Despatch to His Majesty's Ambassador at Paris       forwarding Agreements between Great Britain and       France of April 8, 1904.

The Marquess of Lansdowne to Sir E. Monson.

Sir,                                               Foreign Office, April 8, 1904.
      I HAVE from time to time kept your Excellency fully informed of the progress of my negotiations with the French Ambassador for the complete settlement of a series of important questions in which the interests of Great Britain and France are involved. These negotiations commenced in the spring of last year, and have been continued with but slight interruptions up to the present time.
      Such a settlement was notoriously desired on both sides of the Channel, and the movement in its favour received a powerful impulse from the visit paid to France by His Majesty King Edward VII in May last and by the return visit of President Loubet to this country. Upon the latter occasion, the President was accompanied by the distinguished Statesman who has so long presided over the French Ministry of Foreign Affairs. It is a matter for congratulation that his presence afforded to His Majesty's Government the great advantage of a full and frank exchange of ideas. It left us in no doubt that a settlement of the kind which both Governments desired, and one which would be mutually advantageous to both countries, was within our reach.
      The details of the questions at issue have since been examined in confidential discussions with the French Ambassador, to whose personal knowledge of many of the points involved and wide diplomatic experience it is largely due that I am now able to announce to you the Agreement which has been arrived at. I inclose copies of the Convention and Declarations which were signed to-day by his Excellency and myself.
      Among the questions which it has been our duty to examine, that of the position of Great Britain in Egypt and of France in Morocco have necessarily occupied a foremost place.
      From a British point of view there is no more remarkable episode in recent history than that which concerns the establishment and the gradual development of British influence in Egypt. Our occupation of that country, at first regarded as temporary, has by the force of circumstances become firmly established. Under the guidance of the eminent public Servant who has for the last twenty years represented His Majesty's Government in that country, Egypt has advanced by rapid strides along the path of financial and material prosperity. The destruction of the power of the Mandi and the annexation of the Soudan have increased that influence and added to the stability of our occupation.
      But while these developments have, in fact, rapidly modified the international situation in Egypt, the financial and administrative system which prevails is a survival of an order of things which no longer exists, and is not only out of date but full of inconvenience to all concerned. It is based on the very elaborate and intricate provisions of the Law of Liquidation of 1880, and the London Convention of 1885. With the financial and material improvement of Egypt, these provisions have become a hindrance instead of an aid to the development of the resources of the country. The friction, inconvenience, and actual loss to the Egyptian Treasury which it has occasioned have been pointed out by Lord Cromer on many occasions in his annual Reports. It is well described in the following passage which occurs in Lord Milner's standard work on Egypt:—

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      “The spectacle of Egypt, with her Treasury full of money, yet not allowed to use that money for an object which, on a moderate calculation, should add 20 per cent. to the wealth of the country, is as distressing as it is ludicrous. Every year that passes illustrates more forcibly the injustice of maintaining, in these days of insured solvency, the restrictions imposed justifiable upon the financial freedom of the Egyptian Government at a time of bankruptcy—restrictions then, but wholly unjustifiable now. No one would object to the continuance of the arrangement by which certain revenues are paid in the first instance to the Caisse de la Dette. But as long as these revenues suffice to cover the interest on the Debt and to provide any sinking fund which the Powers may deem adequate, the balance ought simply to be handed over to the Egyptian Government to deal with as it pleases, and the antiquated distinction of 'authorized' and 'unauthorized' expenditure should be swept away. No reform is more necessary than this, if the country is to derive the greatest possible benefit from the improved condition of its finances which has been attained by such severe privations.”

