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(2758.)

CONFIDENTIAL.

Printed for the use of the Cabinet. February 15, 1886.

No. 1.

Sir H. Drummond Wolff to the Marquis of Salisbury,—(Received January 12.)

(No. 1. Most Confidential.) My Lord,

Cairo, January 1, 1886. WITH reference to my despatch No. 124 of the 26th ultimo, and to previous correspondence, on the subject of the Domains, there is one difficulty which presents itself to any arrangement which may be proposed for selling them.

Messrs. Rothschild are, I believe, of opinion that they cannot allow them to be sold at a smaller price than would cover the whole amount of the Domains Loan; and their reasoning is that if the whole of the lands were sold without the loan being reimbursed, the remainder of the bonds would have no better security than the revenues of the Province of Keneh.

I do not for a moment contest the reasoning which leads to this result. But it unfortunately places the whole question in a vicious circle, as I fear the lands never will be equal to the value of the loan, and unless sold, the expenses of administration must always continue. Letting will require a staff for collection and supervision.

The project of the Crédit Foncier to a certain extent met this objection, as that institution was ready to advance the money necessary for the redemption of the land by the Government, and to its being farmed out, relying on the guarantee of the Province of Keneh for any deficit on the letting returns of the lands.

For many reasons the Government look on this proposal as inadmissible, and every attempt is now being made to devise a scheme for disposing of the land in such a manner as to get rid of administration expenses, and to reduce the deficit. The Egyptian Government must make some sacrifice. From this there is no escape; and the financial officials of the Government are now considering how far the loss can be ascertained and fixed.

The deficit on the Domains is this year 300,0007., and under the present system of administration it is not likely to be much reduced. The problem to be solved is to what figure it may be diminished, so as to prevent the possibility of so large a gap in the general Budget of the country,

I have partly initiated a scheme for redeeming a portion of the Civil List, and for a commutation of pensions by grants of the Domain lands. This plan is more feasible here than it would be elsewhere, as the revenue from land is mucli larger. Some years ago it used to be considered on an average 10 per cent., and even now, I believe, it may be taken at from 7 to 8 per cent. A pensioner, or the receiver of an annuity from the Civil List, commuting their pensions or allowances, would therefore not be losers to the same extent as in a country where the income from land is much lower, and they would be enabled, at a comparatively small sacrifice of present income, to make a permanent provision for their families. Besides this, there would be considerable political advantages in thus interesting many persons, now idlers, in the good government and prosperity of the country. Great caution will have to be exercised as to the choice of persons who may be permitted to commute, as there are some members of the Khedivial family to whom it would not be advisable to grant this facility.

The Civil List of the Khedivial family, apart from the Khedive himself, amounts to 208,000/. a-year, while the pensions reach the figure of 390,0001. Your Lordship will therefore perceive there is a large field over which this principle of commutation can be exercised.

But the difficulty lies in the insufficiency of the lands to provide for the service of the loan, and some means must be found to supply the margin.

Mr. Vincent is at present engaged in studying the figures, which I trust to be

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