ASIA (UNIVERSITY Mason E3 k31 130(9 t.,.Au.. Uttirmitg f THE GIFT OF Jilr«g 1 h.'.%,.i!i,..-i..?[S. - ft7s^A7- 7673-1 HG 205l!i3K3r"'r906' ''"""' "^''SiiirffliiiiiSiiiilSiS!'^^ "3"'' <" Egypt 3 1924 023 465 648 a Cornell University J Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924023465648 REPORT Agricultural Bank of Egypt THE SECRETARY OF WAR THE PHILIPPINE COMMISSION/V/^'yvf ^^ E. W, KEMMERER, Special Commissioner to Egypt. June 1, 1906. V.',S, — BUREAU OF INSULAR AFFAIRS, ■ WAR DEPARTMENT. WASHINGTON: GOVERNMENT PRINTING OFFICE. 1906. P .^■^t^:^^* |\ ^ '2.\ 0~L.°(S £.C^ REPORT ON THE AGRICULTURAL BANK OF EGYPT TO THE SEC- RETARY OF WAR AND TO THE PHILIPPINE COMMISSION, BY E.W. KEMMERER, SPECIAL COMMISSIONER TO EGYPT. Contents. Page. Preliminary 2 Indebtedness of the fellaheen 2 Land credit in Egypt 4 Government advances to agriculturists 5 The National Bank of Egypt 6 The Agricultural Bank of Egypt 7 The bank and the fellaheen 9 A. Number and size of loans 10 B . Reasons for borrowing 11 C. Are the fellaheen getting out of debt? 12 The bank and the stockholders 15 A. The bank established on a strictly commercial basis 15 B. The bank's financial condition i 15 C. The bank's financial standing 16 D. Bad debts 16 E. Competition , 18 The bank and the Government 19 A. The government's guarantee 19 B. Miscellaneous 19 Factors in the bank's success 20 A. High personnel 20 B . The utilization of the services of government employees 21 C. Egyptian land titles 22 Applicability of the Egyptian plan to the PhUippines 23 The Filipino farmer and the Egyptian fellah , 23 Greater security of Egyptian crops 24 Land titles in Egypt and the Philippines 25 Conclusion 25 Appendix. exhibit a. Revised statutes and concession of the Agricultural Bank of Egypt 27 Schedule I — Revised statutes 27 Schedule II — Concession of the Egyptian government 35 EXHIBIT B. Reports of the directors of the Agricultural Bank of Egypt 36 Schedule I — Report for the period June 1, 1902, to December 31, 1903 36 Schedule II — Report for the period January 1, 1904, to December 31, 1904 41 Schedule III — Report for the period January 1, 1905, to December 31, 1905 45 EXHIBIT 0. Extracts from the annual reports of the Earl of Cromer relative to the Agricul- tural Bank of Egypt, and to the distribution of Egyptian land 49 Schedule I — Extracts from the annual report of the Earl of Cromer for the year 1904 49 Schedule II — Extracts from the annual report of the Earl of Cromer for the year 1905 51 1 2 AGRICULTUEAX, BANK OF EGYPT. Ithaca, N. Y., Jwm 1, 1906. pSSiRs: Pursuant to a resolution of the Philippine Commission under date of February 9, 1906, appointing me as special commissioner to Egypt, with instructions to make a study of the Agricultural Bank of Egypt, and to prepare a report on the same, to be submitted to the Secretary of War and to the Philippine Commission, -I have the honor to make the following report, which should be considered as supple- mentary to my report to the treasurer of the Philippine Islands under date of February 7, 1905, concerning* the advisability of establishing a Government agricultural bank in the Philippines. INDEBTEDNESS OF THE FELLAHEEN. At the time of the establishment of England's so-called "single control" in Egypt in 1883, the Egyptian fellaheen, as well as the Egyptian government, were badly m debt. For years the fellaheen had been the victims of a most oppressive and unjust system of taxa- tion. The burden of the taxes fell upon the poor peasants, while the wealthy landowners were either entirely exempt or escaped by the payment of merely nominal amounts. The tax collectors were as a rule unscrupulous men, who took every piastre " they could lay hands upon, regardless of law, or of justice. Only a small part of the money collected ever reached the public treasury, and of that amount only a small proportion was expended wisely and for the benefit of the public. The situation is well de- scribed by Viscount Milner: ^ The fellah, had for years past been driven to borrowing, and to borrowing on ruinous conditions, by the government itself. The tax gatherer had paved the way for the usurer. It was not the amount of taxation, crushing as in many cases it was, which did the mischief. It was above all the irregular, cruel, and arbitrary manner in which the taxes were collected. The fellah was seldom sure of the amount which would be demanded of him. He was never sure of the moment when the demand would be made. That moment might, as likely as not, be the very one at which he was least able to pay. Called upon to find ready money while his crops were stUl in the ground, he was simply driven into the arms of the money lender. His choice lay between so many blows of the kurbaah and the acceptance of the usurer's terms, however onerous. Under these circumstances money was borrowed at as much as 60 per cent per annum. - Worse than that it was obtained by the sale of the growing crops, which were estimated for the purpose of the advance at half or less than half their value. This state of things was bad enough, and it was pretty general; but the ruin of the cultivator was consum- mated in many instances by positive collusion with the usurer on the part of the cor- rupt officials. The latter would demand the payment of taxes by the peasant, who was already in debt, at the very time when the interest on his debt was due. If he had any cash at all, the authorities were bound to get it. When the usurer came after them nothing was left to the fellah but to surrender his land and cattle or to renew his bond on still more ruinous terms. He was, in fact, entirely at the mercy of the lender. Sir Auckland Colvin says the exactions of usurers ranged from 25 to 200 per cent." Interest charges of 40 and 50 per cent were com- mon."* "■ The unit of value in Egypt is the Egyptian pound, the symbol for which is £ E. The Egyptian pound is divided into 100 piastres, the symbol for which is P T., and the piastre is divided into 10 milliemes, the symbol for which is M. The Egyptian pound weighs 8.5 grams of gold 875 fine, and is therefore worth £1 Os. 6Jd. sterling, or almost exactly $5 United States currency. The piastre is accordingly the equivsuent of 5 cents American money, and the millieme the equivalent of \ cent. The English sovereign, which is the principal gold coin circulating in Egypt, passes current at the rateof P.T. 97i. 6 England in Egypt, eleventh ed., p. 82. cThe Making of Modern Egypt, second ed., p. 280. d Compare PhU. Agric. Bank Bep., pp. 7, 28-29, 31-43. AGRICULTUEAXi BANK OP EGYPT. The Earl of Cromer in his report for the year 1895" cites the fol- lowing instances as illustrative of the relations which generally existed between the money lenders and the ignorant cultivators : A small cultivator in Upper Egypt borrowed £10 from an European money lender. In order to obtain the money, he was obliged to sign a bond for £15. He states that for three years he paid £5 at the end of each year. At the end of the third year he was asked to repay the capital sum of £15. This he first refused to do, alleging that account should be taken of the payments already made. As no written documents other than the original bond for £15 had past, the annual payments could not be proved. The creditor then threatened legal proceedings. These would have been instituted at Cairo, some 400 miles distant itrom the residence of both the creditor and the debtor. Eather than go to the expense of a lawsuit, the debtor sold his house to the creditor for £61, the price being fixt by the latter, who then deducted £15 on account of the original debt, and £14 for the expenses of sale and transfer. The bal- ance, namely, £32, was then handed over to the debtor. It will be seen, therefore, that besides being obliged to sell his house for a sum which was probably below its market value, the debtor paid no less than £34 in the shape of interest and legal expenses in return for a loan of £10 for a little more than three years. The following table shows the mortgage indebtedness of Egyptian landowners for the years 1894 and 1902, and ailords an idea of the distribution of land among different classes of proprietors. The fig- ures for indebtedness do not include the great mass of debts not secured by land mortgages, as, for example, those secured by the pledging of growing crops or by other property. It is probable that the figures for 1902 are considerably more complete than those for 1894. Tablb 1. — Distribution of agricultural land and indebtedness of the Fellaheen, i Classification oi iaiidowiiers. Number of land- owners of each class. Area of land owned by each class of landowners. Area of land mortgaged, c 1894. 1902. 1894. 1902. 1894. 1902. Owners of 5 feddans and under d. . . Owners of 5 to 10 feddans 513,080 76,130 39,620 13,140 8,980 11,430 875,202 79,336 .38,825 11,909 8,813 11,996 Feddans. 9.33,700 652,700 .660,300 326,100 347,800 2,000,700 Feddans. 1,171,338 5.66,422 539,008 292,310 338,922 2,266,388 Feddans. 21,400 16,000 20,400 19,600 25.900 292,300 Feddans. 71,864 43,110 Owners of 10 to 20 feddans 48,790 34,714 53,463 778,569 Owners of 20 to 30 feddans Ovpners of 30 to 50 feddans Owners of more tlian 50 feddans Total 661,380 1,026,081 4,721,300 5,164,388 395,600 1,030,500 Classifloation of landowners. Proportion of land mortgaged. Amount of mortgage debts, c Proportion in which each class of landowners s h a r e 3 in the total indebted- ness. 1894. 1902. 1894. 1902. 1894. 1902. Owners of 5 feddans and underii Owners of 5 to 10 feddans Per cent. 2.29 2.90 3.64 6.0 7.44 14.60 Per cent. 6.14 7.72 9.05 11.9 15.77 34 35 £E. 573,300 392,200 407,700 307,200 409,900 5,233,000 £E. 2,188,007 1,209,230 1,402.588 1,024,025 1,228,620 14,287,321 Per cent. 7.82 3.36 5.57 4.20 6.00 71.46 Per cent. 10.26 5 66 Owners of 10 to 20 feddans 6 58 Owners of 20 to .30 feddans 4 8 Owners of 30 to 50 feddans Total 8 38 19.95 7,323,300 21,339,791 100.00 100. OO o Reports by Her Majesty's Agent and Consul-General on the Finances, Administration, and Con- dition of Egypt in 1896, p. 7. These anriual reports are known by the title of " Egypt," followed by the number and the year in which issued, being the year sutsequent to that covered by the report: thus the report above men- tioned wou'd be cited "Egypt" No. 1 (1896). t> Figures for 1902 were prepared by Sir Elwin Palmer, and are quoted by the Earl of Cromer in "Egypt" No. 1 (1896), p. 30. The figures tor 1902 are based upon data given in the Statesman's Year- book 1904, p. 1236. c " Besides the debt here stated there is a certain amount unregistered, due notably by small proprietors." d A feddan is about 1.04 acres. 4 AGRICULTURAL BANK OF EGYPT. The table, in so far as the figures can be depended upon as com- plete, seems to justify the following conclusions : (1) A very large and increasing proportion of Egyptian land- owners is composed of peasant proprietors. In 1894, 78 per cent of the landowners were proprietors of small estates of less than 5 fed- dans in area; in 1902, the percentage had increased to over 85, and in 1904 to over 86. (2) The proportion of the total area represented by petty holdings of 5 feddans and under is small, but slowly increasing. In 1892, 19.8 per cent of the total area was owned by proprietors of 5 feddans and less, in 1902, the percentage was 22.7, and in 1904, it was 23." (3) The proportions of the land mortgaged in the different classes of holdings varies directly with the size of the holdings. During both years referred to in the table the percentage of land mortgaged in the holdings of 50 feddans or over was approximately six times as large as the percentage in the holdings of 5 feddans and under. (4) During the period 1894-1902, there was a large increase in the amount of land under mortgage, and the increase was greater among the peasant proprietors than among the proprietors of large estates. It is among the peasant proprietors that the usurer carried on his business. Here he exacted his pound of flesh with the insatiable greed of a Shylock. He did not apparently succeed in doing busi- ness with a very large proportion of these peasant proprietors — at least not on the security of registered mortgages; but from those few with whom he did do business, the consensus of opinion ia Egypt is that he exacted terms which were both unreasonable and oppressive. LAND CREDIT IN EGYPT. The large landowner in Egypt is fairly well provided with facilities in the line of agricultural credit and has been for some time. In 1901 two land banks were doing business in Egypt. Between 1901 and 1906 the number increased to six. The share and debenture capital and surpluses of mortgage banks' in Egypt increased from £7,263,000 in 1901 to £29,749,000 ia 1905, their liabilities increased during the same period from £6,530,000 to £23,403,000 and their assets from £7,744,000 to £32,655,000.6 The loans of the Credit Foncier Egyptien alone amounted to £E. 14,781, 167 during the period 1880- 1902, representing 6,422 loans; by 1905 the total number of loans made by this institution since 1880 was 8,969, amounting to £E. 23, 963, 583.'^ All these institutions, however, with the excep- tion of the Agricultural Bank of Egypt, have limited their operations to large advances to the more wealthy landowners. For example, of the 8,969 loans made by the Credit Foncier ^Igyptien from 1880 to 1905, 3,594 were loans above £E. 1,000, and 474 were loans above £E. 10,000, while the average size of all the loans was £E.2,672.'* a "Egypt," No. 1 (1905), p. 30. 6 "Egypt," No. 1 (1906), p. 32. c Crfdit Foncier ^fegyptien: Rapports du Conseil d'Administration et des Censeurs. Exercice 1905. <* Credit Foncier Egyptien: Rapports, etc., p. 24. AGRICULTURAL BANK OF EGYPT. O GOVERNMENT ADVANCES TO AGRICULTURISTS. In the year 1894 the Egyptian government took the first step in the direction of providing agricultural credit facilities for the fellah- een by making advances of some 27,000 bushels of seed; in 1895 the amount was increased to nearly 44,000 bushels, and in 1896 it was increased to over 46,000 bushels. The seed advanced was, according to the Earl of Cromer, both better in quality and cheaper in price than that sold by the money lenders. The purchase money was made payable in three equal installments, extending over the last quarter of the year. In 1895 the Egyptian government decided as an experimental measure to devote £10,000 to advances to the fellaheen. The maxi- mum loan to any individual was fixt at £10; in no case, however, was the loan to exceed £2 per feddan of the land mortgaged. It has been notified, said the Earl of Cromer at the time, that the government has no intention of embarking upon banking operations on a large scale. They merely wish to make an experiment in a few selected districts. It will depend on the results of this experiment whether at some future time an endeavor is made to come to some arrange- ment with a private bank with a view to more extended operations. It is impossible to feel very sanguine of success. All that can for the present be said is that the experiment seems worthy of trial."' Incredible as it may seem, the Egyptian government at first found difficulty in inducing the fellaheen to take advantage of the loans offered. It was not until the actual gold coin was taken in bags from village to village and offered to the fellaheen directly that their sus- picions were quieted and they were induced to avail themselves of the assistance proffered by the government. ^ The experiment was successful. Loans were made in eleven dif- ferent villages in Lower Egypt. No advances were made to culti- vators possessing more than 20 acres, and the rate of interest charged was one-half of 1 per cent a month or per cent per annum. Between February and July, 1896, persons owning in the aggregate 4,665 acres of land, borrowed £E7,700. Of these 1,113 were cultivators of less than 5 acres. With the exception of £E20 the whole of the capital and interest was paid by the end of November. " With reference to the experiment Mr. Chitty, the man who was in special charge of these operations, says: "^ The experience gained has convinced me of the great benefit that an agricultural bank would be to the smaller cultivators. The experiment made this year has not only been a great boon to the villages where the advances were made, but has had the effect of making the money lenders in the neighborhood reduce their rates of interest consider- ably, and has opened the eyes of the fellaheen to the possibility of money being pro- cured at more moderate rates, e a " Egypt" No. 1 (1896), p. 9. The italics are mine. b See description of Maroor, p. 11, note. c" Egypt" No. 2(1897), p. 5. d Same. « It is interesting to note in this connection that similar government loans are at pres- ent being made in the Soudan, with like success. I quote the following from the Earl of Cromer's report on the Soudan for 1905 (" Egypt " No. 1 (1906), p. 134) : ' ' Pending the establishment of a private agricultural bank in the Soudan, the government advances small amounts of money to the cultivators at 7 J per cent interest. The loans are for the most part repayable in three years. Up to the end of 1905, advances to the extent of £E20,000 had been made, of which £E15,000 had been repaid. Governors of prov- inces are made responsible that these loans are actually expended on the purchase of cattle or agricultural implements, or on the construction of sakias. The money is not issued until they have satisfied themselves on this point." 