      The functions of the Caisse, originally limited to receiving certain assigned revenues on behalf of the bondholders, have in practice become much more extensive. Its members have claimed to control, on behalf of the Powers of Europe, the due execution by the Egyptian Government of all the complicated international Agreements regarding the finances of the country. Their assent is necessary before any new loan can be issued. No portion of the General Reserve Fund can be used without their sanction; and all assigned revenues are paid directly to them by the collecting Departments without passing through the Ministry of Finance. In the same way, the receipts of the railways, telegraphs, and port of Alexandria, administered by a Board consisting of three members—an Englishman, a Frenchman, and an Egyptian—are paid, after deduction of the expenses, into the Caisse.
      The inconvenience of the arrangements which I have described has not been contested by the French Government, and they have shown themselves fully disposed to concert with us the means of bringing the system of financial administration into more close accord with the facts as they now present themselves.
      The case of Morocco presents different features. The condition of that country has for a long time been unsatisfactory and fraught with danger. The authority of the Sultan over a large portion of his dominions is that of a titular Chief rather than of a Ruler. Life and property are unsafe, the natural resources of the country are undeveloped, and trade, though increasing, is hampered by the political situation.
      In these respects the contrast between Morocco and Egypt is marked. In spite of well-meant efforts to assist the Sultan, but little progress has been effected, and at this moment the prospect is probably as little hopeful as it has ever been. Without the intervention of a strong and civilized Power there appears to be no probability of a real improvement in the condition of the country.
      It seems not unnatural that, in these circumstances, France should regard it as falling to her lot to assume the task of attempting the regeneration of the country. Her Algerian possessions adjoin those of the Sultan throughout the length of a frontier of several hundred miles. She has been compelled from time to time to undertake military operations of considerable difficulty, and at much cost, in order to put an end to the disturbances which continually arise amongst tribes adjoining the Algerian frontier—tribes which, although nominally the subjects of the Sultan, are, in fact, almost entirely beyond his control. The trade of France with Morocco is again—if that across the Algerian frontier be included—of considerable importance, and compares not unfavourably with our own. In these circumstances, France, although in no wise desiring to annex the Sultan's dominions or to subvert his authority, seeks to extend her influence in Morocco, and is ready to submit to sacrifices and to incur responsibilities with the object of putting an end to the condition of anarchy which prevails upon the borders of Algeria.
      His Majesty's Government are not prepared to assume such responsibilities, or to make such sacrifices, and they have therefore readily admitted that if any European Power is to have a predominant influence in Morocco, that Power is France. They have, on the other hand, not lost sight of the fact that Great Britain also has interests in Morocco which must be safeguarded in any arrangement to be arrived at between France and Great Britain. The first of these has reference to the facilities to be afforded to our commerce, as well as to that of other countries, in Morocco. Our imports to that country amount to a considerable percentage of the whole; and it is obvious that, given improved methods of administration, a reform of the currency, And cheaper land transport, foreign trade with Morocco should be largely increased—an increase in which British merchants would certainly look to have their share.
      The rights and privileges of Great Britain in Morocco in respect of commercial affairs are regulated by the Convention of Commerce and Navigation concluded

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between the two countries in December 1856, and the rights of British subjects to reside or travel in the dominions of the Sultan are provided for in the general Treaty between the two countries of the same year.
      The Convention entitles British subjects to trade freely in the Sultan's dominions on the same terms as natives or subjects of the most favoured nation, and stipulates that their right to buy and sell is not to be restrained or prejudiced by any monopoly, contract, or exclusive privilege, save as regards a limited number of imported articles, which are specifically mentioned.
      The Treaty gives to British subjects the right of residing or travelling in the dominions of the Sultan, and further entitles the British Government to appoint Consular officers at the cities and ports in Morocco, and establishes Consular jurisdiction over British subjects, besides providing for the usual privileges in respect of the right of British subjects to hire dwellings and warehouses, and to acquire and dispose of property, for their exemption from military service and forced loans, and for the security of their persons and property.
      It would have been impossible for His Majesty's Government to consent to any arrangement which did not leave these rights intact and the avenues of trade completely open to British enterprise.
      A second condition which His Majesty's Government regard as essential is also readily accepted by the French Government. It has reference to certain portions of the Moorish littoral, upon which both Governments desire that no Power shall be allowed to establish itself or to erect fortifications or strategical works of any kind.
      A third condition has reference to Spain. An adequate and satisfactory recognition of Spanish interests, political and territorial, has been from the first, in the view of His Majesty's Government, an essential element in any settlement of the Morocco question.
      Spain has possessions on the Moorish coast, and the close proximity of the two countries has led to a reasonable expectation on the part of the Spanish Government and people that Spanish interests would receive special consideration in any arrangement affecting the future of Morocco.
      His Majesty's Government have observed with satisfaction that, so far as the principle involved is concerned, the two Governments are in entire accord, and that it is the object of the French, as it is that of the British Government, to insure that the special consideration, which both agree is due to Spain, shall be shown in respect of questions of form no less than in respect of her material interests.
      The Declaration, of which a copy is attached to this despatch, embodies the terms upon which the two Governments propose to deal with the cases of Egypt and Morocco respectively.
      The first, and from the point of view of Great Britain the most important, part of the Agreement which has been concluded in respect of Egypt is the recognition by the French Government of the predominant position of Great Britain in that country. They fully admit that the fulfilment of the task upon which we entered in 1883 must not be impeded by any suggestion on their part that our interest in Egypt is of a temporary character, and they undertake that, so far as they are concerned, we shall not be impeded in the performance of that task. This under-taking will enable us to pursue our work in Egypt without, so far as France is concerned, arousing international susceptibilities. It is true that the other Great Powers of Europe also enjoy, in virtue of existing arrangements, a privileged position in Egypt; but the interests of France—historical, political, and financial—so far outweigh those of the other Powers, with the exception of Great Britain, that so long as we work in harmony with France, there seems no reason to anticipate difficulty at the hands of the other Powers.
      The importance of this engagement cannot be overrated. Although the attitude of the French Government in regard to Egyptian questions has been considerably modified of late years—in great measure owing to the harmonious relations which have recently prevailed between the Representatives of the two countries in Cairo—the possibility of French opposition has had, nevertheless, constantly to be taken into account; its disappearance will be an unqualified benefit to both Governments, and will greatly facilitate the progress of the task which we have undertaken in Egypt.
      It has long been clear that, in the interests of all parties, it was desirable to introduce very considerable modifications in the international arrangements, established in Egypt for the protection of foreign bondholders. The new Khedivial Decree annexed to the Declaration and accepted by the French Government will, if it be accepted by the other Powers concerned, have the effect of giving to the Egyptian

