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Sir Stafford Northcote, Chancellor of the Exchequer, asked on February 14, 1876, for the vote of a sum "to pay the purchase-money for shares which belonged to the Khedive in the Suez Canal."
Owing to the bankruptcy of Ismail, the Egyptian Khedive, in November 1875 Disraeli was able to make the surprise purchase of nearly half the total shares in the Suez Canal Company - not a majority interest, though a controlling interest for practical purposes. Since Parliament was not in session at the time, Disraeli borrowed £4,000,000 from the Rothschilds, thereby opening himself to much criticism from Parliamentary opponents, although winning approbation from the Queen and the public. The last portion of his speech makes clear the real importance of the purchase for England.
Sir, although, according to the noble Lord [Hartington], we are going to give a unanimous vote, it cannot be denied that the discussion of this evening at least has proved one result. It has shown, in a manner about which neither the House of Commons nor the country can make any mistake, that had the right honourable Gentleman the Member for Greenwich [Mr. Gladstone] been the Prime Minister of this country, the shares in the Suez Canal would not have been purchased. The right honourable Gentleman defies me to produce an instance of a Ministry negotiating with a private firm. ...The right honourable Gentleman found great fault with the amount of the commission which has been charged by the Messrs. Rothschild and admitted by the Government; and, indeed, both the right honourable Gentlemen opposite took the pains to calculate what was the amount of interest which it was proposed the Messrs. Rothschild should receive on account of their advance. It is, according to both right honourable Gentlemen, 15 per cent; but I must express my surprise that two right honourable Gentlemen, both of whom have filled the office of Chancellor of the Exchequer, and one of whom has been at the head of the Treasury, should have shown by their observations such a lamentable want of acquaintance with the manner in which large amounts of capital are commanded when the Government of a country may desire to possess them under the circumstances under which we appealed to the House in question. I deny altogether that the commission charged by the Messrs. Rothschild has anything to do with the interest on the advance; nor can I suppose that two right honourable Gentlemen so well acquainted with finance as the Member for Greenwich and the Member for the University of London [Robert Lowe] can really believe that there is in this country anyone who has £4,000,000 lying idle at his bankers. Yet one would suppose, from the argument of the right honourable Gentleman the Member for Greenwich, that such is the assumption on which he has formed his opinion in this matter. In the present instance, I may observe, not only the possibility, but the probability, of our having immediately to advance the whole £4,000,000 was anticipated. And how was this £4,000,000 to be obtained? Only by the rapid conversion of securities to the same amount. Well, I need not tell anyone who is at all acquainted with such affairs that the rapid conversion of securities to the amount of £4,000,000 can never be effected without loss, and sometimes considerable loss; and it is to guard against risk of that kind that a commission is asked for before advances are made to a Government. In this case, too, it was more than probable that, after paying the first £1,000,000 following the signature of the contract, £2,000,000 further might be demanded in gold the next day. Fortunately for the Messrs. Rothschild they were not; but, if they had, there would in all likelihood have been a great disturbance in the Money Market, which must have occasioned a great sacrifice, perhaps the whole of the commission. The Committee, therefore, must not be led away by the observations of the two right honourable Gentlemen, who, of all men in the House, ought to be the last to make them.
But the right honourable Gentleman the Member for Greenwich says we ought to have gone to our constitutional financiers and advisers, the Governor and Deputy Governor of the Bank of England, and, of course, the honourable Member for Galway [Mr. Mitchell Henry] who rose much later in the debate, and who spoke evidently under the influence of strong feeling, also says that we ought to have asked the Governor of the Bank of England to advance the £4,000,000. But they forget that it is against the law of this country for the Bank to advance a sum of money to the Ministry.
