ranean, especially as the undertaking was to be in French hands and mainly supported by French capital.

13. But M. Ferdinand de Lesseps, the famous Frenchman who projected it, was not diverted from his object by this opposition or by other difficulties which he had to meet, and after his friend Said Pasha had become Viceroy of Egypt in 1854, he obtained a concession from him authorizing the formation of a company for the purpose of making a canal. Such a concession required the sanction of the Sultan to give it full legal validity; and it was not till 1866 that a firman to this effect was granted to the Company, and then only with some special conditions attached to it. The Sultan's refusal to sanction the scheme previously was due to the influence of Great Britain over him at the time. Meanwhile de Lesseps proceeded at once to form a Company under the name of the Compagnie Universelle du Canal Maritime de Suez, and obtained on January 5, 1856, a further concession by which the Company was established. This latter concession by which the Company's powers were determined and its statutes declared, is regarded as its fundamental charter.2

14. These concessions, it should be observed, great as were their political and international consequences, give the Suez Canal Company simply the status of a private company. By Article I of the second concession the Company is bound to construct a Maritime Canal between Suez in the Red Sea and Pelusium in the Mediterranean, and also a canal of irrigation to connect the Nile with the Maritime Canal. It was also, by Article VI, required, if necessary, (1) to construct a port at the entrance of the Maritime Canal in the Gulf of Pelusium, and (2) to improve the existing port of Suez. Further, by Article VII, it was to maintain these canals and ports in proper condition at its own charges.

1 See on this subject J. Charles-Roux, L'Isthme et le Canal de Suez, 2 vols., Paris 1901.

2 For Concessions, Conventions, Statutes, and Resolutions of the Suez Canal Company, with the Sultan's Firman, see Parliamentary Papers, Egypt No. 6, 1876 (C. 1416).

15. Articles XIV and XV show the uses which the Maritime Canal was intended by the Egyptian Government to serve. In Article XIV the Pasha solemnly declares for himself and his successors, subject to the ratification of the Sultan, that the great Maritime Canal from Suez to Pelusium and the ports attached to it shall be always open as neutral passages to every merchant ship passing through it from one sea to the other, without any distinction, exclusion, or preference either in respect of persons or nationalities, on payment of the dues and following the regulations laid down by the Company for the use of the canal and its dependencies. And Article XV further provides that the Company shall not under any circumstance grant to any ship, company, or private person any advantages or favours which are not granted to all other ships, companies, or private persons in the same conditions.

16. It should be observed in respect of these Articles(a) That they contain a distinct dedication of the Canal by the Egyptian Government to the use of the ships of all nations on equal terms, the Egyptian Government not reserving any right to give a preference to Egyptian vessels or those of the Ottoman Empire generally. Only merchant ships, it will be seen, are here mentioned; but in its administration of the Canal, the Company has also equally admitted all vessels of war.1

(b) The Company is bound to administer the Canal in accordance with these declarations, as it has in fact done; but the declarations themselves, being made only by an act of internal government and not in an agreement with foreign States, do not give rise to any international obligation on the part of the Egyptian Government.

(c) It seems to follow from Article XIV (cf. also Article VII) that the Company has no right to close the Canal at its pleasure, as de Lesseps at one time claimed in a dispute he had with the French on the tolls question. The Concession does not confer any political

1 See memorandum of de Lesseps on the subject, Parliamentary Papers, Egypt No. 1, 1877 (C. 1766), p. 1.

rights on the Company, the defence of the Canal being left in the hands of the territorial Power.

17. The legal character of the Company is described by its statutes, which are appended to the Concession. Of these, Article I states that the Compagnie Universelle du Canal Maritime de Suez, as it is called, is a société anonyme of proprietary and other shareholders; and Article III that its local settlement (siège) shall be at Alexandria and its administrative domicile at Paris. As a société anonyme it is governed by the provisions of the French code respecting such companies. The Court of Appeal in Paris is the ultimate resort for the trial of cases coming under this law (see Articles LXXIII-LXXVIII); but jurisdiction over cases of a local character, including criminal cases, belongs to the Egyptian courts. Paris, being the administrative domicile of the Company, is its general place of business. By Article LXXVI the Egyptian Government has a special commissioner there to inspect its operations and to fulfil other duties with which he is charged. The government of the Company is carried on by a council of thirty-two members representing the principal nationalities interested in the undertaking and chosen by the general assembly of shareholders. For the conduct of business the council appoints a committee of management with executive powers.

