Legacy of Muhammad Ali Pasha’s Mercantilist Development – by Ramses Abul Naga

State Monopoly + British Imperialism = the Emergence of Land Inequality: Aspects of the Socio-Economic Legacy of Muhammad Ali Pasha’s Mercantilist Policies

Post by Ramses H Abul Naga, Reader in Economics, University of Aberdeen, 2018-2019 IMéRA fellow in partnership with AMSE – Aix-Marseille School of Economics. Ramses Abul Naga IMéRA research project and biography here.

Weakened by Bonaparte’s expedition, the Mamluk armies no longer held control of government in Egypt. The vacuum of power following the defeat of the French armies during the final siege of Alexandria of August 1802 saw the return of Egypt under Ottoman rule, and paved the way for the rise of Muhammad Ali of Kavala. The successes and failures of the Pasha’s rule over a period covering 43 years (1805-1848) were intimately related to his management of the public finances, and to his ability to align his personal interests with those of the Ottomans and the Great Powers. We reflect on some aspects of the socio-economic legacy of his mercantilist development policies for contemporary Egypt.

Mercantilist re-organisation of agriculture and tax revenues

The Pasha sought to enrich himself by taking complete control of Egypt’s natural resources. As a mercantilist, his plan was to impose a state monopoly over export cash crops, use the income from agriculture to build a modern army to enable him to conquer new colonies, and hence further expand his export market and command over productive resources.

Muhammad Ali Pasha ruled Egypt as Ottoman Viceroy between 1805 and 1848

Muhammad Ali inherited the old form of Ottoman government, and was keen to replace it by a modern structure inspired mainly by the French architecture of state institutions. He was keen to undertake a cadastral survey, which he launched in 1811. Alongside, he abolished the old Iltizam tax system, thus depriving his Mamluk and Ulama rivals of income and political power.  To replace the  Iltizam tax, a new Kharaj tax on farming land was introduced and implemented by 1813.  The resulting tax rate varied according to land quality and the type of crops grown, with the intent purpose of increasing state revenue.

It is not entirely clear what the resulting tax rate amounted to. However, the Egyptian historian Al Jabarty (Al Jabarty, 1879) was keen to emphasize that the levied tax was unsustainable:

“When this was done [the cadastral land survey] they reckoned the land in the new faddan [1], showing an increase in the area, and proceeded to tax it at the rate of 15 or 14 or 12 or 11 or 10 riyals per faddan, according to the nature of the region and the quality of the soil. The result was an enormous increase: thus a village which had formerly paid 1,000 riyals in taxes—a sum that had given rise to complaints on the part of the multazims and of the peasants and had resulted in uncollected arrears—was now assessed at between 10,000 and 100,000 riyals, more or less.”

In comparison, the tax on cultivable land in Upper Egypt was lower, as Al Jabarty provides a figure of 7 riyals per Feddan which he yet qualifies as very high.

A further reform of the Pasha was to confiscate the Waqf land (land that consisted of mosques, hospices and other charitable endowments). Between 1809 and 1815 Muhammed Ali transferred  the Waqf land to the state, and the government took up the obligation of the up-keep of the mosques and charitable endowments, thus depriving the Ulama of the right to collect taxes.

Perhaps the most important source of tax income was to come via the organization of Egyptian agriculture as a state monopoly, and via the reorientation of farming to cash crops. By 1816 the Pasha was supplying farmers with capital and was purchasing their crops at government controlled prices. By exporting these crops to the West, Muhammad Ali was able to generate income to finance his new governmental bureaucracy as well as the creation of Egypt’s modern conscript army.

The new army was not only serving the imperial interests of the Pasha: the control of the army placed and maintained Muhammad Ali above the law. Thus, the army was called upon in domestic affairs in order to push through coercive measures ranging from land confiscation, the imposition of new taxes, conscription, the corvée, and the fixing of arbitrarily low prices for cash crops. The Pasha did not take a light heart approach either to hesitant tax collectors:  “Ordered to kill a recalcitrant tax collector if he would not cooperate, Ibrahim  [Muhammad Ali’s son] allegedly did the job with his own hand” Hunter (1984, p. 27.)