6 AGKICULTUEAL BANK OF EGYPT. THE OEEDIT FONOIEE EGTPTIEN REDUCES THE MINIMUM SIZE OF ITS ADVANCES. The next move in the direction of offering improved agricultural credit facilities to the fellaheen was made ia 1897, when the Credit Foncier figyptien was induced to lower the minimum size of its advances to £E100. When it is recalled that the great bulk of the advances desired by the fellaheen are ioside of £E30, it will be seen that this action was really of little consequence, altho consider- able importance was attributed to it by many at the time. From 1880 to 1905 the number of loans made by the Credit Foncier Egyp- tian in amounts less than £E100 was only 138, and the number m amounts of from £E100 to £E200 was but 1,204." THE NATIONAL BANK OF EGYPT. In June, 1898, the National Bank of Egypt was established. "One of the main reasons which induced the government to assent to the creation of this bank was its desire to facilitate the extension of agri- cultural credit facilities among the fellaheen." ^ The National Bank of Egypt soon after its establishment began operations on a small scale among the fellaheen of the Belbeis dis- trict in Lower Egypt." The debts of the Egyptian fellaheen are divisible into two distinct categories: (1) Those represented by small sums borrowed in the early part of the year and repayable in the fall after the sale of the cotton crop, and (2) loans of larger amounts running over a period of years. The bank's operations in the Bel- beis district were to cover both classes of loans. Small advances in sums not over £20, beariag interest at 9 per cent, were 'made ia the spring, payable after the harvesting of the cotton crop in the fall, and larger advances in sums up to £100, at the same rate of interest, repayable in five annual installments, were made to those wishing to pay off their old debts. Arrangements were made with the govern- ment, according to which the payments on the loans were collected by the tax collectors at the time of the collection of the land tax. By this arrangement the bank was saved the expense of hiring a large force of collectors. Of the 9 per cent interest collected IJ per cent was to go to the local agents of the bank and one-half of one per cent to the tax collectors. During the spring and early summer of 1899, 1,580 advances, amounting in all to £E4,780, repayable in the fall, were made by the bank. The result, said Sir Elwin Palmer, the governor of the bank, was "thoroughly satisfactory; the whole of the money due in the year was collected by the government tax collectors."'* The bank made other loans in the Belbeis district to borrowers of the second class. These loans, 870 in number, aggregating £E26,720, and repayable in five annual installments, were made to persons already in debt, "who were thus enabled to effect a commutation of their debts on favorable terms." « In 1899 the bank consented to extend a Credit Foncier :fegyptien, Eapports, etc. , p. 24. b "Egypt" No. 1 (1900), pp. 4, 5. ■ C'Egypt" No. 1 (1900), p. 5, Phil. Agric. Bank Rep., p. 45. <2"Egypt" No. 1 (1900), p. 5, Phil. Agric. Bank Rep., p. 45. « Same. AGRICTJLTUEAL BANK OF EGYPT. / its operations to three more districts. In 1900 the field of opera- tions was extended to ten districts, and later to the whole of Lower Egypt. Of the 9,500 advances made in 1900, aggregating £E137,781, 6,213, amounting to £E36,216, were small loans repayable withiia one year, and the remainiag 3,287, amounting to £E101,565, were for larger amounts repayable in five annual installments. The amount that fell due in 1900 was £E28,122, due from no less than 5,035 borrowers. " It is with very special pleasure," said the Earl of Cromer, " that I am able to record that the whole of this sum was recovered." " By February, 1902, the bank's outstanding loans to the fellaheen numbered 15,269, of which 3,326 were for small sums repayable within the year and 11,943 for larger sums repayable in five annual install- ments. The amounts of these loans aggregated £E402,000. "These figures clearly show," said the Earl of Cromer, "that the main object of the scheme has been attained — assistance has been given to small proprietors."* THE AGRICXILTUEAL BANK OF EGYPT. By the year 1902 the agricultural credit operations of the National Bank of Egypt had grown to such proportions as to absorb an undue amount of the bank's capital, and to have become unwieldy for an insti- tution doing a general banking business! The class of operations, more- over, involved in making these agricultural loans " fell more properly within the functions of a land bank than within those of an ordmary bank."" Accordingly an agricultural bank, under the name of the Agricultural Bank of Egypt, was started on June 1, 1902, with an authorized capital of £2,500,000, of which £1,250,000 had already been paid up. All agricultural loans of the National Bank of Egypt were transferred to the new institution. The preliminary act of association declared the object of the bank to be "to make advances to small farmers."'* Two classes of small loans were authorized,^ in accordance with the plan previously followed by the National Bank of Egypt. The first class, known as "A" loans, was to consist in loans varying in size from £1^ to £20 and not exceeding as a rule twice the annual land tax which the landowner should pay to the government. The loans were to be payable with interest in one sum the following crop season, but if made only two or three months before that season were not to be repayable until the following year. The maximum period for which these loans were to be granted, was fixt at fifteen months. The sec- ond class of loans, known as "B" loans, varied in amount from £10 to £300,-'^ and were not to exceed as a rule ten times the tax which the landowner should pay to the government. These loans were made repayable in annuities covering principal and interest. They were to be secured by first mortgages on land worth at least double the amount o "Egypt," No. 1 (1901), p. 7, Phil. Agric. Bank Rep., p. 48. 6 "Egypt," No. 1 (1902), p. 8, Phil. Agric. Bank Rep., p. 50. c "Egypt," No. 1 (1903), p. 16, Phil. Agric. Bank Rep., p. 50. dFhil. Agric. Bank Rep., p. 54. e For full details concerning the hank's organization and plan of operations see the bank's revised statutes, submitted as Exhibit A of this report, p. 27. / The maximum size of "B " loans was later raised to £500. 8 AGKICULTUEAXi BANK OF EGYPT. of the advance, and to run for a period not exceeding twenty and one- half years. The maximum period was originally fixt at five years, but was subsequently extended to ten and one-half years and later to twenty and one-half years. " The rate of interest was fixt at 9 per cent per annum.* Collec- tions of both principal and interest were to be made as before, by the village sarrafs or tax collectors at the time of the collection of the land tax. It was provided that the sarrafs should receive one-half of one per cent on all sums collected. Article IV of the bank's revised statutes declares that the bank will pay the ministry of fiaance the expenses^ of the staff specially employed in the service of the loans. The dura- tion of the bank was fixt at fifty years. The National Bank of Egypt became one of the largest stock- holders of the Agricultural Bank at the time of the latter's estab- lishment, and the work of transactiag the financial operations of the Agricultural Bank of Egypt was intrusted to it. The government's concession to the Agricultural Bank declared that: "It shall be administered by a board composed of the governor of the National Bank of Egypt, as president, and of five members, two of whom shall be chosen from among the members of the board of directors of the National Bank of Egypt, and controlled by the commissaries of the government of said bank." " The most important provision of the government's concession to the bank related to its guaranty of dividends on the stocks of the bank. That part of the government's concessions which deals with the guaranty is of sufficient importance to quote in full. It is as follows : " The receipts shall comprize: (a) The interest actually received every year. (6) The amount of the loans due or installments due for the preceding years and actu- ally received in the course of the year, subject to what is stipulated in the last para- graph of Article II. From the receipts above mentioned there must be deducted: (a) All the expenses of the company, (b) The amount of all loans due or installments due on these loans and not received in the course of the year. The difference will constitute the net profits. Out of these net profits there shall be taken successively and in the following order: (I) The interest on the bonds. (II) Five per cent of the interest actually received every year for the reserve fund. The sums carried to the reserve fund shall be invested in securities approved of by the government. The interest arising from these investments shall be added to the resources of the reserve fund. From the remaining profits there shall first of all be taken the interest to be paid to the preferred shares, if any; and then 5 per cent of the said profits for the National Bank of Egypt, by way of agreed remuneration for transacting the financial operations of the Agricultural Bank of Egypt and the necessary sum to pay 5 per cent interest to the holders of ordinary shares upon the amount paid up thereon. The balance shall be distributed as follows: Fifty per cent to the ordinary shares and 50 per cent to the deferred shares. o The maximum period for the repayment of loans made by the Credit Foncier ^gyp- tion is fifty years. Similarly long periods are the rule among the land banks of Europe and Australia. See Phil. Agric. Bank Rep., pp. 89, 106, 151, 152, 153, 154. i In May, 1905, the Egyptian government sanctioned an increase in the share capital, on condition that from the beginning of the year succeeding that at the end of which the loans outstanding should have reached jEE?, 000,000 the maximum rate of interest charged to the fellaheen should be reduced to 8 per cent for both old and new loans. This figure was reached early in 1906. The rate of interest will accordingly be reduced to 8 per cent beginning with next year. See Report of the Directors for the year 1905. Exhibit B, p. 46. c See Exhibit A, p. 35. AGRICULTTTEAl, BANK OF EGYPT. Aht. II. 9 Whenever, for any year during the fifty years of the duration of the company, the interest received in the year and the sums received upon the loans due or installments due and not received for the preceding years do not reach the necessary sum — (1) To cover all the expenses of the year and the amount of the loans or of the installments due and not actually received in the year; (2) To leave a net profit representing 3 per cent of the capital invested in loans to the fellahs; the additional sum for the above purposes shall be taken out of the reserve fund; and in the event of the said fund being insufficient, the government will pay to the company, by way of subveijtion, at latest on the 15th February in each year, the balance of the sum necessary for the above purposes. In this latter case, the loans or installments due and not received in the year which are collected in the following years shall be paid over to the government, up to the amount of the subvention paid by it to the company. ' Now that we have sketched the reasons leading to the establish- ment of the Agricultural Bank of Egypt and briefly explained its organization andiplan of operations, it will be well to inquire into the question of results. How has it worked? Has it been a benefit to the fellah and released him to any extent from the clutches of the usurer, or has it pauperized him and led him to plunge still more deeply into debt? Has it proven to be a profitable enterprise and yielded a fair return to the stockholders, or have bad debts been so numerous or the expenses of administration so great as to have made the enterprise a financial failure? Has it been a boon to the government by rendering the fellaheen more contented and prosperous, or has it brought reproach upon the government by its unreasonable exactions and by the extensive foreclosing of mortgages. Has it interfered with the efiicient performance of the regular duties of tax collectors? Has it been a drain upon government revenues by reason of demands for the payment of the government's interest guarantee? These are ques- tions that require honest answers before one can pass an intelligent opinion as to the success of this enterprise. We will consider them under the following general heads: (1) The bank and the fellaheen; (2) the bank and the stockholders ; (3) the bank and the government. At this point attention should be dravsna to two facts, which ought to be kept continually in mind in qualification of the discussion which follows concerning the bank's success. These facts are (1) The Agri- cultural Bank of Egypt, as a distinct institution, has only been in operation since June 1, 1902, a period of four j^ears; and (2) these four years have been years of unprecedented prosperity for Egypt. In view of these considerations, the Earl of Cromer himself, who is responsible for the inception of the bank and who takes a just pride in the bank's success, said to the writer, as recently as March 23 of the present year, that he did not believe the bank was yet entirely out of the experimental stage. Pt (1) THE BANK AND THE FELLAHEEN. The Agricultural Bank of Egypt was in its inception an institution established for the purpose of continuing the work previously carried on by the National Bank of Egypt in the line of rendering financial aid to the Egyptian fellaheen. It was established by government initiative, with the object of assisting the fellaheen to free themselves 10 AGRICULTUKAL BANK OF EGYPT. from the clutches of the usurer and to profitably cultivate _ their farms. By its results in this "direction its success must primarily be judged. NUMBER AND SIZE OP LOANS. The extent to which the bank has reached the fellaheen will be seen from the following table, showing the number and size of the bank's outstanding loans on certain dates. " Table 11.— Loans of the Agricultural Banh of Egypt outstanding on certain dates. "A" loans. Number of loans. Amoimts. Of £E1 and under. Of over £Elto £E5. Of over £E5to £E20. Total number. Total amount. Average amount. Dec. 31, 1903 6 759 1,060 5,963 6,776 6,434 9,662 • 13,156 17, 498 21,829 £E. 104,684 149,032 194,671 £E. 7.96 Deo. 31, 1904 c 8.62 Deo. 31, 1905 d 8.92 "B" loans. Number of loans. Amounts. Date. Of over £E20 to £E50. Of over £E50 to £E100. Of over £E100 to £E150. Of over £E150 to £B500. Total num- ber. Total amount. Average amount. Num- ber. Amounts. Total amount. Average amount. Dec. 31, 1902 !> £E. £E. 46,572 78,911 134,207 186,530 £E. 1,208,200 2,195,841 3,936.242 5,765,672 7,033,486 £E. 25.94 Deo. 31, 1903 c. Dec. 31, 1904 iJ. Deo. 31, 1905 e. 53,481 96,234 7,928 13,207 2,359 3,934 1,987 3,334 65,755 116,709 163,701 2,091,157 3,787,209 6,571,001 31.80 32.45 34.03 27.82 29.33 31.08 Mar. 31, 1906/. o The total number of male Egyptians over ten years of age engaged in agriculture on June 1, 1897, the date of the last census returns, was 2,049,258.— Statescoen's Year Book, 1904, p. 1229. 6"Egypt"No. 1 (1903), p. 16. Detailed figures are not available for this date. The first report of the directors covers the period June 1, 1902, the date of the bank's establishment, to December 31, 1903. Concerning the bank's opera- tions for the year 1902, the Earl of Cromer says (same p. 16): "During 1902, 34,532 loans, repayable in fifteen months, and amounting in the aggregate to £E202,942, were made. Of these, 19,785 were for sums less than £E5; 7,807 were for sums between £E5 and £E10: 6,940 were for sums between £E10and £E20. "The number of loans repayable in five annual installments was 20.341, representing m the aggregate & sum of £E748,S78. Of these, 8,513 were for sums below £E20. Most of the others were for sums less than £E 100. The maximum amount of any one loan was £E300." c Report of the Directors, submitted February 23, 1904. See Exhibit B, Schedule I. dReport of the Directors, submitted February 20, 1905. See Exhibit B, Schedule II. 'Report of the Directors, submitted February 28, 1906. See Exhibit B, Schedule III. The Report for 1905 does not give the figures showing the numbers of loans of different sizes outstand- ing December 31, as was the custom in previous reports, but gives instead the figures for the loans put out during the year. They were as follows: "A " loans. Loans under £E1 1, 861 Loans above £E1 to £E5 19, 217 Loans above £E6 to £E20 26, 863 Total " A " loans 47, 941 "B" loans. Loans from £E10 to £E50 45, 267 Loans above £E50 to £E100 7, 478 Loans above £E100 to £E150 2,596 Loans above £E 150 to £E500 •_ . . . 3, osi Total " B " loans 68, 342 Total loans during 1905 106, 373 The average size of the " A " loans made during the year was £E8.40, and the average size of the " B " loans was £R42.10. / Figures for total loans outstanding March 31, 1906, furnished by bank's manager. aukj.uuijXu«a±j j3aivK of EGYPT. 