WAR BOOM IN EGYPT

Otago Daily Times, Issue 17104, 8 September 1917, Page 8

WAR BOOM IN EGYPT

ABNORMAL INCREASE IN WEALTH,

ADVENTITIOUS PROSPERITY A MENACE. By Yiotob MaoChtrk. (Authorised for Publication by tiw War Office.) Despite tho disturbing conditions oreated by the world war, Egvpt is able to show a gratifying increase in the financial resources of her people. Sho has been singularly fortunate Although invasion has threatened her territories, not only has tho thrust of tho enemy been parried, but behind her well-guarded frontiers her people hnvo enjoyed an unexpected addition k> their wealth. The increase in tin; capital resources of Egypt since August, 1914, as shown by the Budget Note of April last, appoars to bo little Jess than 30 million pounds. Whflo it is insisted upon by the Financial Advisor that tho unexpectedly favourable economic condition of the country must be so-t among tho abnormal effects of tho war, and while facts are indicated that tend to reduce tho value of the increase, as it shows superficially, there is overy reason for the Egyptian people to feel optimistic. KING COTTON. Among the reasons accounting for tlio very strong financial position, there js put forward tho exceptionally high prices prevailing -in the cotton market. The demand for cotton has been so great that, at one period of last year, the prices given for the Egyptian variety doubled, iind rose to heights never touched since tho Civil War in America. With regard to tho prospect for this present crop, it is calculated that, although it is relatively inferior in yield, the sale will realise abovo 40 millions, or about doubo that of lust year. The demand made on the resourcee of Egypt and ihe Sudan, by the military situation and tho continued presence of British troops, has stimulated the activities of the population, and this constitutes the second factor leading to the development of tho financial strength of the country. Tho figure of 50 million pounds increase is arrived at by several methods of calculation; by adding the figures of the balance of trade to tho sums remitted to the country for military purposes; by statistics of increased note circulation, bank deposits, and repayment of debts; or by tho increase of sums invested abroad. There must always bo an uncertain element in such calculation, but, taking a conservative estimate into consideration, the results are near enough to show the figure stated ae reasonable.

The Budget Note points out. that no developments in the country's economic resources can be looked for from this accession of wealth, owing to the- difficulty of obtaining the necessary material. In fact, this difficulty hinders, to a. certain extent, the proper upkeep of existing works, with a consequent deterioration. Much is being done in investing abroad from this extra •wealth, thus reducing the indebtedness to foreign sources and alleviating the annual drain on the country's income. Not only so, but among the people themselves thoro has been a decrease of civil cases m the courts, showing that the increased income is being used for paying off privato debt. The value of the imports of the country has increased to the extent of 69 per cent, but the actual quantity has docreased, and, therefore, it must not be assumed that the people are indulging in lavish expenditure. Although the imports of luxuries has increased and that of articles which might be used for the development of the country has decreased, there are, to be set against any uneasiness on that ground, the facts of the high prices and the special needs of the military forces calling for what might be termei, roughly, luxurious commodities. The Allied countries, as time goes on, will absorb more definitely the energies of their factories for work on material to be expended in warfare, and will deflect these energies from the making of goods normally sent overseas. It is to be expected that the import of necessities to Egypt ■will further diminish in consequence, and that the country will be thrown more on its own resources. The material necessary for upkeep and development will naturally become more scarce, but, at the same time, there will be the accumulation of funds in the country available for the resumption of suspended work, and for meeting contingencies at the end of the war.

FINANCIAL UNCERTAINTY. The Egyptian fiscal system is so conceived that it limits the share of the public revenues in the increased wealth of the country to what can bo obtained by indirect taxation, such as from the Customs, from the profits on State domains, and from the expansion of the paper currency. The mainstay of the revenue is the land tax, which is unalterable, and though the accession of financial strength to the Government is considerable, it is in no way proportionate to the increased general wealth of the country. Under an income tax or other proportional taxation, a legitimate source of revenue would have been availahle; as it stands, the largo increments which havo accrued to cultivators and to contractors 'have been free from taxation, except by the house and land taxes. The Government has borne in the past the burden' of the most important development schemes; it has had to defray 'the cost of these schemes, which have added so much fertility and consequent wealth to f the country, at the expense of administrative reforms in other directions; this because of the limited source of revenue. It would have been perhaps more beneficial to the country generally if the fiscal system had permitted the tapping of the increased financial .resources so that a fund could have been accumulated for the furtherance of contemplated development work. The burden thrown on the revenue is considerable; there is muoh in the way of arrears of upkeep outstanding and the reserve fund, although bome millions greater than before the war, must have set against it these arrears and some other certain debts, of which the redemption of the silver coinage ie only one. Much of the financial uncertainty is due, of course, to the unforeseen which may occur as the result of war conditions. While the Government might be better off than it is, there are considerations which mitigate the situation. There is every prospect that the country will have repaid a good deal of private debt, will have reduced by ir\estmcnts abroad the balance of the country's indebtedness to foreign sources, and will have in hand a large reserve ready to meet contingencies and future productive expenditure. On the whole, it cannot bo said that the outlook for Egypt is anything but smiling. The peoplo have the warning of "past speculation during another financial boom in the country, and the lesson taught by the disastrous results of that wave of unconsidered speculation. It is unlikely that, with such an example before theni, tho people will allow themselves to waste tha wealth that the fortune of war has bestowed upon them. It is more likely that they will conserve their wealth for the benefit of the country generally.