expenditure. Although the money
for public works could be obtained out of grants from the General
Reserve Fund, there was no fund from which to provide a sufficient sum
to keep those works in order. Moreover, to avoid having to pay half the
amount received into the General Reserve Fund the government was
compelled to keep certain items of revenue and expenditure out of the
accounts altogether--a violation of the principles of sound finance.
Then there was the glaring anomaly of allowing the Conversion Economies
to accumulate at compound interest in the hands of the commissioners of
the Caisse, instead of using the money for remunerative purposes. The
net result of internationalism was to impose an extra charge of about
L1,750,000 a year on the Egyptian treasury.

Egypt gains financial liberty.

All these cumbersome restrictions were swept away by the khedivial
decree of the 28th of November 1904, a decree which received the assent
of the powers and was the result of the Anglo-French agreement of April
1904 (see S HISTORY). The decree did not affect the inability of Egypt
to tax foreigners without their consent nor remove the right of Turkey
to veto the issue of new loans, but in other respects the financial
changes made by it were of a radical character. The main effect was to
give to the Egyptian government a free hand in the disposal of its own
resources so long as the punctual payment of interest on the debt was
assured. The plan devised by the London Convention of fixing a limit to
administrative expenditure was abolished. The consent of the Caisse to
the raising of a new loan was no longer required. The Caisse itself
remained, but shorn of all political and administrative powers, its
functions being strictly limited to receiving the assigned revenues and
to ensuring the due payment of the coupon. The nature of the assigned
revenue was altered, the land tax being substituted for those previously
assigned, that tax being chosen as it had a greater character of
stability than any other source of revenue. By this means Egypt gained
complete control of its railways, telegraphs, the port of Alexandria and
the customs, and as a consequence the mixed administration known as the
Railway Board ceased to exist. Moreover, it was provided that when the
Caisse had received from the land tax the amount needed for the service
of the debt, the balance of the tax was to be paid direct to the
Egyptian treasury. The Conversion E