11 The table seems to justify the following conclusions: (1) The Agricultural Bank has had a phenomenal growth since its organization as an independent institution, and, considering its short history, is reaching a surprisingly large number of the Egyptian fellaheen. Its outstanding loans have increased during the period December 31, 1902, to March 31, 1906, from £El,208,200 to £E7,033,486, an increase of 482 per cent in three years and a quarter; and the number of its loans increased during the period December 31, 1902, to December 31, 1905, from 46,572 to 185,530, an increase of 298 per cent in three years." (2) The great bulk of the bank's business, whether judged by the number of borrowers or by the amount borrowed, consists of "B" loans — that is, loans varying in size from £E10 to £E500 and running for periods not exceeding twenty and a half years. (3) The number of "B" loans is increasing at a much more rapid rate than the number of "A" loans, the increase in the "A" loans during the three years ending December 31, 1905, being 66 per cent and the increase ui "B" loans being 149 per cent. (4) The average size of the loans of both classes is steadily increasing, the average size of the "A" loans having increased during the three years from £E7.96 to £E8.92 and the average size of the "B" loans from £E31.80 to £E34.03. REASONS FOE BORKOWING. The figures just cited show that large numbers of the Egyptian fellaheen have been taking advantage of the opportunities for land credit offered by the bank. It is important to know something of the objects for which loans have been obtained. Have the funds borrowed been used wisely for the paying off of onerous debts, for improving the farms, purchasing farm materials and implements, cultivating the soil, harvesting the crops, etc., or have they been employed unwisely for personal luxuries? Unfortunately no statis- tics, are available showing the purposes for which funds have been borrowed and the uses to which they have been put. Replies received to inquiries made on this subject in Egypt of officials of the bank and other persons familiar with its workings would seem to justify the following conclusions: (1) Money is generally borrowed for a combination of purposes, the sums obtained frequently being used in part for the purchase of seed, or for the cultivation of the soil, the harvesting and marketing of the crops, or other running expenses in connection with the working of the farm; in part for the paying of old debts, in part for the purchas- ing of more land, and in part to pay ordinary household expenditures during the period of the cultivation and harvesting of the crops oThe bank's rapid growth in its early days is accountable in no small degree to an institution known as the "Maroor." The Maroor is described as follows by one of the bank's officials: "When the bank was first instituted it was necessary to familiarize the fellaheen with its object and scope. Owing to the fact that the vast majority of the class from which the bank's clients are drawn can neither read nor write, ordinary methods of advertisement were of no use. It was therefore necessary to use others, and the best was found to be what has come to be called for short Maroor. That is, the agent taking a clerk with him visits personally each village in his district. He calls at the Omdeh's house (the Omdeh is the headman of the village, see p. 22] and asks him to call a meeting of the landed proprietors of the village, and when they have gathered together the agent, through his clerk, expounds the bank and its works." 12 AGEICULTUKAL BANK OF EGYPT. and before the proceeds thereon are realized. The proceeds of comparatively few loans appear to be expended solely on one object. (2) The two most important single objects for which money bor- rowed from the bank is expended appear to be (a) the purchase of land and (&) the paying on of old debts bearing excessive rates of interest. [a) One very important reason which leads the fellah to borrow money for the purchase of land is found in his desire to provide for the welfare of his children. According to the system of mheritance prevailing in Egypt the estate of the parent is divided among all the children, the boys receiving equal shares and the girls each receiving one-half of a boy's share. This system naturally results in the breaking up of the land into a great many small holdings. Agriculture is the only form of economic activity with which the average fellah is familiar. His homestead has for him a very high sentimental value. His religion prohibits him from putting money out at interest. " Land is the Egyptian's stocking." As a result of these conditions, if the fellah is to give his children as good a start in life as he himself had, his only course is frequently the purchase of more land. The recent prosperity of Egypt and the opening of large new tracts of land by reason of improvements in the system of irrigation have given further impetus to land purchases, and, in consequence, the desire to purchase land has been a very important motive among the fellaheen for the borrowing of money from the Agricultural Bank. (6) In the early days of the agricultural loan operations of the government and of the National Bank of Egypt the great bulk of the advances made were for the purpose of enabling the fellaheen to pay off debts bearing usurious rates of interest. This motive is probably still the principal one for which the fellaheen seek loans, altho it is naturally one of decreasing importance; for debts bearing exorbitant rates of interest are rapidly being paid off and the usurer is being forced into the background. There is no ques- tion but that usury has greatly declined in Egypt since the estab- lishment of the Agricultural Bank. Mr. RowTatt, governor of the National Bank of Egypt, and Mr. Scott-Dalgleish, manager of the Agricultural Bank of Egypt, agree in the opinion that the operations of the Agricultural Bank have resulted in reducing the rate of inter- est on small loans in cities by something like 3 per cent, and on agri- cultural loans to the fellaheen by at least 5 to 6 per cent. " ABB THE FELLAHEEN GETTING OUT OF DEBT? Do the facts that the rate of interest is being lowered and that the fellaheen are now able to obtain money on reasonable terms mean that they are getting out of debt? Very early in the development "' The late Sir Elwin Palmer said in 1901, concerning the agricultural credit opera- tions of the National Bank of Egypt, of which he was at that time governor: "The fact that the bank is prepared to advance small sums at a fair rate of interest has, in the districts where the bank is working, caused a fall in the rate usually charged by money lenders, and the fellaheen have indirectly benefited in this way too. In one district the largest money lender left when the bank began operations; in another the bank was regularly boycotted, and it was impossible to find an agent among the people of the district of any standing, they being nearly all money lenders them- selves. An outsider had, therefore, to be appointed; he had great difficulties at first, but the people of the district now begin to realize the advantages, and are dealing with the bank."— "Egypt," No. 1 (1901), p. 8, Phil. Agric. Bank Rep., p. 48. AGRICULTUKAL BANK OF EGYPT. 13 of the present system of making advances to the fellaheen the Earl of Cromer took the position that the success or failure of the project would depend largely upon the question of "whether the majority of the cultivating classes, having once been relieved from any very onerous debts which they may have contracted, will or will not use the comparative financial freedom thus acquired to plunge again into operations from which it will be extremely difficult, if not alto- gether impossible, to extricate them."" In the absence of informa- tion concerning the extent and terms of the nonregistered indebt- edness of the fellaheen this question can not be answered with any degree of certainty. Moreover, opinions in Egypt concerning the subject are somewhat contradictory. In 1900 the Earl of Cromer said, referring to this question: It would be premature at present to express any confident opinion on this point. Such little evidence as is forthcoming, however, rather points to the conclusion that it is erroneous to suppose that the Egyptian fellah will almost invariably incur debt up to the maximum amount of his credjt. I do not doubt that a certain number of cultivators, after having commuted debts on which they are perhaps paying interest at the rate of 40 per cent or even more into one on which they will pay 10 per cent, will use the margin of income thus rendered available in order to contract further debt; but I contend that the present scheme may be considered a success if the number of individuals who adopt this ruinous procedure constitute the exceptions rather than the rule.!" In 1901 the late Sir Elwin Palmer, at that time governor of the National Bank of Egypt, wrote : There is nothing to indicate that the fellaheen, once relieved of their onerous debt to the money lenders, are inclined to plunge again into debt beyond the debt to the bank; indeed, the facility with which the recovery of the loans or installments has been effected would seem to show that this is not the case. « Writing on this subject in 1902 the Earl of Cromer said: Up to the present time the number of those who have used their improved credit in order to incur fresh debt has, to the best of my belief, been very small, d In 1903 he declared: Time must be allowed before any confident statement can be made on this subject. So far the reports which I have received on this branch of the question are satisfac- tory. As I have frequently stated before, the fellaheen are generally much less improvident than used to be imagined. « The Earl of Cromer exprest a similar opinion with reference to this subject in conversation with the writer in March of the present year, qualifying it, however, with a statement to the effect that he did not believe that the bank could yet be considered entirely out of the experimental stage in this respect. Testimony of a different character, however, as previously stated, is not wanting. The manager of a large bankmg institution in Cairo, who has been watching with interest the progress of the work of the Agricultural Bank of Egypt, informed me that there was considerable evidence that the fellaheen were using the credit obtained from the Agricultural Bank as a means of further extending their loans with the usurer, frequently borrowing from the bank in order to meet payments due to the usurer. To vmat extent such practises o "Egypt," No. 1 (1900), pp. 5, 6, Phil. Agric. Bank Rep., p. 46. 5 Same. c "Egypt," No. 1 (1901), p. 8, Phil. Agric. Bank Rep., p. 49. d "Egypt," No. 1 (1902), p. 8, Phil, Agric. Bank Rep., p. 50. « "Egypt," No. 1 (1903), p. 17, Phil Agric. Bank Rep., p. 51. 14 AGEICULTUEAL BANK OF BGTPT. existed he was unable to say. One of the district agents, who has been in the employ of- the bank for about three years, and whose duties have brought him into close touch with the fellaheen, exprest an opinion to the following effect : There is no question but that the fellah supplements his loans from the bank largely by loans from the usurer. The fact, however, that the bank holds a first mortgage on his property prevents him from going very deeply into debt to the usurer. The fellah often pays for some time his regular installments to the bank, and then, long before the time arrives for the final liquidation of his debt to the bank, increases the amount of his loan to the maxi- mum, and with the proceeds reduces or pays off his debt to the usurer. It is an unfortunate feature of a bank of this type that it does not encourage people to get out of debt, as do the cooperative banks of Europe. Loans made by the bank to the fellaheen have a tendency to become permanent working credits for the financing of small farms. If only the merits of the cooperative system could be com- bined with those of the Agricultural Bank of Egypt much would be accomplished. The opinion of the district agent just referred to seems to be supported by the figures given in the table on page 3, which give evidence of a decided increase of mortgage indebtedness among the fellaheen between the years 1894 and 1902. In view of the apparently conflicting testimony on this subject from persons in Egj^t thoroly conversant with the bank's affairs, an outsider would be presumptive to express a very posicive opinion. If I may venture to make a guess on the subject, however — and it is only a guess — I would say that the fellaheen are probably not getting out of debt by reason of the facilities offered by the Agricultural Bank; that, in fact, their total indebtedness is probably increasing, and that a large proportion of those who do borrow are borrowing from the bank and from other sources practically up to the limit oi their credit; that, on the other hand, the bank has to a large extent taken the place of the usurer as a source for borrowing, that the fellah is more independent of the usurer than he formerly was, and that the terms he obtains from him, considering the security offered, are much more favorable than they were a few years ago. It may not, moreover, be an entirely unmixt evil, if the fellaheen do use the Agricultural Bank as a means of providing permanent working credits for the financing of their farm operations, provided only that the funds borrowed are wisely used. It should be remembered that the great bulk of the world's industrial and commercial enterprises are financed by money borrowed on the security of pledges of plant, raw material, or finished product. Thanks to the excellent work of the British Government in Egypt the fellah is now assured of the peaceful possession of his property. There is a real incentive for the exercise or his natural thrift, and it is probable that, altho he may borrow excessively^ the money he borrows will be expended more wisely than heretofore. AGB.ICTJLTUEAL BANK OP EGYPT. 15 (ll) THE BANK AND THE STOCKHOLDERS,. THE BANK ESTABLISHED ON A STRICTLY OOMMEKCIAL BASIS. Altho the activities of the Egyptian Government, which led to the estabUshment of the Agricultural Bank of Egypt, were actuated entirely by the desire to improve the condition of the fellaheen, it was never intended that the bank should be a philanthropical enter- prise. The Earl of Cromer, in his annual report " covering the year 1899, said with reference to the agricultural credit operations of the National Bank of Egypt: It was felt * * * that no permanent' success could be obtained unless the phil- anthropic considerations which cluster round the treatment of this subject were so far •discarded as to place the matter on a sound commercial basis, and thus insure to the bank an adequate remuneration for their capital outlay. In his annual report '' covering the year 1902 the Earl of Cromer referred to two"^ important reasons why the Egyptian system had " attained a certain measure of success," the first oi which was : That, although the action of the Government has been so far philanthropic that they have wished to iDenefit a large and important class of the community, the undertaking has in no degree been established on a philanthropic basis. On the contrary, the basis has been strictly commercial. There was in the first instance some very natural difficulty in convincing capitalists that the business would be fairly lucrative; but when by applying the test of actual experiment this difficulty was overcome, the main obstacle to success was removed. THE bank's FINANCIAL CONDITION. A detailed account of the bank's financial condition at the end of each year since its establishment will be found in the three annual reports of the directors, submitted as. an appendix of this report. The following tabulation of the bank's " net profits " ^ will give in a brief way some idea of the bank's success as a financial enterprise. Distribution of the net profits of the Agricultural Bank of Egypt. « Period. Net profits. Interest on Carried to Dividends on pre- ferred shares. Remunera- tion to the National Bank of Egypt. bonds. reserve fund. Rate. Amount. Jum 1, 1902 to Dec. 31, 1903. Jan. 1,1904 to Deo. 31, 1904. Jan. 1, 1905 to Deo. Si, 1905 . £ s. d. 79,915 18 8 157,859 9 11 302,285 14 6 £ o. d. £ i. d. 7,729 3 12,916 8 10 25,790 4 6 Perot. 4 4 4 £ s. d. 2,435 7 9 24,596 3 7 46,128 10 11 £ 8. d. 3,609 6 8 27, nh 16 7 96,202 11 5,868 15 W 9,023 5 10 Period. Dividends on ordi- nary shares. Dividends on de- ferred or found- ers' shares. Amount carried tor- ward. Rate. Amount. Kate. Amount. June 1,1902, to Deo. 31, 190C Jan. 1, 1904, to Dec. 31, 1904 Jan. 1,1905, to Dec. 31, 1905 Per ct. 4 6 7J £ s. d. 65,953 15 74,400 93.000 Per ct. £ s. d. £ s. d. 188 6 3 6.3 15.15 12,300 31.500 172 17 3 813 19 5 ""Egypt" No. 1 (1900), p. 5; Phil. Agrio. Bank Rep., p. 45. 6 "Egypt" No. 1 (1903), p. 16; Phil. Agrlc. Bank Rep., p. 51. » The second reason was that the supervision of the bank's British agents had been " capable, vigilant, and honest." d For definition of term " net profits " as contemplated by bank's statutes, and for the statutory regulations for their distribution, see p. 33. e Figures taken from the Urst, second, and third reports of the directors on the working of the bank. See Exhibit B, Schedules I, II, and III. 236b— 06 2 16 AGRICXJLTUEAX, BANK OF EGYPT. When it is recalled that the bank's statutes require that all loans and installments due and unpaid at the end of each year shall be deducted from the gross receipts for the year, in computing the net earnings, so that the bank's reserve is not oflFset by a lot of bad debts, it will be seen that from the stockholders' pomt of view the bank has so far proven a remarkable success. THE bank's financial STANDING. The financial standing of a concern of this type consists in its reputation for stability m the business world and for present and prospective earning capacity. Its financial standing is reflected in the market prices of its securities. Inquiries made in Egypt of men prominent in financial affairs concerning the bank's local standing invariably elicited the reply that its credit was excellent, and that no one questioned for a moment its stability or its success. The present management enjoys an enviable reputation for ability and for conservatism. The market prices of the bank's stocks and debentures for each quarter since they have been quoted in the London market are given in the following table. It will be recalled that the par value of the common stock and that of the 34 per cent cumulative pre- ferred is £5, and that of the 4 per cent debentures is £100. Market prices of stocks and debentures of the Agricultural Bank of Egypt, a Date. Common stook. 4 per oent omnu- lative preferred stoot. 3§ per oent tends. Highest. Lowest. Highest. Lowest. Highest. Lowest. Quarter ending: Dec. 31, 1903 £7i 7 8i i2i 14 £7 7 7i 8i 8} 9J 12 1^ 9i 93 Mar. 31, 1904... June 30, 1904.. Sept. 30, 1904 Deo. 31, 1904 'iioi lOJ 10^ £95 9J 10 10 £94 95 95 £93 Mar. 31, 1905 93i June 30, 1905 93} 94 Sept. 30, 1905 Deo. 31, 1905 92i Mar. 31, 1906 . 93 May 31, 1906 6 93 1 Figures taken from The Investor's Monthly Manual. 6 Two months ending May 31, 1906. At the end of March, 1906, the deferred shares, whose par value is £5, were valued at about £950. T|ie table^ tells its own story and does not appear to call for comment. BAD DEBTS. One of the first and most serious objections always brought to any scheme for the extension of land credit among small farmers is that of the risk of loss thru the failure of borrowers to repay their loans. The Credit Foncier ifegyptien had experienced considerable difficulty in collecting its annuities prior to the time of the establishment of the Agricultural B^nk of Egypt, and it was argued by many that this difficulty would be fatal to the success of any scheme for the extension of land credit among the fellaheen. It would be natural to expect to AGKICULTTJEAL BANK OF EGYPT. 