All that follows is a direct quotation of the third section of Chapter XV of Morton's History, Colonial Expansion - Egypt:
The story of British dealings in Egypt is worth telling in some detail, not only because of its intrinsic importance but because it contains in the most concentrated form the whole essence of imperialist method. What took centuries in India was here crowded into little more than a generation, while the compact and unified character of the country, the valley of a single great river, enables the whole scene to be realised at a glance.
From the time of the Mohammedan conquest in the seventh century to the beginning of the nineteenth, there were few fundamental changes in Egypt. New dynasties arose, trade routes came into being and declined, but the unchanging basis of peasant cultivation dependent upon the annual cycle of the Nile remained unaltered. Napoleon came and departed, the Turkish empire crumbled away, leaving Egypt virtually independent under its khedive. Almost as shadowy as the authority of the Turkish sultan in Egypt was that exercised by the khedive over the vast territory of the Sudan and the even remoter Somali coast.
In the 1850s came the project of the Suez Canal, and European capitalists began to turn their attention to the Nile valley. The canal was opened in 1869. Much of the capital was French, but the khedive Ismail had subscribed nearly half of the shares. At once Egypt became the key to the most important waterway in the world. Britain was more vitally concerned with the control of the Suez than France because the canal was on the main route to India. At the same time, the development of important cotton plantations in Egypt, to which a powerful impetus had been given by the American Civil War, was another reason for British interest in this region, since Britain was the chief importer of cotton and the plantations had been developed largely with British capital.
Naturally, therefore, when Ismail began, in the 1860s and 70s, to introduce Western improvements, it was to London that he turned for the capital that did not exist in his own country. These were merry years. In little more than a decade 900 miles of railways, hundreds of bridges, thousands of miles of canals and telegraphs, costly docks at Suez and Alexandria were built.
The operations proved almost boundlessly profitable to British bankers and industrialists. First of all the loans had to be raised. Between 1864 and 1873 four great loans amounted to over £52,500,000, raised at heavy rates of interest. But Egypt received only £35,400,000 of this sum, the rest going to the London financiers as commission and expenses. This was only the beginning since almost all the money raised was at once paid over to British contractors, who in their turn made vast profits. Thus, the harbour works at Alexandria, for which the Egyptian Government paid £2,500,000, realised a profit of £1,100,000 for the contractors. By 1876 the indebtedness of Egypt was about £80,000,000, and the interest on this sum was £6,000,000 a year out of a total state revenue of £10,000,000, all of which had to be screwed out of a peasant population of about eight million, cultivating less than five and a half million acres of land. In 1875, the khedive was forced to sell his shares in the Suez Canal, which were bought by the British government through the Rothschilds.
Year by year, as loan was piled upon loan, the country became more and more bankrupt. The peasants, who benefited least by the new railways and docks, were bled white to pay the foreign bond-holders. In 1878 there was cattle plague and famine and it was clear that a crisis was at hand. The Egyptian state machine was breaking down and it was time for Britain, as the representative of the financiers, to step in and protect their interests. A strong agitation compelled the khedive Ismail to grant a constitution, and a nationalist party, openly anti-foreign, began to gain support. This was too much for the British, who had Ismail deposed and replaced by the more subservient Tewfik. The nationalist movement continued to grow, led by Arabi and other army officers. In 1881 they seized power and established a government determined to resist foreign encroachments.
Britain and France sent warships to Alexandria, where they organised a 'massacre' of Christians, mostly Greeks and Armenians, by hired Bedouin assassins, as a pretext for intervention. But the antagonisms between the different European Powers made immediate action impossible. A conference was held in June 1882, at which Britain, France, Italy, Germany, Russia and Austria agreed not to seek any 'territorial advantage, nor any concession of any exclusive privilege', except, according to British addendum, 'in case of special emergency'.
On 11 July the British created their 'special emergency' by bombarding the forts of Alexandria on the excuse that they were being repaired by the Egyptians. An army was landed which defeated Arabi's forces at Tel-el-Kebir, and by the end of September the British were in full military control of the whole country. The most solemn assurances were of course given that the occupation was only temporary and would end when order was restored. For the next twenty-five years the real ruler of Egypt was Sir Evelyn Baring (of Baring Brothers the bankers, later Lord Cromer) whose official post was that of Consul General. Before describing the policy on which Baring reorganised Egypt in the interests of high finance, it is necessary to outline the events by which British rule was extended to the Sudan.
The Sudan, stretching south from Egypt almost to the equator, was important not only for its fertility and natural riches but because the upper reaches of the Nile pass through it and whoever controls the Sudan also controls Egypt. Towards the end of the century it became of special value to Britain as a link in the chain of territory which it was hoped would extend right across Africa from Egypt to the Cape.
About 1880 a religious nationalist movement under Mahommed Ahmed, better known as the Mahdi, spread over the whole country. From Dafur in the West to Suakim on the Red Sea and south to the great lakes, the Egyptian garrisons were swept away. In 1883 an Egyptian army which had been sent up the Nile against the Mahdi under Colonel Hicks was entirely destroyed. Only Khartoum remained in Egyptian hands, and the large garrison there was threatened.
