Lord Derby is ill and at home. I am not sure therefore whether he is writing to you to-night to tell you about the Suez Canal. General Stanton telegraphed that Lesseps (supposed to be backed by French Government) was offering four millions sterling (fr. 100,000,000) for the Khedive's shares, but that the Khedive would sell them to England for the same sum. Thereupon he was instructed to offer this amount, and the Khedive accepted this morning. The contract was signed to-day, as we have just heard by telegram. Messrs. Rothschild advance the money on the security of the shares, £1,000,000 in December, and the rest by instalments, the Khedive to pay 5 per cent. on the shares while they remain without bearing interest (the interest being hypothecated for the next twenty years).
Her Majesty's Government are to apply to Parliament to take the bargain off the Rothschilds' hands.
Practically, therefore, subject to Parliament's assent, Her Majesty's Government have bought the shares.
I am writing in the greatest hurry but the above is a correct outline of the case.
I suppose the French will make an ugly face.
P.S. It has all been kept very secret so far, so pray be supposed to be ignorant till Lord Derby tells you.
The action of Her Majesty's Government was taken none too soon, for as Lord Lyons reported, the shares very nearly fell into the hands of the French. On November 26 the purchase of the shares was publicly announced, and on the following day Lord Derby had an interview with the French Ambassador on the subject.
Lord Derby to Lord Lyons.
Foreign Office, Nov. 27, 1875.
I have seen d'Harcourt. He came to hear what I could tell him about the Suez affair, and I told him the whole story exactly as it is.
He says that there will be some soreness in France, and I am afraid he is right. You know the facts, and I need not therefore repeat them. The points which I dwelt on were these:
We did not wish that the Khedive would sell, nor was there on our part the slightest desire to alter the status quo. But we could not help his selling, and as he had decided on doing so, we took the only effectual steps to prevent the possibility of the shares falling into hands whose possession of them might not be favourable to our interests. The suddenness of the whole affair was not our doing. If we had delayed, other purchasers would have come forward. We had to take the opportunity as it offered itself or lose it altogether.
It is not in the power of the British Government to act as Continental Governments can, through third parties—banks, financial companies, and the like. What we do, we must do openly, and in our own names, so that Parliament may judge of the whole transaction. This I said in answer to a remark made by d'Harcourt, that the act would have had less political significance if done through some company, or otherwise, and not directly in the name of the State.
We hold even now a minority of the canal shares. The question for us is not one of establishing an exclusive interest, but of preventing an exclusive interest from being established as against us.
I have always expressed my opinion that the best arrangement for all the world would be the placing of the Canal under an International Commission, like that of the Danube; and I think so still. I knew, I said, that the French Government were not prepared to entertain any such idea, and I therefore did not put it forward; but if France and other Governments altered their way of thinking, I did not think any difficulties would be made by England.
M. d'Harcourt expressed some fear, or at least thought that some would be felt, lest the Khedive should be unable to pay his promised £200,000 a year, and we in consequence should use some means to coerce him, which would practically establish England in authority in Egypt. I assured him that nothing was further from our thoughts. We wanted the passage through Egypt as free for ourselves as for the rest of the world, and we wanted nothing more.
The purchase of the Suez Canal shares has always been surrounded with much glamour and mystery, but in reality it seems to have been a perfectly straightforward and business-like proceeding, to which no reasonable objection could be taken. So far from being a profound political coup long calculated in advance, the action of Her Majesty's Government was totally unpremeditated, and as far as Lord Derby was concerned, it was undertaken with reluctance, and under the conviction that England was making a bad bargain. So little confidence did Lord Derby feel, and so averse was he from incurring any further responsibility in Egypt, that he unhesitatingly declined a new proposal of the Khedive that he should sell to the British Government his contingent interest in the profits of the Suez Canal above five per cent., and informed the French of the fact. The British public, which warmly approved the transaction, seems to have been a better judge of the Foreign Secretary's action than he was himself. The four millions' worth of shares acquired by the British Government represented nine-twentieths of the entire amount, and it is interesting to compare these figures with the estimate put upon the value of the Canal by Lesseps. On July 11, 1874, the latter called upon Lord Lyons and said that two persons from England had sounded him about the sale of the Canal; one a member of the English branch of the Rothschild family, and the other a Baron Emile d'Erlanger, a well-known banker living in Paris.
The Rothschild was no doubt Nathaniel,[15] M.P. for Aylesbury, who was here in the beginning of June. Lesseps said that on being pressed by him to state a sum, for which the Canal might be purchased, he had said a milliard (£40,000,000) and he declared that although this sum had startled even a Rothschild, it was only a fair one. His object with me seemed to be to give the impression that the shareholders would not sell the Canal for any sum.[16]