17 meet greater difficulties in making collections from petty farmers than from the owners of large estates. Inasmuch as this danger appeared to be a real one, the bank's regulations with reference to the investigation of titles, the preparation of mortgages, the making of advances, and the collection of annuities were most carefully made. Safeguards were thrown about every step in the negotiation of a loan in order to prevent loss by mistake or, perhaps more importantly, by fraud; for the fellaheen, who are for the most part Mohammedans, have not a very high sense of honesty in dealing with "nonbelieving" Christians, and are liable to think the defrauding of a Christian is cute, rather than immoral. Thanks to the bank's efficient management and to the rigid terms of the loan contract, lapses in the payment of obligations have been surprisingly few. In the sketch previously given of the agricultural credit experiments of the Egyptian Government and of the National Bank of Egypt, experiments which finally led to the establishment of the Agricultural Bank of Egypt in June, 1902, figures were cited showing the bad debts met with during the years covered by those experiments. " They showed that bad debts during those years were found to be almost negligible quantities. The following extracts from the reports of the Earl of Cromer, and from the reports of the directors of the Agricultural Bank, will show that that bank has had a similar experience since its establishment: J902.— During 1902, £E305,500 had to be recovered from 35,884 bon-owers. Of this amount all but JEE2,360 was actually paid. There is every reason to believe that the balance due at the end of the year will shortly be recovered.* 1904. — The arrears in capital and interest for the year 1904 amounted to £E27,718, or about 3 per cent, of the amount that was due for collection. By the end of January about a third of these arrears had already been recovered. <= 1905. — Toward the close of last year the collections on account of interest and sink- ing fund were made with some difficulty in the province of Behera and in the northern portions of Gharbieh and Dakahlieh. The difficulty arose owing to the lateness of the cotton crop, d At the end of 1905 the overdue loans for the year amounted to £E68,400,. and the overdue interest to £E28,660.« Of this total of £E97,060 overdue obligations on December 31, 1905, jeE70,000 had been collected prior to March 31. On March 29, 1906, Mr. Scott-Dalgleish, the bank's manager, stated, in conversation with the writer, that not a single loan had been made since the bank's organization that the management believes to be irrecoverable.^ This opinion, if justified — and I see no reason for doubting it — cer- tainly represents a most remarkable record for a bank whose loans have altogether amounted to upward of $50,000,000, covering advances to hundreds of thousands of agriculturists, the average amount of which has probably been less than $150.^ b "Egypt," No. 1 (1903), p. 16; Phil. Agric. Bank Rep., p. 51. I have been unable to obtain the figures for the year 1903. The figures for overdue interest for that year, as given in the 1903 balance sheet, show the amount to have been small. "Egypt," No. 1 (1905), p. 29. d "Egypt," No. 1 (1906), p. 35. « Report of the directors for the year 1905, Exhibit B, p. — . /Mr. Scott-Dalgleish says that the bank has in its books one small loan which it will probably not collect from the borrower hipaself, but whose payment has been guaranteed by a certain local government official who is responsible for the bank's having been misinformed concerning the character of the security offered by the borrower. g See table, p. 10. 18 AGEICULTUBAL BANK OF EGYPT. Delinquencies in the meeting of the obligations due the bank are treated as follows: After the tax collector has reported certain bor- rowers delinquent in meeting their payment, a clerk is sent 9ut from the local office of the bank to attempt to make the collections. The tax collectors are allowed to receive payments during the month fol- lowing that in which they are due; after that all collections must be made by the agencies. When the lists are closed the names of the delinquents in each sec- tion are sent to the bank's legal department, and a "lettre de menace" is then sent to each delinquent notifying him that imless payment is made within a certain number of days (usually seven or eight) the bank will be compelled to take the necessary legal measures for the collection of the account. These letters usually lead to the' settle- ment of from 60 to 70 per cent of the accounts still delinquent. The balances still unpaid are then turned over to a special department of the bank having such 'matters in charge, and one of the bank's English traveling agents calls on each person still delinquent and investigates the case. If he finds that the borrower's failure to pay is caused by sickness, poor crops, or other cause not the fault of the fellah he recommends that the payment be deferred, or that the interest be required to be paid and the installment of the principal be deferred, and so on, according to the merits of the case. If, on the other hand, he finds that the borrower's failure to pay is due to neg- ligence, or to simple unwillingness to meet his obligation, he recom- mends that the mortgage be foreclosed. The bank generally follows the advice of its agent in such matters. The manager informs me that from the time of the bank's establishment in June, 1902, there have been 350 cases in which foreclosure proceedings have been started, but that in all these cases except four the proceedings were abandoned before being completed on account of settlements having been made. COMPETITION. In speaking of the bank as a financial enterprise the fact should be noted that the bank is beginning to experience considerable com- petition from other land credit institutions. The recent remarkable growth of such institutions in Egypt has already been referred to." The operations of the Agricultural Bank of Egypt have freed con- siderable private capital formerly tied up in mortgage loans. These facts, together with the increased land values,* greater security of property, and the growing confidence in the safety of carefully placed mortgage loans have resulted in material reductions in the rates of interest borne by mortgage loans. While the Agricultural Bank of Egypt has a practical monopoly on small agricultural loans, and while other institutions can not be expected to compete with it for such loans, on account of the large and expensive force of employees that would be required," it is meeting considerable competition for larger size loans — loans, say, from £200 to £500. Under present conditions in Egypt an interest rate of 9 per cent is high for well- o Pages 11, 14, 15, 17. 6 See on this subject Londoii Times Financial and Commercial Supplement for January 1, 1906, and Economist, February 17, 1906, p. 267. c The work of collecting annuities in the case of the Agricultural Bank of Egypt, it will be recalled, is performed by government tax collectors. See p. 6. AGEIOULTXTEAIj bank of EGYPT. 19 secured loans' above £200, and it is a matter of common report ia Cairo that other iastitutions are underbidding the Agricultural Bank for its larger-sized loans and in some cases taking away its customers. It remains to be seen what effect the banjc's anticipated reduction in the rate of interest to 8 per cent next year " will have upon this competition. (in) THE BANK AND THE GOVERNMENT. The subject of the bank's relations to the government requires but few words, and these relate principally to the government's 4 per cent interest guaranty. '' THE government's GUARANTY. An institution with a record of such progress during the first three years and a half of its history, it should be evident, is not liable to call upon the government to make good an interest guaranty of 3 per cent. The Earl of Cromer said in his report for 1903: "It is in the highest degree improbable that any occasion will arise for calling on the government to make good a deficit." "= This opinion he reaflarmed in a personal conversation with the writer in March, 1906. It is con- curred in by the officials of the bank and, as far as I could learn; by the financial public. During a' two weeks' investigation ia Cairo, during which I interviewed many of the more prominent government officials and business men of that city, I failed to find a single person who believed that the Egyptian government would ever be called upon to make good its guaranty. It must not be inferred from what has been said that the govern- ment's interest guaranty has not been of great value to the bank. Without it, in fact, it is improbable that the banlt would have been established for many years to come, if at all. The guaranty, more- over, has been an important factor in the establishment of the bank's credit, and has enabled it to borrow funds at lower rates than would otherwise have been possible. Mr. F. T. Rowlatt, governor of the National Bank of Egypt, and Mr. G. Scott-Dalgleish, manager of the Agricultural Bank of Egypt, while concurring in the Earl of Cromer's opinion that there is little likelihood of the government ever being called upon to make good its guaranty, both declare that the guaranty decidedly improves the bank's credit and enables it to borrow on better terms than would otherwise be possible. They believe that the guaranty makes a difference of at least 6 per cent in the prices realizable upon debentures floated in the London and Paris markets. MISCELLANEOUS. The relations existing between the officials of the bank and those of the Egyptian government have, as far as I have been able to learn, always been the most cordial. A helpful spirit of cooperation seems to exist between both classes of officials. There is no evidence that the work of collecting the bank's annuities interferes with the regular official duties of the government tax collectors. aSeep. 8, note. 6 See p. 33. c Phil. Agric. Bank Rep., p. 51. 20 AGRICULTXJEAL BANK OF EGYPT. The bank's services to the fellaheen in assisting them in the develop- ment of Egypt's wonderful agricultural resources of course indirectly redound to the benefit of the government by reason of the greater prosperity and contentment of the people and of the consequent increase of the government revenues. FACTORS IN THE BANK's SUCCESS. The history of the Agricultural Bank of Egjrpt, therefore, up to the present time is a record of success, whether judged from the stand- point of the fellahen, the, stockholders, or the government. Aside from the rather unique character of the Egyptian system, which seems peculiarly well adapted to Egyptian conditions, and to which the bank's success must be largely attributed, there are certain special factors which account for this success in no small degree. HIGH PEESONNEL. (1) One factor of paramount importance is that of the bank's high personnel. The administrative work of a bank like the Agricultural Bank of Egypt, involving as it does the loaning of large funds in small sums to a people of a race and religion different from those of the bank's officials, and possessing little intelligence and little business sense, is a work which demands officials of a high order of integrity, judgment, and tact. Such work is not amenable to hard and fast rules; at every turn the exercise of discretion is demanded. The Earl of Cromer mentions as one of the two most important reasons for the success of the bank the fact that "the supervision, which has been conducted by very carefully selected British agents, has been capable, vigilant, and honest." " There are now 22 English traveling agents continually in the field, the regular quota being 24. Each agent has under liis supervision several of the bank's 72 branches, '' and is held by the head ofiice strictly responsible for the administration of all the branches in his supervising district." A concern desiring to build up and maintain a high persoimel must expect to pay. good salaries, to recognize merit by promotion, and in ' other matters to be liberal to its employees. In this respect the Agri- cultural Bank of Egypt has not been lacking. The salary hst of the English agents of the bank in the provinces is as follows : First class at £E800 per annum, second class at £E700 per annum, third class at £E600 per annum, fourth class at £E500 per annum, fifth class at £E300 to £E400 per annum. "When traveling beyond the limits of his district, first-class railway or steamer fare is allowed to the agent o "Egypt" No. 1 (1903), p. 16, supra, p. 15. b The bank has (March 31, 1906) 72 branches or agencies scattered thruout Egypt. These local agencies are in charge of natives, there being from two to four employees in each agency. The total force in the field, exclusive of English agents, is about 220. The force in the main office varies from 200 to 350, according to the season. The salajy list averages about £2,000 a month. Office expenses average about £1,000 a month. c The bank's rules and regulations contain a clause warning agents "that they alone are responsible to the head office for all money transmitted to the agencies or collected there as well as for all sums paid out from thence." AGEICULTURAXi BANK OP EGYPT. 21 and third-class fare for one servant. Forty P. T. is allowed for every ni^t spent on duty beyond the limits of his district. " " The bank has made liberal provisions for a staff provident fund, and its leave of absence allowances are ample. Agents are allowed to take three months' leave every other summer. THE UTILIZATION OF THE SERVICES OF GOVERNMENT EMPLOYEES. A second factor of importance in explaining the bank's success and one which is closely related to the one just mentioned, consists in the extent to which the bank has been enabled to utilize the services of government employees in its administration. This utilization of the services of government employees for the work of a private institution is one of the distinctive features of the Agricultural Bank of Egypt The land tax is the principal source of Egypt's revenue. It is a very old tax, one with which the public is thoroly familiar, and one requir- ing a large force of employees for its collection. The land tax is collected in several installments during the year, an effort being made to fix the times of collection in the different districts so as to correspond as nearly as possible with the period in wMch the returns on the principal crops are received. '' Each landowner is fur- January £E279, 000 February 281, 000 March 119,000 April 219, 000 May 270,000 June 484, 000 July £E369,000 August 246, 000 September 64, 000 October 1, 184, 000 November • 772, 000 December 332, 000 October and November are the months during which the cotton crop is principally harvested and sold. nished annually by the government with a tax paper known as the "wird." This paper shows the assessed value of his land, the amount of his tax, and the times when the various installments will become due. When the landowner is a borrower from the bank, his agricultural bank annuity is also placed by the government on the wird, and collected by the village tax collector, known as the "sarraf," at the time of the collection of that installment of the land tax which is due after the harvesting of the principal crop. For this service the tax collector receives a commission of one-half of 1 per cent of the amounts collected. The annuities thus collected are past thru the regular governmental channels until they reach the treasurer of the province, by whom they are deposited to the credit of the government m the National Bank of Egypt. The National Bank thereupon transfers by check to the Agricultural Bank the amount due that institution. The annuities are thus collected by government tax collectors, and handled as government funds and entirely under fovernment responsibility until this transfer by the check of the [ational Bank of Egjrpt. a Agents are required to travel first class and are expected to take a clerk with them, ' 'because," as stated by the bank's rules and regulations, "in the opinion of the natives of Egypt it is undignified to go alone, and any lack of dignity on the part of the agent reflects discredit upon the bank and lowers its prestige, and prestige is a most valuable asset when it comes to collections." b The following table showing the amounts of the land tax paid during different months for all Egypt during the year 1902 is suggestive. Figures are in round numbers. 