THE SUEZ CANAL

Manawatu Standard, Volume IV, Issue 222, 20 August 1931, Page 9

THE SUEZ CANAL

A ROMANCE OF NAVIGATION. Shipowners and merchants in Europe are becoming interested once more in the Suez Canal, and during the next few months a good deal is likely to be heal'd of the affairs of the company which controls it (writes Sir Archibald Hurd in the Sydney Morning Herald). The canal has become an important link between East and West, and it is urged that the dues are too high, representing a handicap on western traders, who nave to face increasingly keen competition on the part of rivals, and especially the Japanese and Americans, who have unfettered access to the Eastern markets.

The importance which British shipowners and commercial men now attach to the Suez Canal is a curious reflection on their forebears, who regarded the project with the strongest disapproval. When Ferdinand de Lesseps proposed to construct the Suez Canal, lie succeeded in winning the approval of Said Pasha, who was his personal friend. The Khedive agreed to grant a concession on very generous terms. But the consent of the Sultan of Turkey was also necessary. That was refused for a long time, owing to the strong pressure which the British Government exerted on the Turkish authorities.

NAPOLEON’S DREAM OF EMPIRE.

The sequence of events explains the British attitude. The scheme had originated in the fertile brain of Napoleon towards the close of the eighteenth century, when the French and British were at war. Napoleon believed that such a link between Europe and the East, if under French control, would enable France to restore her prestige in Egvnt and In India to the overthrow of the predominating British influence throughout the East. He had dreams of a great French Empire in the East. When Lesseps revived the proposal in the middle of last century, British statesmen were consequently at once suspicious, and Lord Palmerston determined to do all in his power to resist an undertaking which, in his opinion, would injure British trade, which had been conducted for centuries by way of the Cape of Good Hope in sailing ships. So when the Sultan was approached, the British Government, then exercising considerable influence in Constantinople, protested that the canal was not needed, and that, in any event, it would never pay. Lord Palmerston was, moreover, able to quote the opinion of the great engineer, Robert Stephenson, to the effect that the canal could not, for physical reasons, be constructed, and this opinion was in agreement with the verdict which a French engineer had passed when Napoleon consulted him. Lord Palmerston was apparently on strong ground, and he had behind him the British people generally, who regarded the scheme with suspicion, largely because it was favoured by the French, and were jealous of the Cape route, which the jßritish Navy could protect with greater ease than the route through the Mediterranean, flanked by the navies of France,ltaly, and other countries. At last, as has been stated, French interest in Turkey proved too strong; the Sultan withdrew his opposition, and the work was put in hand.

The concession was to be for a period of 99 years The new undertaking was opened by the Empress Eugenie, and .on November 16, 1896, the first ship passed from West to East in the presence of many of the crowned heads of Europe. By the irony of events, it flew the British and not the French flag! DISRAELI’S DRAMATIC COUP.

The money had been found partly by the French people, and partly by the Egyptian Goverument. British investors had no faith in the economic success of the proposal, and, like the Americans and others, refused to subscribe a penny of the capital which was required. For some years it seemed as though this scepticism would be justified by the events, for the receipts of the canal were meagre, and the operating expenses heavy. In 1870 the revenue amounted to only just over £200,000, an(l there was talk of bankruptcy. But slowly, as the steamship displaced the sailing ship, the volume of traffic by way of the Cape of Good Hope fell off. By 1875 the revenue had risen to just short of a million pounds, and five years later it exceeded £1,600,000.

When the tide in the affairs of the company were on the turn, it came to the knowledge of Disraeli that the shares belonging to the spendthrift Khedive of Egypt were for sale, and, without consulting anyone in England, except the financial firm of the Rothschilds, or letting a whisper of his intentions reach France, he as Prime Minister, bought them for £3,976,582. This action was far from pleasing to the French, and he was denounced by many people in the British Isles. It was held that he had gambled with the taxpayers ’ money. But events have proved that Disraeli made a remarkably good investment, which has already yielded dividends amounting to upwards of £35,000,000. , Within a few years the success of the canal was unquestionable. This was mainly due to the extent to which ( British shipping used it during the years when British traders were con- ' solidating British trade in India and the East generally. But, though the British Government has had its directors on the board of the company since Disraeli’s coup, the offices of the company have been in Paris, and the control _ of its affairs has remained predominantly in French hands. The interests of thrifty shareholders in France have naturally been the special care of the administration. A PROSPEROUS CONCERN. That the company has been well managed is not denied, and, the directors and staff have shared in the prosperity. It was recently stated in the House of Commons that the thirtytwo directors, who meet once every month, share equally, in accordance with the statutes of the company, 2 per cent, of the net profits. ..The net profits for 1929 were approximately £6,000,000, and the total sum paid to the directors was, therefore, approximately £120,000. A.s the company’s receipts have risen, reductions in the dues on shipping have been made, but it is urged that- the reductions have not kept pace with the growth not only of the gross revenue, but of the net profits, with the result that, after making provision for reserves, the dividends paid on the ordinary shares rose from £2,001,000 in 1921 to £4,301,000 in 1929, the last year for which figures are available. In other words, the shareholders divided twice as much profit in 1929 as in 1921. The dues, however, have also been reduced. The contention of shipowners and merchants in Europe is that these reductions have been inadequate in view of the growth of the net profits. They hold that western traders are being handicapped in faoe of the keen competition which now confronts them in Eastern markets. On the other hand, the dues on loaded ships are little higher than before the war, and those on ships in ballast have been brought down to below the pre-war

level in spite of the increase in wages and the cost of all materials. UNCERTAINTIES OF THE FUTURE. These statements are not in dispute, but those who are agitating for further concessions urge that the company can well afford to pass on to shipowners and traders a greater share of the higher profits which have been earned. The suggestion has been made in Paris that the British Government could forego some of its dividends on its shares, handing over to British shipping companies as large a proportion as it considers desirable. That proposal has not, however, been seriously considered, and the agitation, initiated in Liverpool, will probably not die down until radical reductions have been made, possibly not at once, but gradually. The company may be more inclined to such a policy in view of the possible diversion of trade by way of the Panama Canal, while it is also suggested that, owing to the lower fuel consumption of modern ships, the Cape route may regain some measure of its former favour, to the advantage of South African ports. But it is too early to indulge in prophecy as to the outcome of the movement for limiting the dividends of the shareholders in the canal. Much will depend on the volume of traffic passing through the canal, which has been declining for many months past owing to political events in India and China, the fall in wholesale prices of wheat, rubber ,_ tin. and other things, and the depreciated value of silver, which is still the medium of exchange in countries “East of Suez.”