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Government a free hand in the disposal of its own resources so long as the punctual payment of interest on the Debt is assured. The Caisse de la Dette will still remain, but its functions will be strictly limited to receiving certain assigned revenues on behalf of the bondholders, and insuring the due payment of the coupon. The Caisse will, as soon as the Decree has come into operation, have no right and no opportunity of interfering in the general administration of the country. The branches of revenue assigned to the service of the Debt have also been changed, and the land tax has been substituted for the customs duties and railway receipts. This arrangement will give the bondholders the advantage of having; their rights secured on the most stable and certain branch of the Egyptian revenue, and one which shows a constant tendency to increase. On the other hand, the Egyptian Government will no longer be hampered in the administration of the customs and railways, and, as a corollary, the mixed administration which has hitherto controlled the railways, telegraphs, and port of Alexandria, will disappear.
      The fund derived from the economies of the conversion of 1890, which since that date has been uselessly accumulated in the coffers of the Caisse, and which now amounts to 5,500,0001., will be handed over to the Egyptian Government, who will be free to employ it in whatever way most conduces to the welfare of the people.
      Though we still maintain our view as to the right of the Egyptian Government to pay off the whole of their debt at any time after 1905, the French Government have strongly urged the claims of the bondholders to special consideration in view of the past history of the Egyptian Debt. In order to meet their wishes in this matter the present arrangement provides that the conversion of the Guaranteed and Privileged Debt shall be postponed till 1910 and the conversion of the Unified Debt till 1912—a postponement which confers a very material advantage on the existing bondholders, and should remove all grounds of complaint whenever the conversion is carried through.
      The Decree abolishes various other provisions of the old Law which experience has shown to be unnecessary and inconvenient. It will be sufficient to mention the two most important of these. In the first place, the consent of the Caisse will no longer be necessary in the event of the Egyptian Government desiring to raise further loans for productive expenditure or for other reasons. In the second place, the plan devised in the London Convention of fixing a limit to the administrative expenditure of the Egyptian Government has been swept away. The manifold inconvenience, and even loss, to which this system has given rise in a country which is in the process of development, and where, consequently, new administrative needs are constantly making themselves felt, have been frequently pointed out by Lord Cromer.
      Your Excellency will not fail to observe that the Khedivial Decree in which these measures are embodied will require the consent of Austria, Germany, Italy, and Russia before it can be promulgated by the Egyptian Government. The amount of the Egyptian Debt held in these countries is, however, quite insignificant. France and Great Britain, indeed, between them hold nearly the whole of the Debt, with the exception of the small proportion which is held in Egypt itself. In these circumstances it is reasonable to hope that no serious difficulties will he encountered in other quarters regarding proposals which are considered by the two Governments as giving entire satisfaction to the legitimate interests of the bondholders, and which those two Governments are formally pledged to support. Should, however, unexpected obstacles present themselves, we shall, in virtue of our Agreement with France, be able to count upon the support of French diplomacy in our endeavours to overcome them.
      It is necessary that I should add a few words as to the other points in which the internal rights of sovereignty of the Egyptian Government are subject to international interference. These are the consequences of the system known as that of the Capitulations. It comprises the jurisdiction of the Consular Courts and of the Mixed Tribunals, the latter applying a legislation which requires the consent of all the European Powers, and some extra-European Powers, before it can be modified. In Lord Cromer's opinion the time is not ripe for any organic changes in this direction and His Majesty's Government have not, therefore, on the present occasion, proposed any alterations in this respect. At the same time, whenever Egypt is ready for the introduction of a legislative and judicial system similar to that which exists in other civilized countries, we have sufficient grounds for counting upon French co-operation in effecting the necessary changes.
      It will be observed that an Article has been inserted in the Agreement declaring