22 AGRICTJLTUEAX, BANK OF EGYPT. The village tax collector, tho perhaps the most frequently men- tioned government employee in the service of the Agricultural Bank, is far from being the most important one. That honor belongs to the village headman, or omdeh. The omdehs belong to the middle class of landowners, and their position is in many respects analagous to that of the unpaid justices of the peace ia England. The omdeh is the headman or spokesman of the village, and is held responsible by the government for the order in his village. He is elected by the pro- vincial assembly, and has limited judicial powers. He is "the link between the government and the governed," and the man upon whom, according to the Earl of Cromer," the whole life of the village turns." The position of omdeh, altho one of great dignity and influence, has no salary attached to it." The sole emolument of a financial character is an exemption from land tax on 5 acres of land. ' ' The Agricultural Bank of Egypt, as previously stated, depends upon this officer for much of its most important work. He is the real link between the bank and the people. It is he more than any other per- son who creates the public sentiment in his village concerning the bank, and it is upon him that the bank must depend largely for its information conQerning the character and local standing of the various applicants for loans in his village. He gives out the application forms to persons wishing to apply for loans, he testifies concerning the ownersliip and cultivation of the land which the applicant wishes to mortgage, he verifies the applicant's seal, and vouches for the good faith of the applicant, and he is responsible for the truth of his testi- mony. His sole remuneration for these services is the privilege of borrowing money from the bank at a slightly reduced rate of interest — 7 per cent instead of 9 — a privilege he frequently does not care to take advantage of. " LAND TITLES. A third important factor in the success of the Agricultural Bank of tCgypt is to be found in the character and records of the Egyptian land titles and the government's valuations of the land for the purpose of the assessment of the land tax. The subject of land tenure m Egypt is a complicated one, and one upon which it is difficult to obtain reliable information.'' Fortunately a discussion of the history and present status of land tenures in Egypt is not necessary, for our purpose, because, regardless of the , theoretical differences in present day Egyptian land tenures, the great bulk of the privately owned agri- cultural land in Egypt may, /or all practical purposes, be considered as held in fee simple. The administration of the land tax requires that the sarraf or tax collector in each village shall have a complete record of the Ownership of lands in his jurisdiction, and of the liens thereon. Further records are kept at the ofl&ces of the mixt tribunals. The recent evaluation of the various land holdings in Egypt for the purpose of the land-tax readjustment affords the bank reliable information con- a See Milner,England in Egypt (11th ed.), p. 390, and "Egypt," No. 1 (1906), p. 60. 6 The children of omdehs are not liable to military service. "There seems to be considerable evidence that the omdehs often illegally exact fees of applicants for loans. This is an evil which the bank has for some time been making serious but rather unsuccessful efforts to eliminate. dOn this general subject consult Gouvernement Egyptian, La Legislation en Mati6re Immobilize en Egypte, Cairo, 1901. AGRICTJLTUKAL, BANK OF EGYPT. 23 cerning the value of lands offered for mortgage. The EOTptian gov- ernment itself, I am informed, holds itself responsible for the accuracy of the information concerning land titles and liens given by its duly authorized employees to the bank. As a result of this situation, the Agricultural Bank of Egypt has experienced little difficulty and no losses by reason of poor land titles. APPLICABILITY OF THE EGYPTIAN PLAN TO THE PHILIPPINES. We have now sketched the history of the Agricultural Bank of Egypt, explained its plan of operations, and pointed out what seem to be some of the more important elements in its success; it remains to say a few words concerning the applicability of the Egyptian plan to the Philippines. This subject has already been discust in some detail in a previous report to the Philippine government on the advisability of establishing a government agricultural bank in the Philippines. A two-weeks study in Cairo and vicinity of the work- ings of the Agricultural Bank of Egypt has but served to strengthen my convictions, as set forth in that report, of the advisability of establishing an agricultural bank in the Philippines along lines similar to that of the Agricultural Bank of Egypt. In saying this I do not mean to imply that I believe that such a bank if established in the Philippines would be able to show the remarkable record of success during the first few years of its history that has been shown by the Agricultural Bank of Egypt. In fact, I do not believe it would be able to make such a record on the start, and that for three reasons, one relating to the Filipino people as compared with the Egyptian fellaheen, another relating to the differences in the physical charac- teristics of the country, and the third relating to land titles in the Philippines as compared with those in Egypt. Let us take these points up in order, THE FILIPINO FARMER AND THE EGYPTIAN FELLAH. The Filipino and the Egyptian belong to entirely different races, and altho possessing some characteristics in common, exhibit many important differences. Only two of these differences concern us here. All descriptions of the Egyptian fellah agree in describing hiin as industrious and docile. "^ ' o "They are healthy, industrious after their own fashion, extraordinarily conserva- tive in their habits and traditions, prone to obedience, devoid of initiative, good- humored, and pacific. * * * Alike in town and in country, the poorer classes are of the same manageable temperament — cheerful, sociable, and easily contented. * * * They are not only light-hearted, but light-natured. * * * To govern such a race is, under ordinary circumstances, a simple task. * * * The docile and pacific disposition of the race, their ignorance, and their lack of independence increase enormously the responsibility resting on their governors." Lord Milner, lEngland in Egypt (1904 ed.), pp. 314, 316, 318. "In early life the Egyptian peasant is remarkably docile, active, and intelligent. * * * In his own fields the fellah is an industrious laborer, and his work is more con- tinuous than that of the peasant of more northern countries." Dr. G. Schweinwurth in Baedeker's Egypt, pp. xxxviii, xxxix. "Anyone who has seen much of the fellaheen population can bear testimony to the fact that they are a very hard-working and- industrious race,' who are keenly alive to such matters affecting their own interests as they clearly understand." The Earl of Cromer, Egypt, No. 1 (1900), p. 6; Phil. Agric. Bank Rep., p. 46. 24 AGEICtTLTUKAL BANK OP EGYPT. These are qualities that make him a productive laborer and a man easily controlled — qualities of paramount importance for the debtors of an agricultural bank to have. Now, whatever other good quali- ties the Filipino may have — and, all in all, I am inclined to think that he will show to advantage in a comparison with the Egyptian fellah — industry and docility are qualities which his warmest adWirers do not claim to particularly characterize him. For this reason it is probable that an agricultural bank in the Philippiues would find that its pay- ments would be met with less promptness than they are in Egypt, and would, experience greater difficulties in enforcing the "collection of delinquencies. " (2) It is probable that a privately managed bank like the one recommended would have less trouble along these lines than a' purely governmental institution, since it would be in a better position to deal with its customers on strictly business principles and to be exacting with reference to the terms of the loan contract. While it must be admitted as improbable that the Filipinos as a people would prove as reliable customers for an- agricultural bank as the Egyptian fellaheen, there is little reason to believe that a bank organized on the plan suggested would not be able to carry on a reasonably safe and satisfactory business, provided it would use due care in the selection of its customers, would require as security for all but its petty loans mortgages on land registered under the Philippine land registration act, and should take as great pains as does the Agricultural Bank of Egypt in the safeguards it throws about the various steps in the negotiation and collection of its loans. The following statement made by the Earl of Cromer concerning the Egyp- tian fellaheen applies with equal force to the agricultural population of the Philippines: "Until of recent years the system of government prevalent in Egypt was certainly not of a nature to encourage thrift. Time will assuredly be required to wean the Egyptian population from habits acquired during the long period when but little respect was shown for the rights of property, and when the demands of the taxgatherers were not merely excessive but also uncertain and capricious." * GREATER SECURITY OF EGYPTIAN CROPS. A second advantage which an Egyptian agricultural bank would have over one in the Philippines is in the greater certainty and security of Egyptian crops. Agricultural Eg3rpt covers about 13,000 square miles along the Nile Valley and in the Delta. The area actually under cultivation during the crop year 1903-4 was in round numbers 5,500,000" acres. As is well known, there is practically no rainfall thruout most of Egypt and the country is dependent for its water supply upon the river Nile. Formerly, when the country was dependent upon flood irrigation; that is, upon the deposits of water and silt brought down the river in the flood season and deposited oyer the Nile Valley and Delta, the crops were entirely dependent upon the vicissitudes of this flood.. If the flood was of normal height and came at the proper season good crops were practically assured. a See pp. 16, 17. 6 Egypt," No. 1 (1900), p. 6; Phil. Agric. Bank Rep., p. 46. c Report upon the Administration of the Public Works Department in Egypt for 1904, pp. 102, 169. AGBICTJLTUKAL BANK OF EGYPT. 25 An excessively low flood meant scant irrigation, bad crops, and frequently famine; an excessively high flood meant devastation. Under the present system of perennial irrigation prevailing thruout lower Egypt and in certain parts of upper Egypt the distribution of the water supply has been brought largely under the control of man, and thanlis to the reconstruction of the barrage, the erection of the Assuan dam, and other important recent improvements in the Egyptian irrigation system the waters of the flood season can be stored and distributed as needed thruout the year. By this means drouths and destruction of crops by reason of excessive floods are largely averted, and the country's crops are rendered much more certain and regular than in countries depending upon rainfall for their water supply. Furthermore, the small area of the country, its compactness, and the ready accessibility of all parts, render the problem of dealing with various crop-destroying pests and blights a much more easy one than in a country like the Philippines. The relative security and regularity of crops due to these causes are an important factor in the successful extension of agricultural credit among petty farmers. In this respect Egypt has an advantage over the Philippines, and, for that matter, over every other country in the world m regard to the subject of land credit. LAND TITLES IN EGYPT AND IN THE PHILIPPINES. It has already been observed that for practical purposes, so far as the bank is concerned, the great bulk of the privately owned agri- cultural land in Egypt may be considered as being held in fee simple. Moreover, mortgages are generally registered in the village where the land is situated and In the ofiice of the proper mixt tribunal. As a result the Agricultural Bank of Egypt has been able from the start to be reasonably certain of the titles of the large number of farms offered to it by way of security. Titles registered under the Philippine' land registration act would be even more certain than are Egyptian titles, but up to the present time a relatively small amount of Philippine agricultural land has been so registered, and as the proposed bill only permits the bank to accept as security mortgages on land registered under that act, the amount of land in the Philippines which could for some time be hypothecated to the bank would be comparatively small. The small amount of registered land in the Philippines would probably retard somewhat the development of the bank's business at the beginning, but the difficulty would soon be remedied, as elsewhere " pointed out, by the stimulus given to the registration of titles by the knowledge that registered titles would probably enable the owners to obtain loans from the bank at a moderate interest rate. CONCLUSION. In some important respects the Philippines compare favorably with Egypt as a field for the operations of an agricultural bank. Certainly the need for such a bank in the Philippines is greater than a Bank Rep., p. 16. 26 AGRICULTURAL BANK OF EGYPT. it was in Egypt ia 1898 when the National Bank of Egypt was estab- lished. The country is in greater need of capital, there are less facilities for the obtaining of loans on landed security, and the exactions of the usurer are, if anything, more oppressive.'^ In the office of municipal treasurer the bank would fmd a reasonably satisfactory agent for the collection of its annuities. The shortcomings of the Filipino presidente would probably not be much greater than those of the Egyptian omdeh. The Philippine land-registration act gives a more certain guaranty of title than does the present Egyptian registration system. The Filipino may not be as industrious as the feflah, but it is quite possible that he will improve in this respect as time goes on, now that he is begimiing to learn that if he accumulates a little store of wealth he will not be robbed of it by government ofl&- cers under the guise of law. The Egyptian fellah is said to have become noticeably more industrious and thrifty since the British control has made him secure in the possession of his property. It is furthermore true that the principal crops of the Philippines, particularly hemp, copra, and sugar, do not require the careful cultivation required by Egypt's cotton and rice. The Philippines, moreover, have the advantage of Egypt's experience — no small item in the establish- ment of an enterprise of this character. It is assumed that the Philippines would use similar care to that exercised by Egypt in the granting of the concession and in seeing to it that it should be admin- istered m the interest of the public. In the light of the phenomenal success of the Agricultural Bank of Egypt and of the crying need of the extension of agricultural credit in the Philippines, conditions would seem to justify giving the matter a fair trial at least. The management of an agricultural bank of the type recommended would at first extend its operations very slowly, and would certainly not risk any great ainount of its capital, even under a government guaranty or interest, if its operations did not appear to be reasonably assuring after a fair trial. In concluding this report I wish to bear testimony to the uniform courtesy and willing assistance rendered to me during my ' investiga- tions in Egypt by government officials and by business men. My thanks are particularly due to His Excellency the Earl of Cromer, td Mr. Scott-Dalgleish, manager of the Agricultural Bank of Egypt, Mr. F. T. Rowlatt, governor of the National Bank of Egypt, the Hon- orable W. E. Brungate, Khedivial Counselor, and to the Honorable Lewis M. Iddings, Consul-General and Diplomatic Agent of the United States. All of which is respectfully submitted. E. W. Kemmerer, Special Commissioner of the Philippine Government to Egypt. The Secretary of War, Washington, D. C. The Members of the United States Philippine Commission, Manila, P I. o Bank Rep., pp. 28-31. Appendix. Exhibit A. THE AGRICULTURAL' BANK OF EGYPT. Schedule I. — Statutes.a [New edition, with modifications made by General Meetings held on the 38th February, 1903, the 8th June, 1903, 6th and 23d ol February, 1904, and 1st and X8th May, 1905.] Pabt X.^Name of the Company — Its Seat — Its Duration — Its Object. Art. I. The limited Liability Company constituted in accordance with the terms of the Decree dated the 17th May, 1902, and of the present Statutes takes the name of "The Agricultural Bank op Egypt." It is governed by the Mixed Codes. Art. II. f Its head office is at Cairo, but the Board of Directors may create agencies at any other places in Egypt and abroad which it may think advisable for the interest of the Bank. Art. III. • r The duration of the Company is fixed at fifty years, reckoning from the 1st June 1902. Art. IV. The sole object of the Agricultural Bank of Egypt is to make advances to small farmers, under the following conditions; (1) Advances not exceeding the sum of ,£E500 and recoverable in twenty and a half years at the latest. These advances are secured by First Mortgage on lands of a value of at least double the amount of the advance. (2) Advances not exceeding the sum of £E20 and recoverable in fifteen months at the most. The rate of interest must not exceed 9 per cent per annum, and, in any case, the maximum conventional rate fixed by the law. If at the end of any one year the advances made according to the above-named provisions should in the course of the year reach a capital of 7,000,000 Egyptian pounds, the maximum rate of interest shall, from the fiist day of the following year, be reduced to 8 per cent per annum for new advances as well as for the advances in course. The recovery of the loans both as to Principal and contingent charges shall be accomplished by the agency of the sarrafs of the villages, who shall receive a com- mission of one-half per cent on all sums recovered. In addition to this the Bank wUl pay the Ministry of Finance the expenses of the staff specially employed in the serv- ice of the loans. ' Pabt II. — Funds — Shares— Bonds. Art. V. The Company shall ha,ve a Capital of £3,740,000 sterling, of which: (1) £2,480,000 sterling divided into 496,000 Ordinary Shares of £5 sterling each; £1,250,000 sterling, divided into 125,000 Preferred Shares, 4 per cent, of £10 sterling each, and £10,000 sterling, divided into 2,000 Founders' Shares (Deferred Shares), of £5 sterling each. a The modifications of the Statutes made by the General Meetings held on the 28th February and 8th of June, 1903, 6th and 23d February, 1904, and the 1st and 18th May, 1905, were approved by reso- lutions past by the Board Meetings of the 9th April and 13th Jime, 1903, 14th Apnl, 1904, and 30th May, 1905. 