But then it may be said - "Though the Bank could not have advanced the £4,000,000, you might have asked them to purchase the shares." But how could they have purchased the shares? They must have first consulted their legal adviser, who probably would have told them that they had not power to do it; but, even if that doubtful question had been decided in the affirmative, they must have then called a public Court in order to see whether they could be authorized to purchase those shares to assist the Government. Now, I ask the Committee to consider for a moment what chance would we have had of effecting the purchase which we made under the circumstances, and with the competitors we had to encounter, and the objects we had to attain, if we had pursued the course which the right honourable Gentleman opposite has suggested? "But," says the Member for the University of London and this also has been echoed by his late right honourable Colleague "you would have avoided all this, if you adopted the course which we indicate, and which I have just reminded the Committee is illegal, if you had only taken the illegal course we recommend, you would have got rid of this discreditable gambling, because although the Messrs. Rothschild, some of whom have been Members of this House, are men of honour, yet they have a great number of clerks who are all gambling on the Stock Exchange." Now, my belief is that the Messrs. Rothschild kept the secret as well as Her Majesty's Government, for I do not think a single human being connected with them knew anything about it. And, indeed, it was quite unnecessary for the Messrs. Rothschild to have violated the confidence which we reposed in them, and quite unnecessary even for the Members of Her Majesty's Government to hold their tongues, for no sooner was the proposal accepted than a telegram from Grand Cairo transmitted the news to the Stock Exchange, and it was that telegram which was the cause of all the speculation and gambling to which the right honourable Gentleman has referred. It is a fact that while the matter was a dead secret in England, the news was transmitted from Cairo. That was the intelligence on which the operations occurred. But I wish to say one word respecting the moral observations which have been made. As to gambling on the Stock Exchange, are we really to refrain from doing that which we think is proper and advantageous to the country because it may lead to speculation. Why, not a remark was made by the noble Lord, who has just addressed the House, the other night, or by me in reply, that would not affect the funds. On the one side people would say - "The Government are in great difficulty, and probably a Vote of Censure will arise out of this Suez Canal speculation," while other persons would observe - "There is evidently something coming about Egypt, and he is not going to let it all out." Ought we to refrain from doing what is necessary for the public welfare because it leads to stock-jobbing? Why, there is not an incident in the history of the world that led to so much stock-jobbing as the battle of Waterloo, and are we to regret that that glorious battle was fought and won because it led to stock-jobbing? So much for the operations on the Stock Exchange. I think we have been listening all night to remarks on this transaction that have very little foundation. We have been admonished for conduct which has led to stock-jobbing and we have been admonished because we applied to a private firm when from the state of the law, I have shown that it was absolutely necessary from the character of the circumstances we had to deal with that a private firm should be appealed to.
And now I come to the policy of the two right honourable Gentlemen, for on that portion of the subject they appear to agree very much. The right honourable Gentleman the Member for the University of London says - "You have your shares, but you have no dividends." And the right honourable Gentleman the Member for Greenwich says - "You have your shares, but you have no votes." That is the great lamentation of the two right honourable Gentlemen. Shrieking and screaming out - "You have no votes and no dividends, though you have the shares," they account for conduct on the part of the Government so totally devoid of sense and calculation as that the Government should become encumbered with all these shares, and yet possess neither the advantage of dividends nor of voting power. They say this is due to the simple circumstance that we acted in total ignorance, that we were innocent - nay, more than innocent - and that the most becoming thing for us to do would be to acknowledge and, at the same time, to regret our fault. Instead of that, they say we triumph in our ignorance, and they absolutely pretend that we were aware of the immense blunder we have committed. It is very remarkable that the two right honourable Gentlemen should have ventured to take up such a position in this case. What is this question of the Suez Canal? From the numerous Papers which have been placed before the House, the House must be tolerably aware that during the whole period of the existence of the present Parliament the question of the Suez Canal has more or less been before us. I am not sure that in the first Cabinet Council we held some decision was not come to on the subject. Then the International Commission at Constantinople had either just terminated, or was involving the Government in a painful and difficult Correspondence. We were represented at the International Commission by Colonel Stokes, who is completely master of the subject, an invaluable public servant, and a man Of great intelligence, and who had completely mastered all the details of what was then a very complicated question. From that time until we made the purchase in October last Colonel Stokes has been in almost constant attendance at the Foreign Office. The question of the Suez Canal was constantly before us, and therefore I need not go further to show to the Committee that although it happened to be a subject upon which we were called in the present instance to decide hastily, we had the advantage of much previous knowledge. Why, my right honourable Friend the Chancellor of the Exchequer was intimately acquainted with the subject, and was himself present at the opening of the Suez Canal. Nothing, in short can be more unfounded than the assumption of the two right honourable Gentlemen, who wished to convey to the House that Her Majesty's Government had entered into their agreement in perfect ignorance of all the circumstances of the case. This, in fact was the style of the whole speech of the right honourable Gentleman [Mr. Lowe]. Take this away; convince the right honourable Gentleman - or convince, what is easier and more satisfactory, the Committee - that we were aware of these circumstances, and the right honourable Gentleman himself confesses that be might as well have made no speech at all.
Then the right honourable Gentleman the Member for Greenwich [Mr. Gladstone] proceeds in his attack in his own way, and makes a great many objections, but takes up two great positions as grounds of condemnation. "First of all," he says, "I object to this purchase, because it will give you no influence." That is the assertion of the right honourable Gentleman. I might meet it with a counter assertion. I might offer many arguments to show that it will give us a great deal of influence. I might refer to that which has already occurred, and which, though not in its results very considerable, shows some advantage from what has been done, while before a year has elapsed it will possibly show much more. I might refer to the general conviction and the common sense of society that such an investment cannot be treated as absolutely idle and nugatory, as the right honourable Gentleman wishes to treat it. The right honourable Gentleman takes a position from which it is certainly difficult to dislodge him, because it is perfectly arbitrary. He says - "You have no votes." He views the question abstractedly. He says - "Here is a company, and you have a great many shares in it, but you are not allowed to vote, and therefore it follows you can have no influence." But everybody knows that in the world things are not managed in that way, and that if you have a large amount of capital in any concern, whatever may be the restrictions under which it is invested, the capitalist does exercise influence.
