Financial Reconstruction 155
tion was to see that Egypt paid its debts. Its European
mandate, to use a modern term, was that of a receivership
for the European creditors of Egypt. Reforms could only
be effected in so far as they contributed—or at least were
in no way contrary to the fullest liquidation of Egypt's
extravagant liabilities. But any real financial recon-
struction obviously required as a first step a thorough
revision of these liabilities and a reduction of them within
reasonable limits. As Egyptian solvency had now practi-
cally a British guarantee, European creditors ought to have
allowed in return a squeezing out of water and a scaling
down of the more extortionate claims. For, if Egypt was
to become a paying proposition, it was essential that all
real profits should be applied to remunerative replace-
ments of the plant and to promoting production. But
none of these essential powers were in possession of the
British receivers owing to the international mortgages
placed upon Egypt, and to the deliberate use of them
made by the French for putting every possible difficulty
in the way of a British reconstruction. -
The French still held two-thirds of the debt. They had,
under protest, acquiesced in the abolition of the French
controller at the beginning of the British occupation
(January 4, 1883). But soon after they adopted the
policy they thereafter maintained until 1904, of using
the International Debt Commission and its powers under
the Law of Liquidation, in conjunction with the inter-
national Mixed Tribunals, for thwarting whenever
possible, by legal proceedings, the British efforts to avoid
another bankruptcy with its further development of
financial bondage. It has been shown that the burden of
the debt, even as provisionally reduced under the
condominium, was more than the country could bear
without loss of recuperative power. To this had been