27 28 AGRICULTXJKAL BANK OF EGYPT. The Board of Directors fixes the amoulit of the calls. The above-mentioned capital can only be increased with the consent of the Gov- ernment. Any new ordinary Shares which may be created in complement or increase of the aboved-named capital shall not be issued below par. Holders of previously issued ordinary shares shall have a right of preference in proportion to the number of shares they hold to subscribe to the ordinary shares about to be issued. The Board of Directors fixes the forms, extension of time, and conditions in which the advantage of these arrangements can be claimed. New Founders' Shares can never hereafter be created. Art. VA. The Board of Directors is authorized, with the consent of the Government, to issue Bonds under such conditions as they think fit up to the amount of £6,570,000 sterling, including those already issued. Art. VI. The amount of the shares and bonds is payable at Cairo, at the Head Office, or at such places as may be determined by the Board of Directors, and on such terms as it will fix. Art. VII. Every sum whereof the payment is in arrear carries ipso facto, in favour- of the Bank, interest at 7 per cent per annum, reckoning from the day on which it was claimable, without any demand in Judicature. Art. VIII. • In default of payment when due, the Bank is entitled, one month after publication of the numbers of the shares or bonds in arrears in a newspaper appointed for legal advertisements in Cairo, to cause the shares or bonds to be sold on the Alexandria Bourse, in one lot or sej)arately, even at successive dates, by stock brokers or agents, for account and at the risk and peril of the persons in arrear, without formal notice of judicial formalities. , The certificates of the shares or bonds so sold become ipso facto void, and new .ones under the same numbers are delivered to the purchasers. Any certificate which does not duly mention the payment of the sums claimable ceases to be negotiable. The steps authorized by the present Article do nbt form an obstacle to the simulta- neous exercise by the Bank of the ordinary means of the law. .The price resulting from the sale, after deducting the expenses, belongs to the Bank, and is set off, in accordance with the law, against that which is owing by the share- holder or bondholder whose shares or bonds have been sold, who remains liable for the difference, if there is a deficit, but who benefits by the surplus, if any. Art. IX. The Bank may make its share certificates and bonds registered or to bearer. The shares will be registered until they are fully paid. These certificates and bonds are numbered and provided with the signature of two Directors. They bear the stamp of the Bank. , Art. X. The registered shares or bonds are negotiated by a transfer entered in the Registers of the Bank. For that purpose a declaration of transfer and a declaration of acceptance of transfer, the former signed by the transferrer apd the latter by the transferee, are delivered to the Bank. The transmission is only effected, either as between the parties or, as regards the Bank, by the registration of the transfer, made in accordance with these declarations, in the Registers of the Bank and signed by two 'Directors or two Attorneys of the Board of Directors. The Bank may require that the signature and the capacity of the parties be legally certified. Shares and bonds to bearer are transferred by simple delivery. / AGEICULTUBAL BANK OF EGYPT. 29 Art. XI. Every Shareholder or Bondholder can deposit his shares or bonds at the Cashier's office and claim a registered receipt in excnange for the same. The Board of Directors determines the conditions, the' mode of delivery, the costs of the receipt, and the costs of the exchange of the shares or bonds. Art. XII. The shares of each category have among them, in the same way as the Founders' Shares, and each in proportion to their number, a share in the rights. and advantages which are respectively conferred upon them by Articles 40 and 43 hereafter. The dividends on every share, whether registered or to bearer, are validly paid to the bearer of the coupon. Art. XIII. The Shareholders are only liable up to the amount of the capital of each share ; beyond that any call of funds is prohibited. The possession of a share x-pso facto involves adhesion to the Statutes of the Bank and to the resolutions of the General Meeting. The heirs or creditors of a Shareholder can not, upon any pretexte whatever, procure the affixing of seals upon the property and securities of the Bank, or demand the divi- sion of the sale thereof by auction, or interfere in any way in its administration. For the exercise of their rights they must abide by the inventories and the resolutions of the General Meeting. Art. XIV. Every share or bond is indivisible; the Bank only recognizes one owner for one ahare or one bond. The rights and obligations which are attached thereto follow the share or bond into whatever hands it passes. Part III. — The Board of Directors — Commissaries — Auditors — General Meeting. Art. XV. The Company is administered by a Board composed of the Governor of the National Bank of Egypt, as President, and of seven Members, three of whom are chosen from amongst the Directors of the National Bank of Egypt. Three or at most four of these Members constitute a special committee, sitting in Lon- don, where they must have their residence. The Board of Directors will sit in Cairo. Nevertheless the President is at liberty to call a Meeting of the Board in London when- ever the business of the Bank requires it. The Board will keep the London Committee informed of the business every week. It will take the opinion of the said Committee, and will count its votes in regard to — (1) Of deciding upon a call of funds, of proposing the increase of the capital of the Company, or the distribution of shares of future creation, which the holders of shares have not the right to subscribe, or do not subscribe. (2) Of settling the Agenda of the General Meetings, consenting to the convening of Extraordinary Meetings or proposing amendments of the Statutes. (3) Of approving of the final balance sheet, which must be submitted every year to the General Meeting. (4) When it is a question of the liquidation or the dissolution of the Company. (5) In all questions relating to the increase of the capital or the issue of bonds, the conditions of such increase or of such issue, and the distribution. (6) In all other cases in which the intervention of the Committee is asked for by the President of the Board of Directors. Art. XVI. The President is charged with the fulfilment of the resolutions of the Board of Direct- ors and the direction of all the business of the Company. Art. XVII. Every Member of the Board of Directors must be the owner of at least 200 shares of the Company, deposited in the Company's offices. These shares shall be inalienable during the term of his office and until the General Meeting has passed the accounts for the period coBresponding to the exercise of his task. The receipts for these deposits shall be stamped with a stamp showing their statutory character. 30 AGRICULTURAL BANK OP EGYPT. Art. XVIII. The Members of the Board of Directors do not, Tdv reason of their ofla.ce,contract any- personal liability. They are only responsible for the fulfilment of their task. Art. XIX. The office of the Member of the Board of Directors is personal; it can not be dele- gated nor exercised by delegation of power. Art. XX. The Board meets as often as it thinks fit. The Board is convened by its President or by the person acting as such. Art. XXI. The Governor of the National Bank of Egypt or, faUing him, the Sub-Governor of the said Bank, will preside over the Board of Directors. In-order that the decisions of the Board maybe vaild, there must be at least three Members present. The resolutions of the Board are passed by a majority of votes. In case of equal- ity, the President has a casting vote. Art. XXII. The resolutions of the Board of Directors are recorded by Minutes entered in special Registers and signed by the President or person acting as such. Similarly copies or extracts, to be produced for any reason whatsoever, shall be certified as correct by the President or the person acting as such. Art. XXIII. The Board of Directors has the widest powers for the management of the affairs of the Bank within the limits of the Statutes. It acts in Judicature both as plaintiff and as defendant; it exercises all recourse and appeals, sets up all pleas of objection, and grants all powers. It treats, arranges, makes references to arbitration, appoints all amicable referees, compromises, makes all remissions and abandoimients, renounces all rights, grants releases and renunciation of all liens and mortgages, rights of annulment, attachments, or impediments whatsoever, and consents to the cancelment of all inscriptions, all with or without payment. It consents to all priorities of rights, all subrogations and notes. Art. XXIV. The office of the Members of the Board of Directors has a duration of five years. It is always renewable under the same conditions. One-fifth of the Board is renewed every year. By way of exception the first Board of Directors is appointed in the preliminary Deed of Association. The functions of this first Board will continue for five years. Upon the expiration of that period the Members to retire in succession will be deter- mined by lot. The renewel will thenceforth go by seniority. The Board of Directors provisionally fills up any vacancies which may arise in its body. These appointments are afterwards submitted to the first General Meeting. The Members so appointed to take the place of the other Members shall hold office, until the time when the functions of those whose places they take would have expired. The years of office shall be reckoned from one ordinary General Meeting to another. The Directors in office shall not cease to hold office until after the holding of the General Meeting and the appointment of their successors. Art. XXV. The remuneration of the Board of Directors is fixed at £2,600 sterling per annum. The distribution of this sum amongst the Directors shall be fixed by the Board of Directors. AGBICULTUEAX, BANK OF EGYPT. 31 Art. XXVI. t^ The Commissaries of the Government, delegated by the Minister of Finance to the National Bank of Egypt, likewise have as their task the strict observance of the Stat- utes of the Agricultural Bank of Egypt. They may at any time examine the accounts of the Bank. They may attend the Meetings of the Board of Directors with a consulting voice. In case of a breach of the Statutes of the Bank they shall lay their written observa- tions before the Board, and if the same are not taken into consideration, they shall at once make their report to the Minister of the Finances. Art. XXVII. The Ordinary General Meeting appoints an auditor annually; he is re-eligible indefi- nitely. He receives a remuneration fixed annually by the General Meeting. The first Auditor shall be appointed by the Board of Directors in concert with the Government Commissaries. It is the duty of the Auditor to examine the accounts for the current year, and to give his opinion to the next Ordinary General Meeting. He does not attend any meeting of the Board of Directors unless asked to do so. In order to be an Auditor he must be the owner of twenty shares and must deposit them in the hands of the Company, where they remain inalienable during the whole term of his office. This deposit will be made and received under the same con- ditions as that of the Members of the Board of Directors. GENERAL MEETING. Art. XXVIII. The Ordinary General Meeting appoints the Members of the Board of Directors, with the exception of the Presid-ent, and in conformity with the provisions of Article 15 of the present Statutes, as also the Auditor, by a majority of votes. It hears the reports of the Board and of the Auditor. It examines the accounts and approves of them or demands their correction, as the case may be. It fixes the dividends to be distributed; but the dividend can not be larger than j;hose proposed by the Board of Directors. It deliberates upon all the interests of the Company within the limits of the Statutes. The Extraordinary General Meeting, upon the proposal of the Board of Directors, can introduce into the present Statutes any modifications or additions which may be recognized as advantageous, subject to the approval of the Government. In partic- ular it may resolve upon: The increase or the reduction of the capital, shares, and bonds. The prolongation or the limitation of the duration of the Company. Its prior dissolution. The modification of the object and of the name of the Company. This enumeration is simply declaratory and by no means restrictive. Art. XXIX. The General Meeting is composed of all the shareholders of the Company entitled to vote, acting in person or by proxy. Art. XXX. Shareholders possessing at least five shares are entitled to vote at the General Meeting. Every Shareholder shall, if he has not more than 100 shares, have as many votes as he possesses five times shares. If he possesses more then 100 shares he shall have, for the shares exceeding that number, as many votes as he has twenty times shares, and if he possesses upward of a thousand, as many votes as he has a hundred times shares. The Shareholders entitled to vote may be represented at the General Meeting by legal or conventional proxies. The Shareholders entitled to vote, who wish to attend the General Meetings, must deposit their shares at the Head Office or at the establishments indicated for that pur- pose by the Board of Directors, at least five days before the General Meeting. There shall be delivered to them, at the same time as the receipt for the deposit, an admis- sion card bearing their name, or a proxy; this card shall state the number of votes which the holder has. The shares deposited at the Bank for the meetings shall be returned after the close of the meetings and upon giving up the receipt. 236b— 06 3 32 AGBICXTLTURAL BANE OF EGYPT. Art. XXXI. The Ordinary General Meetings shall be held every year in the month of February, at the Ofiice of the Bank in Cairo, at the date fixed by the Board of Directors. The Extraordinary General Meetings shall be held at the office of the Bank when- ever the Board of Directors deem it advisable. Art. XXXII. The General Meetings shall be convened by a notice inserted in the .Official Journal of the Egyptian Government and in a newspaper appointed for legal liotices in Cairo and also in a London newspaper. These notices shall be inserted twice, at an interval of at least eight days, the second insertion appearing at least eight days before the date of the meeting. The Board may order any additional publicity in Egypt and abroad. When the notices are issued for the Extraordinary General Meetings, they mus^ state summarily the object of the meeting. Art. XXXIII. The General Meeting, assembled upon a first notice, deliberates validly when the Shareholders present or represented constitute one-fifth of the shares issued. If the General Meeting is extraordinary, the shareholders present or represented must constitute one-fourth of the shares issued. In either case, if this condition is not fulfilled, a second Meeting shall ipso facto be convened in the same way, but at a period which may be reduced to fifteen days. In that case one single insertion shall be sufiicient. At this second meeting the meeting deliberates validly, no matter what may be the number of shares produced by its members. No modification of the Statutes can be resolved upon except by a General Meeting at which three-fourths of the capital of the Company — ^that is to say, of the share capital — are present or represented. Every resolution for a modification must be passed by at least one-half of the capital. But if the General Meeting does not comprise a nimiber of Shareholders representing three-fourths of the said capital it may pass a provisional resolution by a simple majority of the Shareholders present or represented. In that case a fresh General Meeting is convened in the terms of the preceding paragraph. Th» notices of meeting acquaint the Shareholders with the provisional resolutions passed by the first meeting, and these resolutions become final if they are approved by the new meeting composed of a number of Shareholders representing at least one-fourth of the capital of the Company. Art. XXXIV. The General Meetings are presided over by the Governor of the National Bank of Egypt, or, failing him, by the Sub-Governor of the said Bank, who will form the Bureau by choosing, from among the Members of the meeting, two Tellers and a Secretary, whose appointment shall be submitted to the meeting for ratification. The President directs the discussions. He is invested with the widest powers for that purpose. At the meetings no other questions can be dealt with than those put down on the agenda prepared oy the Board, which the President reads before the discussion. The agenda of the Ordinary Meetings comprise, of themselves, everything that comes within the powers of these meetings. The agenda of the Extraordinary Meetings only comprise the subjects stated in the notice of the meeting. The agenda must, however, contain any proposals which have been submitted to the Board at least ten days before the day of the meeting, signed by at least twenty Shareholders entitled to attend the meeting and representing together at least one-tenth of the capital of the Company. Art. XXXV. The resolutions formulated by the Bureau shall be put to the vote by the President They shall be passed by an absolute majority. Art. XXXVI. The resolutions of the General Meetings are binding on all the Shareholders, even on those who are absent or dissentient. AGRICULTURAL BANK OF EGYPT. 33 Art. XXXVII. Minutes of the proceedings of the General Meetings shall be drawn up. These Minutes shall be entered in a special register and signed by the President, the Tellers, and the Secretary. The copies or extracts of the Minutes shall be certified either by the President of the Board of Directors or by a Director. ^ To the Minutes of each General Meeting snail be annexed the documents relating to the convening of the General Meeting and the attendance sheet stating the names of the Shareholders attending the meeting in person or by proxy, as also the number of shares represented. Part IV.