Then the right honourable Gentleman says - "You have no real control over the purchase you have made; and yet that purchase will lead to eat complications." Sir, I have no doubt that complications will occur. They always have occurred, and I should like to know the state of affairs and of society in which complications do not and will not occur. We are here to guard the country against complications, and to guide it in the event of complications; and the argument that we are to do nothing - never dare to move, never try to increase our strength and improve our position, because we are afraid of complications is certainly a new view of English policy, and one which I believe the House of Commons will never sanction. I think under these two heads all the criticisms of the right honourable Gentleman are contained. But the noble Lord [the Marquess of Hartington] who has just addressed us says many points were made by the right honourable Gentleman which the Chancellor of the Exchequer did not answer. There is no precedent of a British Ministry treating with a private firm; my right honourable Friend did not answer that. [Mr. Gladstone: I did not say so.] The right honourable Gentleman, however, says he made no observation of the kind. Then the noble Lord says my right honourable Friend never answered the charge about speculations in Egyptian Stock. Well, I have answered that charge. The noble Lord says my right honourable Friend never touched - upon the amount of the commission. I have touched upon it. He says that we never thoroughly cleared ourselves from the charge of not buying the 15 per cent shares. I am here to vindicate out conduct on that point. In purchasing the shares we did, we purchased what we wanted, we gained the end we wished, and why we should involve the country in another purchase, when we should thereby only have repeated the result we had already achieved I cannot understand. The noble Lord says my right honourable Friend never expressed what expectations we had of receiving the £200,000 a-year from the Khedive, but we do not suppose that interest which is at the rate of 5 per cent is quite as secure as it would be if it were at the rate of 3¼ per cent. Then the noble Lord says that my right honourable Friend never met the charge of the right honourable Gentleman that our policy would lead to complications with other nations. We believe, on the contrary, that, instead of leading to complications with other nations, the step which we have taken is one which will avert complications. These are matters which to a great degree must be matters of opinion; but the most remarkable feature of the long harangue of the right honourable Gentleman the Member for Greenwich is that it was in a great degree a series of assumptions, abstract reasonings, and arbitrary conclusions, after which he sat down quite surprised that the Vote should be passed unanimously, and requesting his allies to attack us for not answering that which we have felt not to be substantial, but to consist of assumptions which we believe experience will prove to be entirely false.
The right honourable Gentleman charged us, lastly, with not having answered a charge of having abandoned a strong position. The right honourable Gentleman pictured us as having been in a good position before this - a position which he charged us with having abandoned for one of a more doubtful character. Here again, what proof does he bring of the charge he makes? We found ourselves in a position which has been called a strong position, but we could not for a moment think that our position with regard to the Canal was satisfactory. The International Commission sat, as honourable Members know, before the Conservatives acceded to power, and the work it did was greatly assisted by our Predecessors, and by a number of other able and eminent men; but, as I have said, no one who remembers all the circumstances of the case and what has occurred since, can for a moment pretend that our position with regard to the Canal was then satisfactory. At the moment Turkey was in a very different position from that which she occupies at present, as far as authority is concerned. The Khedive himself was in a very good position; and yet those who are familiar with what occurred at that time know the great difficulties which the Government experienced, and the very doubtful manner in which, for a considerable time, affairs looked with regard to the whole business.  Therefore I do not agree with the right honourable Gentleman. I feel that at this moment our position is much stronger, and for the reason that we are possessors; of a great portion of the capital invested in the Canal.
The noble Lord himself has expressed great dissatisfaction, because I have not told him what the conduct of the Government would be with regard to the Canal in a time of war. I must say that on this subject I wish to retain my reserve. I cannot conceive anything more imprudent than a discussion in this House at the present time as to the conduct of England with regard to the Suez Canal in time of war, and I shall therefore decline to enter upon any discussion on the subject. ... What we have to do tonight is to agree to the Vote for the purchase of these shares. I have never recommended, and I do not now recommend this purchase as a financial investment. If it gave us 10 per cent of interest and a security as good as the Consols I do not think an English Minister would be justified in making such an investment; still less if he is obliged to borrow the money for the occasion. I do not recommend it either as a commercial speculation although I believe that many of those who have looked upon it with little favour will probably be surprised with the pecuniary results of the purchase. I have always, and do now recommend it to the country as a political transaction, and one which I believe is calculated to strengthen the Empire. That is the spirit in which it has been accepted by the country, which understands it though the two right honourable critics may not. They are really seasick of the "Silver Streak" [The English Channel]. They want the Empire to be maintained, to be strengthened; they will not be alarmed even it be increased. Because they think we are obtaining a great hold and interest in this important portion of Africa - because they believe that it secures to us a highway to our Indian Empire and our other dependencies, the people of England have from the first recognized the propriety and the wisdom of the step which we shall sanction tonight.
 Turkey had recently gone bankrupt and the Khedive was in financial difficulties so that safeguards in dealing with De Lesseps, the projector of the canal, who was anxious for French domination had disappeared for England. Yet four fifths of the shipping that used the canal was British. [back]
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