Commissioners of France and Russia,
who had been out-voted, brought an action against their colleagues on the
grounds that the grant was ultra vires; and against the Egyptian
Government for the return of the money thus wrongly obtained.
Other actions were brought at French instigation by various people
purporting to represent the bondholders, who declared that their interests
were threatened. The case was tried before the Mixed Tribunals, an
institution which exists in Egypt superior to and independent of the
sovereign rights of that country.
On the part of the Egyptian Government and the four Commissioners it
was contended that the Mixed Tribunals had no competency to try the case;
that the attacking parties had no right of action; that the Egyptian
Government had, in applying, done all that the law of liquidation required;
and that the act of sovereignty was complete as soon as the Caisse,
which was the legal representative of the bondholding interest,
had pronounced its decision.
The argument was a strong one; but had it been ten times as strong,
the result would have been the same. The Mixed Tribunals, an international
institution, delivered its judgment on strictly political grounds,
the judges taking their orders from the different countries they
represented. It was solemnly pronounced that war expenses were not
'extraordinary expenses.' The proximate destruction of the Khalifa's power
was treated quite as a matter of everyday occurrence. A state of war was
apparently regarded as usual in Egypt. On this wise and sensible ground
the Egyptian Government were condemned to pay back EP500,000, together
with interest and costs. After a momentary hesitation as to whether the
hour had not come to join issue on the whole subject of the financial
restrictions of Egypt, it was decided to bow to this iniquitous decision.
The money had now to be refunded. It had already been spent. More than
that, other sums were needed for the carrying on of the war.