— Annual Accounts— Inventories— DivideTuis—Beserve Fund- Am. XXXVIII. The business year begins on the 1st January and ends on the 31st December. But the first year shall comprise the time elapsing between the 1st June, 1902, and the 31st December, 1903. Art. XXXIX. At the end of each year a general inventory of assets and of liabilities shall be drawn up. This inventory, the balance sheet, and the profit and loss account shall be placed at the disposal of the Government Commissaries, of the Auditor, and of the Share- holders, at the Head Office, ten days before the date fixed for the holding of the Gen- eral Meeting. The Board shall present these accounts to the General Meeting and submit them for its approval. Article XL. The receipts shall comprise — (a) The interest actually received every year. (6) The amount of the loans due or installments due for the preceding years and actually received in the course of the year, subject to what is stipulated in the last paragraph of article 41. From the receipts above mentioned there must be deducted — (a) All the expenses of the company. (6) The amount of all loans due or installments due on these loans and not received in the course of the year. The difference will constitute the net profits. Out of these net profits there shall be taken successively and in the following order — • (1) The interest on the Bonds. (2) For the Reserve Fund 5 per cent of the interest actually collected each year. ' If the interest exceeds £225,000 the amount set aside for the reserve shall be increased 2 per cent on the excess. This sum of £225,000, being calculated on the basis of 9 per cent, at which rate the loans are made at present, shall be proportionately reduced if the rate of interest is lowered subsequently. Should the interest to be paid by the company on Bonds it has issued be less than 4 per cent per annum, the difference between 4 per cent and the rate thus calculated shall be carried to the Reserve Fund. In calculating the rate of interest as above, account will be taken of the charge result- ing from the reimbursement at par of Bonds which may have produced less than par. The sums carried to the Reserve Fund shall be invpsted in securities approved of by the Government. The interest arising from these investments shall be added to the resources of the Reserve Fund. From the remaining profits there shall fir>=t of all be taken the interest to be paid to the Preferred Shares, if any, and then 5 per cent of the said profits for the National Bank of Egypt by way of agreed remuneration for transacting the financial operations of the Agricultural Bank of Egypt, and the necessary sum to pay 5 per cent per annum interest to the holders of Ordinary Shares upon the amount paid up thereon. The balance shall be distributed as follows: Fifty per cent to the Ordinary Shares. Fifty per cent to the Deferred Shares. Art. XLI. Whenever for any year during the fifty years of the duration of the Company the interest received in the year and the sums received upon the loans due or installment? due and not received for the preceding years do not reach the necessarj' sum — (1) To cover all the expenses of the year and the amount of the loans or of the installments due and not actually received in the year. 34 AGRICULTUKAL BANK OF EGYPT. (2) To leave a net profit representing 3 per cent of the capital invested in loans to the Fellahs. The additional sum for the above purposes shall be taken out of the Reserve Fund and in the event of the said fund being insufficient the Government will pay to the Company by way of subvention, at latest on the 15th February in each year, the balance of the sum necessary for the above purposes. In this latter case the loans or installments due and not received in the year, which are collected in the following years, shall be paid over to the Government, up to the amount of the subvention paid by it to the Company. Aht. XLII. The dividends shall be paid annually at the times fixed by the Board of Direc tors, after the General Mieeting has fixed the amount thereof. The Board of Directors may in the course of the year distribute interim dividends. Any dividend which is not claimed within five years from the time when it was payable is forfeited to the funds of the Company. Part v.— Dissolution^^Liquidationr— Disputes . Art. XLIII. Upon the expiration of the Company, or in case of prior dissolution, the Extraordi- nary General Meeting, upon the proposal of the Board of Directors, settles the mode of liquidation, appoints the liquidators, and defines their powers. The assets, after deducting all the debts and charges, shall be devoted successi\ely and in the following order to repaying — Q) The capital paid up on the Preferred Shares (if any). (2) The capital paid up on the Ordinary Shares. (3) The capital paid up on the Founders' Shares. The balance, if any, shall be distributed as follows: Fifty per cent to the Ordinary Shares. .50 per cent to the Founders' Shares. The Reserve Fund, after previously deducting in favor of the Government all the sums which it may have paid by way of subvention and which have not been refunded to it, shall be distributed in the same proportion, viz: Fifty per cent to the Ordinary Shares. 50 per cent to the Founders' Shares. A.ET. XLIV. During the whole of the period of the liquidation the General Meeting retains its powers. In particular it passes the account of the liquidation and gives a discharge for the same. Art. XLV. The appointment of- the liquidators puts an end to the powers of the Board of Directors. Art. XLVI. Any disputes concerning the general and collective interest of the Company can only be directed against the Board of Directors or one of its members in the name of the body of Shareholders and in virtue of a resolution of the General Meeting. Any Shareholder who wishes to raise such a dispute must give notice thereof at least one month before the next General Meeting to the Board of Directors, which is bound to put this motion down on the agenda of the meeting. If the motion is rejected by the meeting no Shareholder can take it up again in his own name. If it is accepted the meeting appoints one or more Commissaries to follow the dispute. I All notices must be served on the Commissaries alone on pain of nullity. Elwin Palmer. F. VON Leonhardt. Joseph I. Aghion. Jacques de Menasce. A. C. Zervudachi. M. C. Salvago. M. Cattaui. Witnesses: E. Manusardi. Z. Giannotti. AGRICTJLTUKAXi BANK OF EGYPT. 35 Schedule II. — Concession. Between the Egyptian Government, represented by llis Excellency, the Minister of Finance, duly authorized for that purpose by a resolution of the Council of Ministers dated the 17th May, 1902, of the one part, and the National Bank of Egypt and Sir Ernest Cassel, K. C. M. G., of the other part, it has been agreed as follows: Art. I. The National Bank of Egypt and Sir Ernest Cassel are authorized to constitute a Limited Liability Company for Agricultural Credit upon the following bases: (1) The Company shall have a capital of £2,500,000 sterling, part in shares and part in bonds. The division of its capital into shares and bonds shall be determined by the Company itself. This capital can ofily be increased with the consent of the Government. (2) It shall be administered by a Board composed of the Governor of the National Bank of Egypt, as President, and of five members, two of whom shall be chosen from amongst the Members of the Board of Directors of the National Bank of Egypt, and controlled by the Commissaries of the Government to the said Bank. (3) It shall have the duration of fifty years. (4) Its sole object shall be to make advances to small farmers under the following conditions: (a) Advances not exceeding the sum of £E300 each, and recoverable in five years and a half at the latest. These advances are to be secured by first mortgage on lands, the value of which must be at least double the amount of the advance. (6) Advances not exceeding the sum of JEE20 each, and recoverable in fifteen months, at the most. (5) The rate of interest must not exceed 9 per cent per annum, and, in any case, the maximum conventional rate fixed by the law. (6) The recovery of the loans, in principal and accessories, shall be effected through the Sarrafs of the villages, who shall receive from the Company a commission of one-half per cent on every sum recovered. (7) The receipt shall comprise — (a) The interest actually received every year. (6) The amount of the loans due on installments due for the preceding years and actually received in the coiu:se of the year, subject to what is stipulated in the last paragraph of Article II. From the receipts above mentioned there must be deducted — (a) All the expenses of the Company. (6) The amount of all loans due or installments due on these loans, and not received- in the course of the year. The difference will constitute the net profits. Out of these net profits there shall be taken successively and in the following order — I. The interest on the bonds. II. Five per cent of the interest actually received every year for the Reserve Fund. The sums carried to the reserve fund shall be invested in securities approved of by the Government. The interest arising from these investments shall be added to the resources of the Reserve Fund. From the remaining profits there shall first of all be taken the interest to be paid to the Preferred Shares, if any; and then — Five per cent of the said profits for the National Bank of Egypt, by way of agreed remuneration for transacting the financial operations of the Agricultural Ba,nk of Egypt and the necessary sum to pay 5 per cent interest to the holders of Ordinary Shares upon the amount paid up thereon. The balance shall be distributed as follows: Fifty per cent to the Ordinary Shares. 50 per cent to the Deferred Shares. Art. II. Whenever, for any year during the fifty years of the duration of the Company, the interest received in the year and the sums received upon the loans due or installments due and not received for the preceding years do not reach the necessary sum — (1) To cover all the expenses of the year and the amount of the loans or of the install- ments due and not actually received in the year. (2) To leave a net profit representing 3 per cent of the capital invested in loans to the Fellahs. 36 AGRICULTUEAL BANK OF EGYPT. The additional sum for the above pxirposes shall be taken out of the Reserve Fund, and in the event of the said fund bemg insufiicient, the Government will pay to the Company, by way of subvention, at latest on the 15th February in each year, the balance of the sum necessary for the above purposes. In this latter case the loans or installments due, and not received in the year, which are collected in the following years, shall be paid over to the Government, up to the amount of the subvention paid by it to the Company. Done at Alexandria in triplicate on the 17th May, 1902. The Minister of Finances. Ahmed Mazloum. El. Palmbk, Oovernor National Bank of Egypt. For Sir Ernest Cassel. F. VON Leonhardt. A true copy. M. Innes. The Minister of Foreign Affairs certifies that the present copy of the Journal, bearing the date of the 24th May, 1902, and the No. 54, is the Official Journal of the Egyptian Government. Done at San Stefano, 10th September, 1902. (Here follows consular legalization in English.) (L. S.) BouTEOS Ghali. Exhibit B. Annual Reports of the Directors of the Agricultural Bank of Egypt. Schedule I. — Report of the Directors for the period June 1, 1902, to December 31, 1903. [Agricultural Bank of Egypt. — SociStiS Anonyme, incorporated under Egyptian law. Created by the Khedivial decree dated May 17, 1902, under concession of the same date granted by the Egyptian Government. Capital issued £1,876,000, in 62,500 Cumulative 4 per cent Preferred Shares of £10 each, 241 ,000 ordinary shares of £5 each, and 2,000 Deferred Shares of £5 each.] Direaors.—^ir Elwin Palmer, K. C. B., K. C. M. G. (President); E. W. P. Foster, 0. M. G.; Sir John Rogers, K. C. M. G. D. S. O.; Monsieur Felix Suares. London Committee. — Sir Vincent Caillard (Chairman);' the Right Hon. Viscount Esher, K. C. B., K. C. V. 0.; the Right Hon. Arnold Morley; the Hon. S. Peel. Government Commissioners. — V. Harari Pacha, Nubar Bey Innes. Auditors. — ^Messrs. Hoare & Russell. Report of the Directors on the working of the Bank from the 1st June, 1902, the date of the establishment of the Bank, to the Slst December, 1903, to beisubmitted to the Shareholders at the first Ordinary General Meeting, to be held at the offices of the Bank in Cairo on Tuesday, the 23d day of February, 1904, at 3.30 p. m. The Directors have to report that after crediting the Reserve Fund with£7,729 3s., being the Statutory 5 per cent on the interest collected on loans, the net profits from the Ist June, 1902, to the Slst December, 1903, are £72,186 15s. 8d.' £ s. d. The amount of accrued Interest on the 62,500 Cumulative 4 per cent Preferred Shares is 2,435 7 9 5 per cent of the Net Profits to the National Bank of Egypt 3,609 6 8 6,044 14 5 Balance available for dividend on the Ordinary Shares \.. 66,142 1 3 Total as above 72, 186 15 8 The Directors recommend the payment of a dividend of 4 per cent per annum on the Ordinary shares calculated from the dates on which the installments were due, which will absorb £65,953 15s., leaving £188 6s. 3d. to be carried forward. In accordance with the Statutes of the Bank only the Interest actually recovered during any financial year can be taken into account in making up the Balance Sheet. Thus only the interest actually collected, viz, £154,582 19s. 7d. has been carried to Profit and Loss Account, whereas the interest accrued amounted to £39,286 19s. lid. more. AGRICULTURAL BANK OF EGYPT. 37 This large difference will disappear in future years and a similar difference will only arise when, in any current year, fresh capital has been employed, the interest on which is recoverable in the following year. In accordance -with the resolution passed by the shareholders at a Meeting held on the 29th October, 1903, 62,500 Cumulative 4 per cent Preference Shares of £10 each, part of an issue of 125,000 shares, were issued to the public on the 4th November, 1903, allof which have been applied for and allotted. This being the first annual report presented to the Shareholders, the Directors con- sider it expedient to explain to them somewhat fully the working of the Bank. The sole business of the Agricultural Bank is to advance money to small landowners. All of these are paying land tax, and the amount paid by them is of material guidance to the Bank in accepting or rejecting applications for Loans. " There are two kinds of loans, loans termed "A Loans, " which consist of small sums from P. T. 50 to £E 20, these are recoverable within fifteen months, and "B Loans,?' i. e., loans of over £E 20 up to £E 300, the maximum period for the recovery of which is ten and one-half years, the redemption taking place by equal annual installments. For the A Loans there is no special security beyond the crop. The B loans are secured by a first mortgage on land of a value at least double the amount of the loan. Listsof all loans made by the Bank are sent to the Ministry of Finance, by whom they are sent to the village tax collectors with orders to recover the amount falling due; at the beginning of each month the Ministry of Finance informs the Bank what amount has been recovered during the previous month and credits the Bank with the amount col- lected; the Bank pays the tax collectors one-half per cent on all recoveries effected by them. At the end of the month succeeding the one in which recovery is due, the Ministry of Finance sends the Bank lists of allloans then in arrear, if any, and the neces- sary steps have to be taken by the Bank's agents to get in the arrears. Witii a view to improving the cotton crop, both in quantity and in quality, the Khedivial Agricultural Society has for the past few years offered to provide the small proprietors with specially selected cotton seed. By an arrangement with the Bank an "A" loan is given for the cost of the seed furnished to each applicant. It has now been settled that the demands for seed shall be received by the Bank's agents, the ^eed being provided by the Agricultural Society and distributed by the Government agents as in the past. An experiment is also being made in two districts to see if the distribution of manure on the same basis can be made. In the first financial year of the Bank's working, consisting of nineteen months, there were put out 59,607 "A" loans, amounting to £E380,860, and 55,014 " B " loans, which amounted to £E1,970,307. The number of loans outstanding on the 31st December, 1903, was 78,911, of which 13,156 were in A loans, amounting to £E104,684 and 65,755 in B loans, amounting to £E2,091,157. The 65,755 <•! B " loans include the loans taken over from the National Bank of Egypt on the formation of the Agricultural Bank. The total of the A and B Loans was £E2,195,841, being an average of £E27.82 for each loan. It will be seen from the above figures that the amount of Loans granted has exceeded the present Capital raised, and aiTangements have accordingly been made with the National Bank of Egypt for providing funds in anticipation of a further issue of capital being made. In view of the constantly increasing demand for loans from the Bank, the Egyptian Government have unofficially agreed to extend their subvention guaranteeing 3 per cent per annum on the capital employed to a further £2,500,000, whichitis proposed to raise gradually by debentures as the money is required. The terms of the proposed arrange- ments in this connection are expressed in the proposed modification of the Statutes which have been submitted to the sanction of the Shareholders. The following statistics of Loans outstanding on 31st December, 1903, may be of interest: A. Loans of 1 £E and under 759 Loans over 1 £E to £E5 - 5, 963 Lonas over 5 £E to £E20 6, 434 13, 156 B. Loans from £E20 to £E50 53, 481 Loans over £E50 to £E100 7, 928 Loans over £E100 to £E150 2, 359 Loans over £E150 to £E300 1, 987 65, 755 78, 911 38 AGB.ICTJLTUEAL BANK OF EGYPT. Tbp total number of land taxpayers according to the figures furnished by the Minis- try of finance is 1,026,081; at least 96 per cent are proprietors of 20 feddans or less, 85 per cent being proprietors of 5 feddans or less. It will be noticed that so far the propor- tion of land taxpayers who have become clients of the Bank is not large. There appears little doubt that a far greater proportion will in time apply to the Bank for accommodation, and in fact since 31st of December last up to the 8th of Febru- ary loans have been granted to 7,516 applicants amounting to £E34,456 in A loans and £E229,419 in B loans. The directors consider that they have established ample safeguards for the conduct of the business of the Bank, and they have every reason to believe that it will continue to develop in a manner satisfactory both to that part of the Egyptian population which it is intended to serve and to the shareholders. The Board wish to record their appreciation of the services rendered by the Manager, Mr. Scott-Dalgleish, and by all the agents of the Bank. By order of the board. Elwin Palmer, President. Cairo, February, 1904. AGRICULTITBAL BANK OF EGYPT. 