Sir Evelyn Baring and the majority of the British Cabinet, including Gladstone who was Prime Minister at the time, decided that the Sudan must be abandoned for the moment. A powerful minority, working in close harmony with Lord Wolseley and other leading army officers, thought otherwise. Making use of a stunt journalist, W. T. Stead, they whipped up an intense and apparently spontaneous agitation to have General Gordon sent to Khartoum to organise the withdrawal of the garrison, though he had publicly declared his opposition to this policy. Baring's protests were overruled and Gordon arrived at Khartoum in February 1884.
Instead of proceeding with the evacuation as he had been instructed to do, he allowed himself to be besieged, apparently with the idea of blackmailing the government into sending a relief force, defeating the Mahdi and reconquering the Sudan. A relief force was sent, after much delay, but it did not arrive till 28 January 1885, two days after Khartoum had fallen and Gordon had been killed. The expedition then returned, since the re-conquest of the Sudan was impracticable till after the reorganisation of Egypt had been completed. But British imperialism gained something more immediately useful than a new province, it gained a saint and martyr. The very peculiarities which had made Gordon an imperfect instrument when alive, his naive piety, his indiscipline and his contempt for convention, made him all the more suitable for canonisation, since the vein of sentimentality running through the British ruling class would have prevented their accepting a saint who was not also something of a simpleton.
For twelve years the Sudan was abandoned. During this time much happened: the position in Egypt had been consolidated, Britain, France and Italy were penetrating the Somali Coast, Abyssinia and Uganda, the vision of Rhodes of a British empire running unbroken from north to south was being embodied in the settlement of Rhodesia. And, in opposition to this, the French were planning an east to west block which would cut across the British somewhere on the upper Nile.
Then, on 1 March 1896, the first Italian attempt to conquer Abyssinia was shattered at Adowa. Adowa was more than a defeat for Italy. Indirectly it was a defeat for Britain, Italy's ally in East Africa, and a victory for France which had been supplying Abyssinia with arms and posing as its only genuine friend, with the object of using that country as a base from which to conquer the Sudan and turn the flank of the British. Adowa meant that the way was now clear for such an attempt.
Within a week the British government had decided to begin the invasion of the Sudan. General Kitchener, with a powerful Anglo-Egyptian army, moved slowly up the Nile, consolidating every step and building a railway as he advanced. In September 1898 Khartoum was re-taken after the Sudanese had been routed in a bloody battle at Omdurman. Soon after, the victorious army encountered a handful of French soldiers who had occupied Fadosha, still higher up the river. For a short time, war between France and Britain seemed likely, but the French gave way, partly because their rivals were in effective military occupation of the Sudan but more because they dared not risk a war of which a hostile Germany might take advantage.
The finance of the conquest was somewhat peculiar. Egypt had to pay two-thirds of the £2,500,000 bill, and for years after paid the heaviest part of the cost of administration. But the profits from the exploitation of the new province went entirely to British capitalism. Railways and other works were constructed on the same terms as those in Egypt, and the Sudan soon became a producer of fine quality cotton. The highest point of co-operation between the British government and the cotton planters was reached in the case of the Sudan Plantations Syndicate, of which the ex-Prime Minister Asquith was one of the directors. Over a large area in which an irrigation scheme was carried out all the land was forcibly rented by the government from its Sudanese owners at 2s. an acre, and then re-allotted to the original peasant occupiers on condition that one-third of each holding of thirty acres was used for cotton growing. The cultivator was allowed 40 per cent of the proceeds of the cotton crop and the remaining 60 per cent was divided between the syndicate and the government. It is not, perhaps, surprising that for the first eight years of its working the syndicate made an average profit of 25 per cent. Besides being a cotton-growing area, the Sudan became an important and steady market for the products of British heavy industry.
The principle on which Baring ruled Egypt during the twenty-five years of his consulship was that 'the interests of the bond-holders and those of the Egyptian people were identical'. In practice this meant that the surplus for export must be increased so that the charges on loans could be regularly met. By 1907 cotton exports had increased from £8,000,000 a year to about £30,000,000. As the proportion of land under cotton rose, food had to be imported for a population previously self-supporting. Thus the peasants provided two new sets of profits, one for the exporters of cotton and one for the importers of wheat. While the total productivity of the country rose, they received a steadily diminishing proportion of the value of their crops.
Egypt was governed by a bureaucracy entirely under British control, and for a long time organised opposition was impossible. In 1906, however, a particularly gross example of misrule in the judicial massacre at Denshawai provided the spark which set ablaze the smouldering discontent and a new nationalist movement began to develop. Under pressure of this movement small concessions had to be made but the First World War, during which Egypt became a point of first-class strategic importance, provided an opportunity for even stricter control. Egypt was placed under martial law, her nominal connection with the Turkish empire was at last broken, a rigid censorship was imposed and nearly a million peasants and workers were conscripted for war service in spite of the most specific pledges that this would not be done.
After the war the nationalist agitation was resumed. In 1919 there were widespread riots and strikes in course of which over one thousand Egyptians were killed. After a struggle lasting for more than a decade Britain was forced to grant Egypt a nominal independence, in which the reality of British rule was preserved, first by a strong military occupation of the Suez Canal zone and secondly by the continued occupation of the Sudan. The great irrigation works which have been constructed on the upper Nile made it possible for Egypt's vital water supply to be interrupted at any time, and it has therefore always been a prime demand of the Egyptian nationalists that the whole Nile valley should be united under a single independent regime.