The Sultan replied as follows:—

To His Majesty the King, London.

I present to your Majesty an expression of my deepest gratitude for the sentiments of friendship with which you have so kindly honoured me, and for the valuable support which assures me of the safety and integrity of the independence of Egypt. Conscious of the responsibilities that I have just assumed, and determined to devote myself entirely to the Protectorate, and to the progress and welfare of my people, I am glad to be able to rely in this task upon the goodwill of your Majesty, and upon the assistance of your Government.

Hussein Kemil.

A Rome message stated that the proclamation of the deposition of the Khedive and the elevation of the Sultan on December 19 was made the occasion of an imposing military display. Cairo was tranquil. In a rescript addressed to the Prime Minister the Sultan said that he himself had aspired to repose after a life of service. But it was his duty in the particularly delicate situation events had created "to assume the weighty charge and, faithful to our past, to continue to place our energy at the service of the country. We owe it to Egypt and to our glorious ancestor Mehemet Ali, whose dynasty we desire to perpetuate." He outlined an internal policy of reform and progress, and on that subject and on representative institutions, paraphrased the language of the Foreign Office letter summarised above. Rushdy Pasha was asked to continue in office as Prime Minister and consented to do so.

Prince Hussein, the second son of Ismail Pasha, was born on December 20, 1853, and was educated in France, where he enjoyed the friendship of Napoleon III. and his family. He was Chamberlain to the Empress Eugenie at the opening of the Suez Canal. Returning finally to Egypt during the Franco-Prussian War, he became Inspector-General and held successive administrative offices. He accompanied his father to Naples on the latter's abdication in 1878, and was abroad for three years. Returning to Egypt after Arabi's rebellion he identified himself with Egyptian interests under the British regime and held various offices. He made a special study of the economic conditions of the peasantry and of Egyptian agriculture and thus earned the name of "the Father of the Fellah." He has a son, Kamel-el-Din, now in his thirtieth year. The new High Commissioner took up his duties late in December.

Events antecedent to the war need only a brief narration. In January the late Khedive opened the first session of the New Legislative Assembly (A.R., 1913, pp. 434, 435), amid great public interest. The inaugural speech expressed satisfaction that the representative institutions of Egypt had been brought into conformity with the needs of the country and now offered opportunities to men of ability. It emphasised the duty laid upon the new Legislature to prepare and suggest laws for economic development, and advised that this right of initiation be used with prudence. The Khedive counselled members to regard the welfare of all classes and especially that of the peasant cultivators, and declared that the exercise of their functions would determine the future of representative government.

The day was regarded as opening a new epoch in the history of Egypt. The session concluded in June and the Assembly was prorogued till November. Sixteen Bills were discussed, of which twelve were passed, dealing with matters of administrative reform and economic questions. Many interrogations to Ministers were made and answered. There were forty-five sittings. An Opposition was developed early in the session and showed aptitude for tactical obstruction. The Cairo correspondent of The Times, giving his impressions of the Assembly at the close of the session, observed that the debates had at times been conspicuous for a lack of dignity, an outspoken disrespect for Ministers and a general excitability. But it was premature, he admitted, to attempt to pass judgment. The majority of the delegates were new to public life and inexperienced in the arts of debate. If the Opposition would adopt a more reasonable attitude towards the Government and bring an unbiased mind to bear upon its labour, there was little doubt that the Assembly would realise the hopes of its founders, for it included many men who had in them the making of good legislators. The composition of the Assembly was: Landowners forty-nine, Lawyers eight, Merchants four, Ulemas and heads of religious sects three; and one Engineer.

The Budget showed receipts for 1913 of E. 17,703,898l. and expenditure E. 17,659,961l. The extraordinary expenditure, on remunerative work of public utility, was E. 2,776,032l. The keystone of financial policy had been the prosecution of such schemes and the remission of anomalous and oppressive taxation. Lord Kitchener claimed that the policy had been justified both by the increase of national wealth and the provision of security against a low Nile. He deprecated the undertaking of capital expenditure by means of loans, especially in a country entirely dependent on agriculture and to a large extent on a single crop. The Budget for 1914-15 estimated the expenditure at E. 18,162,000l. and the revenue at a like figure. The balance at Reserve on January 1, 1914, was E. 5,848,000l. and the outstanding capital of the Egyptian debt E. 94,202,540l., of which E. 88,742,620l. was in the hands of the public. The total annual charge was E. 3,552,000l. The Customs receipts for 1913 amounted to E. 3,939,885l. The value of the imports was E. 27,865,195l.; exports showed a decrease of 8.89 per cent., the total being E. 31,662,200l. The share of the United Kingdom was 43.1 per cent. of the exports. The export of phosphates from the Red Sea mining area increases yearly. The Nile flood in 1913 was abnormally low and late—the lowest on record; and the report suggested that but for the irrigation works and organised distribution of the available supply economic disaster would have been caused. The Nile was again low in 1914. A dam is to be constructed on the White Nile about forty miles south of Khartoum. The probable cost is 1,000,000l. It will serve the double purpose of a storage reservoir and control of excessive floods; but it was intimated that resort would ultimately be made "to regulation on the Great Lakes as a final settlement of the problem of Egypt's summer water when all available areas are developed." The educational section of the Report is of an encouraging tenour. Note is taken of the fact that about 750 Egyptians were completing their education in Europe, chiefly in England and France. Concerning the Khedivial Library mention is made of the appointment as Director of Dr. Schaade, "a distinguished Orientalist, who has been for some years an editor of 'The Encyclopædia of Islam' and latterly a lecturer on Oriental languages at Breslau." Among the new acquisitions of the library was a series of works on Islam printed by order of the ex-Sultan of Morocco, Mulai Abd el Hafiz, and presented by His Majesty.