The Monetary System in Egypt
by Marc Van Daele
It is often overlooked that during the middle of the 20th century Egypt was relatively prosperous, economically active and very cosmopolitan. The Egyptian Vice-Roy had on June 26, 1867 obtained from the Sublime Gate the title of Khedive with the qualification of Highness. The British military occupation from 1882 did nothing to change the subservient connection that had bonded Egypt and the Ottoman Empire.
Nevertheless, at the end of this period, it was the Counsel General of Great Britain who led the country. On July 1, 1913, a Legislative Assembly was created by Khedival decree. It was made up of 89 elected members to the universal male vote in two degrees.
Egypt used its own currency, based on the gold standard, and produced in the name of the Ottoman Sultan. The Egyptian pound was divided into 100 piastres or guerches divided themselves into 1000 ochr. The Pound was worth 25 francs or 62 centimes. A Pound Sterling was worth 97.5 piastres.
The piastre could also be divided into 40 paras.
During the war with Turkey, Great Britain proclaimed its protectorate over Egypt on December 18, 1914. The British Counsel General was replaced by the High Commissioner. The Khedive took the title of Sultan. From 1916 new coins were placed into ciruculation. There was no change regarding the circulation of bank notes which were issued after 1899 by the National Bank of Egypt following a decree on June 25, 1898. In 1913, Egypt made 813 billion of marks and silver and 76 billion marks ready for circulation. The numbers for Turkey are limited to 598.1 billion marks and 110.9 billion marks, respectively.
Faced with the desire for independence among the Egyptians, and after numerous delays, Great Britain ended its protectorate of Egypt on February 28, 1922. England unilaterally declared the country's independence with 4 stipulations. These points concerned the status of Anglo-Egyptian Sudan, the imperial British communications (Suez Canal and airfields), the British military occupation of Egypt and the points of capitulation.
On March 15, 1923, Sultan Fouad who ruled after 1917 took the title of King. On April 19, a constitution was drawn for him by the Wafd, a bourgeois and nationalist Egyptian party. The constitution would be suspended from 1930 to 1935. Egypt was thus a sovereign country of limited independence. the influence of the British High Commissioner remained dominant. Hence we find ourselves in the confusing circumstance of the constitutional Statute arranged before the War. Egypt could not become a member of the Society of Nations which had Liberia and Ethiopia among its ranks!
Certainly it can be said that Egypt was a monarchy under the benevolent supervision of the British Empire. Great Britain sought to sign a treaty with Egypt, but it knew that such a treaty must give substantial consideration to the Wafd and the King. The King led a pro-British policy which did not mix well with the pro-nationalist Wafd. In November 1924, the English general who served at the time as Governor of Sudan and General in Chief (Sirdar) of the Egyptian army was assassinated. Great Britain ordered the withdrawal of Egyptian troops from Sudan and several repressive policies were used in Egypt. Under the economic plan, however, Egypt fared well.
The Egyptian Pound was tied to the English Pound by the parity set before the war (one Pound Sterling for 97.5 piastres).
The piastre was signified by the letters P.T. piastre tarife'e or tariffed piastre.
The tariffed piastre was worth close to 2.5 d. Traditionally before the war, one would use a piastre in regular affairs as and which had a value of about half the tariffed piastre. This "small" piastre was called Nusf Girsh and represented 1.25d. The Pound was also divided into thousandths.
Many banks sprouted up at this time . There was the National Bank of Egypt, the Anglo-Egyptian Bank Ltd., Comptori National d"Escompte and Credit Lyonnais. The Egyptian Pound was used in Sudan. In that country, one shilling coins and two English shillings were circulated at a value of 5 and 10 piastres. King Fouad made an official visit to Belgium in October 1927 and G. Devresse made a medallion for the occasion.
The crisis of 1929 would impoverish the working classes in Egypt. What followed would be severe and have lasting consequences for the future.
The rise to the throne of King Farouk on April 28, 1936 brought lots of hope to the Egyptian people. The sixth Anglo-Egyptian negotiations ended with the signing of treaty between the two sides. The English ceded nothing: the military occupation became an alliance. The British High Commissioner became an ambassador. At the same time, Egypt entered the Society of Nations where it had preceded Iraq. On May 8, 1937 in Monteux, the powers signed the cancelation of capitulations.
The mixed tribunal would be abolished in 12 years. Egypt continued on its plight.
The hard awakening presented numerous challenges for King Farouk and the Egyptians. By the conventions signed with Great Britain and France in July and August 1940, debt was abolished. King Farouk reached his majority on February 11, 1937. His relationship with the Ward was difficult because the constitutional roles were not set. Once prosperous Egypt moved towards careless policies.
In February 1942, King Farouk could no longer accept the break up diplomatic relations with Vichy France. The British Ambassador was called to the palace under armored protection. England presented the King with a Wafd that was agreeable to English interests.
During the war, Egyptian independence was very theoretical. On March 22, 1945, Egypt actively participated in the constitution of the Arab League inspired by Britain. On June 26, 1945, Egypt became a member of the United Nations. Great Britain left the Nile Delta and Cairo in April 1947. English troops remained in the Suez Canal. The political situation was confusing for a long time and stayed that way because of deteriorating economic conditions. The war in Palestine in 1949 settled nothing. The Anglo-Egyptian treaty would be repealed in 1952 and a republic proclaimed on June 18, 1953 after the short-lived reign of the infant Fouad II (26.7.52- 18.6.53).
June 1996
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