18. The revenue of the Company is principally derived from the tolls and other dues it is authorized to impose. According to Article XVII, Section 3, of the Concession, no exception in respect of dues is to be made in favour of the vessels of any nation, and the maximum charge for vessels making use of the Canal is not to exceed ten francs a ton, estimated either by the capacity of the ship or per head for persons.

19. But the Concession left it to the Company to decide what system it should adopt for defining the ton of capacity. The question subsequently led to a dispute which was not settled without much difficulty. An international commission to consider it sat in 1873 at Constantinople,

1 See on the subject of the tonnage question Charles-Roux, op. cit.

on account of complaints made by shipowners of the working of recent changes in the system. The Commission recommended a new tariff, but this did not give satisfaction; and for some years the controversy between the Company and the shipowners continued, the latter at one time threatening to promote the construction of another canal. But eventually a settlement was arrived at by which the tolls were to be reduced in 1885 to 9 francs a ton, to be further reduced as the profits of the Company increased; on the dividends paying twentyfive per cent., the surplus profits were under this arrangement to be exclusively applied to their reduction till they were lowered to 5 francs a ton. Till the outbreak of war the profits continued to rise, so as to admit of a reduction of the tolls according to this scale.

20. In consideration of the concession to the Company of the Canal routes and other rights connected with them, the Egyptian Government reserved considerable interests in the undertaking itself. Thus by Article XVIII it was to be entitled to fifteen per cent. of the annual profits. The Khedive also took 85,506 shares on his own account. The lease of the Maritime Canal to the Company was limited to ninety-nine years, to run from the time of its opening, which was in 1869; hence, as the Company is the owner of a most prosperous concern, the reversionary interest of the Egyptian Government is of great and increasing value.

21. In 1875, some years after the Canal had been opened to navigation, the British Government obtained a powerful influence over the Company by the acquisition of the Khedive's original shares, with some others -in all 176,602 shares out of the 400,000 issued.

22. This step was taken to stop these shares coming into French hands, as it was feared that they might. Lord Derby, our Foreign Minister at the time, said on this subject that he would regard with much satisfaction

ii, p. 9, &c., &c.; Voisin Bey, Le Canal de Suez, Paris, 1902-7, ii, p. 41, &c., &c.; R. Dedreux, Der Suez Kanal im internationalen Rechte, Tübingen, 1913, p. 32, &c. &c.; Encyclopaedia Britannica, 11th ed., 1910-11, vol. xxvi, p. 22.

the carrying out of a scheme, if it were possible, by which the shareholders were made disinterested parties, or, if it were possible, replaced as a Company by a kind of administration or syndicate on which all the maritime Powers should be represented. But he objected to

a monopoly in foreign hands of a concern in which we had the first interest, having made more use of the Canal than all other nations put together. The Company and the French shareholders, he said, possessed £110,000,000 of the £200,000,000 comprised in the capital of the Company's shares. It was on this account that the British Government purchased the shares in question, and not to obtain any monopoly for itself. At this time, it should be remembered, the future of the Canal was particularly uncertain; the British occupation of Egypt had not begun and the Canal had not yet been. internationalized by treaty. The intervention of Lord Beaconsfield in making the counsels of our Government in the affairs of the Company heard in this way has been abundantly justified. The effect was soon shown in the part our Commissioners took in the Tolls question and in getting the Canal deepened and extended, as well as in other ways.

The Protection of the Canal

23. We have seen that, while the concessions granted to de Lesseps and his Company declared the Canal to be neutral and open to the ships of all nations on equal terms, they were only unilateral acts and therefore could not internationalize it. To give an international status a treaty between the Powers was required, without which its condition would remain precarious.1 Free access to it might be stopped, and it would be exposed to danger in case of war or insurrection, while the territorial Power might be in a too weak or divided condition to be able or willing to protect it. Moreover, this danger would be magnified if the territorial Power, i.e. the Ottoman Porte including Egypt, were itself a belligerent.