39 lO ■*[- CO CD CO g ■" W5 '■a w 03— ico« l>. r-i .2.rt P taw m w , oi c3 OO 1 ME- is ci+j'^ 9 Oil -' ■■S > 5 fl a d ■ <=> fl °3 S5 -i^ S " - i o^ S 9 ® pq CQ CQ FPFQWpq t>j t>» >. t>> >, l>> " -» m m m r* -*o 00 w^ SS 8S? MCI C01>- 0-* cor- §0 00 00^ 00 COCO QOO m t— 00C-1.H ^as CO t— -^ t— eO i-H o inoo oooscM oi to ■0 OO OiO or- OO Sec C09sS;^'3 ow S K t, 3 ^.2 « S T) g'd oj ft o o ^O o 6H6-I EhB ■giaOElHSS' « B a pooo 50 II 9l^ .. O [Q sg« ■S'3 2" o „ <* B^B .- S > " s if" 44 AGEICTJLTTJKAL BANK OF EG"£PT. n H o H n o a 'A M < o |i( iz; != o o o < o p iz; TS CO o o CO 00 ^- o CO CO 00 -o flo tH rH §8 o 1 g 1§ « «i| T-i 00 "* ^ N i s i :^ i i 1 §8 CO i i M s 1 1 s 1 "* \ =11 TtT m" t f 1 1 a 8 ^ 5 2.2 CO 8 ^ ■s : 1 III c F- 1 n IS. ■^ ..i« 1^ if M o o 3 a5o g §■51 QJ (» O f- ss- o: c ^1 f ^ s^^ SkIoo "SSg • t->^ [>.'0 t>» S ^POOt^ o CO ■* t-. t^OOOOCO lO t- •* 00 35 too to CO CO c^ i-(OSO rHOi CO eji> (Nc-cccnio 00 T MCQ-* >0 o CD (N tN(M T-((N M 00 a !^ s ~^ s CO Bq f2 S ig «il ft" 00 1 IwCOOSOOOliO i-H oo»i- Si- lO-q- OCN I— (M ■^tc CO '^3 O lO (N .H OiO«" .COCnOiOCCH O ry,coooc: MOJOO (M ft] — - CO.- 10I005 t-- ^.^ gs '^1 aa H g "H m 03 o ^ t4 aj a S2 ft % ? 03 o CD M 1 03 CD & 1 o ■sss ^ 2 fl ■ fl 03 1 M ffl o o _ 1 El ■a '- \ Pi M 1— ( ll o o o o o o o ft o Eh Eh ^ Eh c-t 6h H tH AGEICULTTJKAL BANK OF EGYPT. 45 SCHEDDI.E III.— Report of the Directors for (he Period January 1, 1904, to December SI, IBOB . [Agricultural Bank ol Egypt. Societe Anonyme Incorporated under Egyptian Law. Created by Khe- divial Decree dated ilay 17, 1902, under a Concession ot the same date granted by the Egyptian Government. Authorized Share Capital £stg. 3,740,000 In 496,000 Ordinary Shares oJ £5 each, 12fi,000 Cumulative 4 per cent Prelerred Shares of £10 each, 2,000 Deferred Shares of £6 each. (AU issued.) Authorized Debenture Capital £atg. 6,570,000 (of which £2,500,000 have been issued) . Reserve Fund, £47,418 3s. Hd.] Directors.— The Governor of the National Bank of Egypt (President); E. W. P. Foster, C. M. G.; Sir John Rogers, K. C. M. G., D. S. 0.; Monsieur Felix Snares. London Committee.— &\i Vincent Caillard (Chairman); the Right Hon. he Viscount Esher, K. C. B., K. C. V. O.; the Right Hon. Arnold Morley; the Hon. S. Peel. Oovemment Commissioners. — Nubar Bey Innes and £. G. Koussin, esqs. Auditors. — Messrs. Russell & Kerr. Report of the Directors on the working of the Bank for the year 1905 to he submitted to the Shareholders at the third Ordinary General Meeting, to be held at the Offices of the Bank in Cairo on Wednesday, the 28th of February, 1906, at 3 o'clock p. m. The Directors have to report that the — ■ Net profits of the Bank for the financial year 1905, established in accordance with Article 40 of the Statutes, amount to £302,285 14s. 5d. From this amount there has to be deducted : £ s. d. I. The service of the Debentures issued 96.202 11 II. The Provision for the Reserve Fund 25.790 4 6 £ s. d. 121. 992 15 6 Leaving 180.292 18 11 And there has to be further deducted: £ s. d. III. Dividend on £1,250,000 Preferred Shares 46. 128 10 11 IV. Five per cent to the National Bank of Egypt.. 9. 023 5 10 55.151 16 9 Leaving 125.141 2 2 which is available for distribution of dividend on Ordinary and De- ferred Shares. The Ordinary Shares have to receive in the first instance dividend at the rate of 5 per cent per annum 62,000 The balance of 63,141 2 2 is available to the extent of one-half, or 31,570 11 1 for further dividend on the Ordinary Shares and to the extent of one- half, or 31, 570 11 1 for dividend on the Deferred Shares. ORDINARY SHARES (FIRST ISSUE OP 248,000 SHARES). The amounts available for dividend on these Shares for the year are as follows: £ s. d. Balance from 1904 130 11 9 For dividend, at the rate of 5 per cent per annum 62,000 Further amount available 31,570 11 1 98, 701 2 10 The Directors propose a dividend at the rate of 7 J per cent per annum for the year 1905 on the 248,000 Ordinary Chares of the first issue, amounting to 93,000 and to carry forward the balance of 701 2 10 j DEFERRED SHARES. ' The amounts available for dividend an these Shares are as follows: Balance from 1904 42 5 6 Further amount available 31,570 11 1 3 _ _ 31, 612 16 7 46 AGRICULTXTKAL BANK OF BGTPT. The Directors propose a dividend at the rate of £15 15s. per Share for the £ s. d. year 1905, amounting to : .' 31, 500 and to carry forward the balance of 112 16 7 Only the interest actually recovered during any financial year can be taken into account in making up the Balance Sheet. Accordingly, only the interest actually col- lected, viz, £432,717 98. lid. has been carried to the credit of Profit and Loss account for 1905, whereas the interest accrued amounted to £89,627 15s. 6d. in addition to this amount. At the end of 1905 the overdue Loans for the year amounted to £68,400 and the over due interest to £28,660.a - _ , The greater part of these arrears was outstanding in the Behera Province and in the Northern parts of Gharbieh and Dakahlieh. Of this amount over £E30,000 has been collected by the Bank up to February 8th. Owing to the lateness of the cotton crops in these parts the payment to the fellaheen against sale of their cotton was naturally delayed, and hence the Bank waa late in collecting its money. The Directors are glad to be able to report that the work of the Bank has continued to increase steadily, £2,937,960 having been put out in loans during 1905, against ■&2,497,300 in 1904. The total number of Loans put in 1905 was 106,373 and the total number outstanding on the 31st December, 1905, was 185,530, amounting to over £5,900,000, as against 134,207, amounting to a little over £4,000,000, on the 31st December, 1904. Of these 185,530, 21,829 are A Loans and 163,701 B Loans. The following statistics of loans put out during the year may be of interest: "A." Loans of P. T. 50 to £E1. . . : 1, 861 ; Above £E1 to £E5 ^ 19, 217 Above £E5 to £E20 : 26, 863 47,941 "B." Loans from £E10 to £E50 45, 267 Above £E50 to £B100 7,478 Above £E100 to £E150 2, 596 Above £E150 to £E500 3,081 58,432 106, 373 The average of the small loans is £E8.4 and the average of the larger loans £E42. 1. In addition to the £625,000 of the 3i per cent Bonds issued in January, 1905, the whole of the remainder of the Preferred Shares has been placed during the year, thus completing the issue of the £5,000,000 of Capital authorized in 1904. At the Extraordinary General Meeting of the Bank of the 18th of May, 1905, it was resolved to increase the Share Capital to £3,740,000 by the issue of 248,000 new Ordi- nary Shares of £5 each and to increase the Debenture Capital fi-om £2,500,000 to £6,570,000.. This was duly sanctioned by the Government, subject to the condition that from the beginning of the year succeeding that at the end of which the loans out- standing should have reached £E. 7, 000, 000 the maximum rate of interest chained to Fellaheen shouldbe reduced to 8 per cent for both old and new loans. The new Ordinary Shares were issued pro rata to the original shareholders at par, in October, and will rank equally with the old Shares from January 1st of this year. The Board has to announce with the greatest sorrow and with a deep sense of the loss the Bank has sustained, the sad death of Sir Elwin Palmer, Governor of the National Bank of Egypt and President of the Agricultural Bank of Egypt, to which institutions his great capacity and untiring energy were devoted. They wish to record their appreciation of the services of the whole staff at the Head- quarters of the Bank and of the Agents in the provinces. Cairo, February, 1906. For the Board. P. T. ROWLATT, Sub-Governor of the National Bank of Egypt. a [Of this total sum of £97,060, £70,000 was collected prior to March 31, 1906.— E. W. K.] AQBIOUIjTUBAL bank of EGYPT. 47 (O^OO !>■ igoscot^ S isis i ss§s CO ODn^U c3 d .ci >.i>.i>.fe.8 < W WWWP S2 SR s« 00,1'- »o. ■a ^■° a ri w^ 0) CO +> >T» -I 2 S ^ !!" ■ *< TO 0)0 i •p ^«R s ^ E a) C) P- ferH 236b— 06- 48 AGRICULTURAL BANK OF EGYPT. a A P4 -1 o o u o o ^|S gs Sg u ii S8" SOS'S sS S „ m'-' 8 9 9 sa*,"! ggggss s 00 .iH CO OS CO-* t^ to » eO l> lO r-1 Ol UBNop A6EI0ULTUEAL BANK OP EGYPT. 49 Exhibit " C." Extrq,cts from the Annual Reports of the Earl of Cromer Relative to the Agricultural Bank of Egypt, and to the Distribution of Egyptian Land. Schedule I. — Extract from the Annual Report of the Earl of Cromer for the year WOi-" The Agricultural Bank has considerably extended its operations during the past year, and it now may be said to be working aU over Egypt. The number of loans not exceeding jeE20 put out during the past year was 47,753, the number of loans of from £E20 to £E500 was 64,350, making a total of 112,103. Many of the loans were, without doubt, contracted to make good the loss of cattle consequent on the cattle plague. The following were the number of loans outstanding at the end of 1904: From P. T.50 to £E1 1, 060 Prom jCEI to £E5 6, 776 From £E5 to £E20 9, 662 From £E20 to £ E50 96, 234 From jeE50 to £E100 13, 207 From £E100 to £E150 3, 934 From jeE150 to jeE500 3, 334 Total 134, 207 The average amount of loans below £ E. 20 was £ E. 6.1; that of the loans above £, E. 20 was about £ E. 33. The total amount outstanding on the 31st December, 1904, was 4,005,569 I. The total now outstanding (January 31st) is 4,346,500 I. As the capital of the bank is only 5,000,000 I, an increase of capital will very shortly be required. The arrears in capital and interest for the year 1904 amounted to £ E. 27,718, or about 3 per cent, of the amount that was due for collection. By the end of January about a third of these arrears had aheady been recovered. ******* In my report for the year 1902 (p. 24) I made some remarks on the distribution of land in Egypt. I stated that such statistics as existed were not thoroughly trustworthy, as all transfers of land were not registered. 6 This source of error still exists, but a fair degree of reli- ance may nevertheless be placed on the figures for all purposes of comparison. The following table shows the changes which have taken place during the last five years: 1900. 1904. Area of holding. Number of landown- ers. Acreage. Number of landown- ers. Acreage. 761,337 80,171 39,710 12,267 8,990 11,939 1,113,411 560,195 550,774 301,334 344,765 2,243,673 932,013 78,902 38,658 11,868 8,791 12,311 1,213,444 551,441 534,884 288,281 338,094 Above 50 acres 2,348,047 Total 914,414 5,114,052 1,082,543 5,274,191 It will be observed that the total increase in the area during the past five years amounts to 160,139 acres. Of this amount 104,474 acres apparently went to the large c a "Egypt," No. 1 (1905), pp. 29-32. b The recent reduction of from 5 per cent to 2 per cent on the duty heretofore levied on sales may possibly incline more persons to register than heretofore, but the change has, of colirse, not as yet had time to operate. A proposal is now being studied by the Commission appointed to examine certain proposed changes in the law admin- istered by the mixed Tribunals to render registration compulsory. It is greatly to be hoped that this excellent proposal will be adopted. Among other good results it will for the first time enable thoroughly accurate information to be obtained as regards the distribution of land. cFor the purposes of the present argument, I use the words "large proprietors" as signifying those owning more than 50 acres of land. 50 AGRICULTUKAL BANK OF EGYPT. and 55,665 acres to the smallest class' of proprietors, namely, those holding under 5 acres. These latter have also gained 44,368 acres from the intermediate classes, viz, those holding between 5 and 50 a,cres. It is also to be noted that the stc^eage held by the fimaiUest class of proprietors in- creased from 21.78 per cent of the total amount in 1900 to.23.01 per cent in 1904, and that the acreage held by the "large" proprietors increased from 43.87 per cent to 44.52 per cent during the same period. On the oliier hand), the number of pifopri^tors in all the intermediate classes, as also the acreage held by them, has decreased in slightly dif- ferent proportions. An examination of the figures of the intermediate years shows that both the increase in the large and very small proprietors, and also the decrease in the four intermediate classes, have been continuous. The explanation probably lies to a certain extent in the fact that under the Mohammedan law of succession when a landowner dies his prop- erty is divided amongst all his heirs. This would naturally operate in the direption of increasing the smaller categories of proprietors and diminishing the larger catego- ries. Its effect on the class of "large" proprietors would for obvious reasons be less perceptible. The following Table shows the proportions of land held by Europeans and local sub- jects in 1900 and 1904, respectively: Area ol holding in acres. 1900. Europeans. Numbers. Acreage.: Natives. NumtibTs. Acreage. Below 5 acres From 5 to 10 acres. , From 10 to 20 acres from 20 16 30 acres Froia 30 to 50 acres. Above 60 acres Total Below 5 acres From 5 to W acres. From 10, to 20 acres From 20 to 30 aftres From 30 to 50 acres Above 60 acres Total 2y4'46 792 717, 372 467 1,553 6,347 4,«77 6,892 10,72i 9,224 18,337 637,095 768/891 79,379 38,993 11,^5 8y523- 10,3i86 686,149 908,067 2,597 4,524 929,416 699 5,223 78,203 625 9,034 08,033 322 8,099 11,546 385 15,260 8,406 1,616 682,033 10,696 6,243 624,173 1,076,300 1, 108^634 554,30a 640,0io 292,110 326,428 1,706,478 4,527,903 1,208,920 546,218 625,850 280,182 322,834 1,766,014 4,650,018 It will be seen (1) that the total number of European proprietors has fallen in the last five years from 6,347 to 6,243; (2) that the number of "large" European proprietors has increased from 1,553 to 1,615; (3) that the total acreage held by all European proprietors has increased from 586,149 to 624,173 acres; (4) that the total number of native proprietors has increased from 908,067 to 1,076,300, and (5) that the acreage held by native proprietors has increased from 4,527,903 to 4,650,018. The policy of the Egyptian Government has been to endeavor to maintain the small proprietors, and, whilst affording all reasonable facilities for the employment of Euro- pean capital in land development, to do nothing which would tend toward ousting native proprietors and substituting, Europeans in their places. It is always somewhat dangerous to base conclusions on statistics — more especially when, as in the present case, they are incomplete — unless they have been most carefully examined. In the figures given above, however, there appears to be nothing inconsistent with the state- ment that the aims, of the land policy adopted in Egypt have been achieved;. The increase in the aggregate amount of European holdit(gs and the general increase in the number of "large" proprietors are both probably due to the same cause, viz, tljle formation of land Companies which, after expending capital on improvements, sell the land to native Egyptians. If this surmise is correct, the policy is unquestionably sound and should not be changed. AGRICULTUEAL BANK OF EGYPT. 51 Schedule II. — Extract from the Annical Repm-t of the Earl of Cromer for the yew 1905.a In the course of last year the Agricultural Bank was authorized to issue 284,000 pew ordinary shares of £5 each to its old shareholders at par, thus raising its authorized share capital from £2,500,000 to £3,740,000. The Bank was also authorized to increase its debenture capital from £2,500,000 to £6,570,000. In the course of the last year 106,373 loans were made by the Bank. Of these, 47,941 were what are called "A" loans, that is to say, they were loans issued against receipt, of from T. P. 50 to £E20. The remaining 58,432 loans were "B" loails, that is to say, they are repayable over a period of years and are guaranteed by raortgage. These loans are from £E10 to £E500. The most popular form of loan appears to be from £E10 to £E50. Of the total number of 58,432 loans, 45,267 fell within this category. The total amount outstanding on the 31st December, 1905, was £5,914,000, as against £4,006,000 on the 31st December, 1904. Toward the close of last year the collections on account of interest and sinking fund were made with some difficulty in the Province of Behera and in the northern portions of Gharbieh and Dakahlieh. The difficulty arose owing to the lateness of the cotton crop. NeyerthelesB, out of a total collection due for the year of £E1,433,150, only £E94,633 remained uncollected at the end of December, and of this sum over £E20,000 was collected in January. I wish, in conjiection with this subject, to record my opinion that Egypt has sustained a very heavy loss in the premature death of Sir Elwin Palmer, who, in various capacities, rendered most eminent services to the Egyptian Government and people. Sir Elwin Palmer, I may observe, when he occupied tie post of Financial Adviser, took a leading part in the initiation of the system under which small loans are made to the Egyptian cultivators, and this at a time when comparatively few believed in the success of the measure. « "Egypt," No. 1 (1906), p. 35.