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the adhesion of His Majesty's Government to the Treaty of the 29th October, 1888, providing for the neutrality of the Suez Canal in time of war. In consequence of the reservation made by Lord Salisbury at the time respecting the special situation of this country during the occupation of Egypt, some doubt existed as to the extent to which Great Britain considered herself bound by the stipulations of the Convention. It appears desirable to dissipate any possible misunderstanding by specifically declaring the adhesion of His Majesty's Government. It is, however, provided that certain executive stipulations which are incompatible with Lord Salisbury's reservation should remain in abeyance during the continuance of the occupation.
      In regard to Morocco, your Excellency will find that the Convention contains the following stipulations on the part of the two Powers: the Government of the French Republic places upon record a Declaration that it has no intention of disturbing the political status of Morocco; that the rights which Great Britain enjoys in virtue of Treaties and Conventions and usage are to be respected; and that British commerce, including goods in transit through French territory and destined for the Moorish market, is to be treated on a footing of absolute equality with that of France. His Majesty's Government, on the other hand, recognize that it belongs to France to maintain order in Morocco, and to assist the Moorish Government in improving the administrative, economic, financial, and military conditions of that country.
      The two Governments undertake a mutual obligation to construct no fortifications themselves, and to allow no other Power to construct fortifications on the more important portions of the Moorish sea-board.
      Finally, with regard to Spain, both Governments place on record their admission that that country has exceptional interests in certain portions of Morocco, and that those interests are to be respected by both Powers alike. The French Government has undertaken to come to an understanding with that of Spain as to the mode in which effect can best be given to this stipulation, and to communicate to the Government of His Majesty the terms of the Arrangement which may be made with this object.
      Your Excellency is familiar with the circumstances which confront us in the Colony of Newfoundland.
      The Treaty of Utrecht (1713) by Article XIII recognized that the Island of Newfoundland should thenceforth belong wholly to Great Britain, but it gave to the French “the right to catch fish and to dry them on land on that part of the coast which stretches from Cape Bonavista to the northern point of the island, and from thence running down by the western side to Point Riche.” They were not to erect any buildings there besides stages made of boards and huts necessary and usual for drying fish, or to resort to the island beyond the time necessary for fishing and drying of fish. This right was renewed and confirmed by Article V of the Treaty of Paris, 1763.
      By the Treaty of Versailles, 1783, the French renounced their right of fishing from Cape Bonavista to Cape St. John on the east coast, and acquired the right to fish from Cape St. John on the east coast to Cape Ray on the west, passing by the north. This change was made in order to prevent the frequent quarrels which took place between the fishermen of the two nations. With the same object Great Britain undertook, in the Declaration of the 30th September, 1783, appended to the Treaty, that measures should be taken to prevent British subjects from interrupting in any manner, by their competition, the fishery of the French during the temporary exercise of it granted to them by the Treaties, and that fixed settlements by the British on the portion of the coast above described should be removed.
      Great diversities of opinion have arisen between the two Governments as to the interpretation of these stipulations. To summarize the chief heads of the dispute, the French have contended that the Treaties give them an exclusive right of fishery on the coast mentioned, and that all British fixed settlements, of whatever nature, on the coast are contrary to the Treaties. On the other hand, the British contention has been that British subjects have the right to fish concurrently with the French, provided that they do not interrupt them, and that the fixed settlements referred to in the British Declaration of 1783 are fixed fishing settlements only, and that other fixed settlements are not contrary to the Declaration.
      Periodical attempts have been made since 1844 to dispose of the various questions arising out of these differences. Negotiations for the purpose were undertaken successively in 1857, 1860, 1874, 1881, and 1885, but without success. On two occasions—in 1857 and 1885—Conventions were actually signed limiting the area within which the French rights were to be exercised, and, in return, acknowledging those rights and conceding some further privileges. These arrangements were, however, viewed with

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