[Extracts from the Report of 1902.'] 



After a prolonged trial, it appeared that the somewhat novel 

 system adopted in Egypt some few years ago had passed out of the 

 experimental stage, and that the introduction of a scheme of a more 

 permanent character than that heretofore adopted was justifiable. 



Negotiations having this object in view were set on foot, with the 

 result that on the 1st June, 1902, an Agricultural Bank was started 

 under the auspices of the National Bank of Egypt. All loans 

 outstanding with the National Bank were transferred to the new 

 bank, whose sole business it is to lend money in small sums to the 

 fellaheen. The capital of the bank was fixed at 2,500,000 of which 

 1,250,000 has been already paid up. Interest at the rate of 3 per 

 cent, is guaranteed by the Government. It was, at the same time, 

 arranged that the rate of interest at which money was advanced to 

 the fellaheen, which had previously been 10 per cent., should be 

 lowered to 9 per cent. 



The distinctive feature of the Egyptian system is that, although 

 the whole of the management is in the hands of the bank, the 

 Government tax-collectors collect the sums due on account of interest 

 and sinking fund. 



The reasons why the Egyptian system has attained a certain 

 measure of success are mainly two-fold. They are : 



1. That, although the action of the Government has been so far 

 philanthropic that they have wished to benefit a large and important 

 class of the community, the undertaking has in no degree been 

 established on a philanthropic basis. On the contrary, the basis has 

 been strictly commercial. There was, in the first instance, some very 

 natural difficulty in convincing capitalists that the business would 

 be fairly lucrative ; but when, by applying the test of actual 

 experiment, this difficulty was overcome, the main obstacle to success 

 was removed. 



2. The supervision, which has been conducted by very carefully 

 selected British agents, has been capable, vigilant, and honest. 



When I say that a certain degree of success has been attained in 

 Egypt, I merely mean that, under the new system, it is clear that the 

 fellaheen are anxious to borrow, and that the arrangement for 