The lack of output diversification

The Jumel long fibre cotton variety was introduced for cultivation in 1821, in order to raise Egypt’s income from exports. Jumel exports provided up to 25% of government income in years of good harvest and high world prices. The sale of Jumel cotton on world markets would contribute to the rapid expansion of Egyptian agriculture in the 1860s (that is, during the American civil war), and to bust later when the terms of trade were no longer favourable to Egypt, especially so in the aftermath of the Great Depression. It is also the case that commodities such as cotton, sugar cane and rice are associated with volatile world prices in comparison to crops such as wheat or maize. Thus, as a widely cultivated export crop, cotton was to further increase Egypt’s vulnerability to international price variability.

The introduction of Jumel cotton would also entail longer term political consequences. Specifically, the orientation of farming toward cotton cultivation made Egypt’s economy totally dependent on Britain’s textile market. Thus, Egypt’s attempts to obtain genuine independence from Britain during the Liberal Years (1922-1952) were compromised due to the aligned interests of Egypt’s parliamentarians (consisting mainly of large landowners) with London.

It is worth noting that today Egypt remains one of the world’s least diversified countries as measured for instance by the Herfindahl Index of Concentration of Exports.  It is also the case that as in much of the Middle East and North Africa, Egypt’s present day export sector—with the exception of energy—consists mainly of few traditional products associated with little potential for technological progress (World Bank 2007). 

The neglect of the Fellaheen [2]

Historians often refer to the Muhammad Ali with praise for his visionary transformation of Egypt from an Ottoman province to a modern state. But those who have paid the bill for the Pasha’s ambitious modernization program are less often mentioned, and the extent of their sacrifice islessdocumented. Radical historians nonetheless are keen to emphasize that Muhammad Ali liberated the Fellaheen from Mamluk feudalism, in order to subject them to a harsher conditions under his state monopoly system. In this respect, the Soviet historian Lutsky writes in his Modern History of the Arab Countries (1969, p. 53),

“Mohammed Ali, however, did not abolish the feudal mode of production. The liquidation of the iltizams and the sharing out of the common land, begun in 1813, undoubtedly altered the conditions of the fellaheen. But the fellah was still exploited by the feudal lords, although he now worked for the feudal state as a whole, not for an individual lord.” The Fellah was not free to choose which crops to grow, and at what price to sell his produce. Instead,  he was obliged to sell his output to the state monopoly at dramatically low prices, that barely ensured  survival.

Mahmuddiyya canal at the turn of the twentieth century

Other sources of hardship included the introduction of an annual compulsory sixty days of corvée    on the estates of the Pasha, or in the development of public works such as canals and barrages (Bent, 2015). This corvée labour was on distant projects, often resulting in the break up of families, and offered little monetary compensation. The construction of the Mahmuddiyya canal (the canal that first brought Nile water to the city of Alexandria) involved for instance no less than 12’000 death casualties over a three-year period, with some estimates rising to 100’000 (Bent, 2015) [3].

To rapidly expand his modern army, the Pasha subjected the Fellaheen to long and harsh periods of military service (a duty Egyptians had been exempt from in the times of the Mamluk.) To avoid conscription, Fellaheen resisted by rebelling, fleeing Egypt for other Ottoman provinces, and mutilating themselves. The most common forms of self-inflicted injuries included blinding one eye, amputating index fingers and the removal of front teeth (Richards, 1982).

Egypt’s independence in 1922 did not bring an end to the neglect and contempt toward the Fellaheen. In this respect, Al-Sayyid  Marsot (1985, p. 86) observes that the elected parliament of the liberal years banned the Fellaheen from organizing into worker unions, and that it was not until the early 1950s that a minimum wage for rural workers was instituted.

Shifting incentives: the Uhda system and the origins of wealth inequality

In the aftermath of the unsuccessful military campaign of 1839 against the Ottoman ruler, Muhammad Ali was forced to give in to British pressure to end state monopoly over agriculture, in return for a hereditary right for his family to rule Egypt as Ottoman Viceroys. In order to mitigate the resulting revenue losses, the Pasha began confiscating land and granting it to his family and protégés. These concessions, known as Uhdas, granted the right to administer farm land in exchange for paying arrears and the obligation to meet future tax obligations.

Rural Scene in Upper Egypt

In practice however, Muhammad Ali was able to dictate over Uhda land crop choices, and  purchase output at prices he determined himself, much the same way as he had done in his early years of tenure. For this reason, the Pasha had the incentive to grant vast amounts of land to himself, his family and entourage. The break up of Muhammad Ali’s state monopoly and the resulting introduction of the Uhda system may well have largely contributed to the famously large levels of land and wealth inequality, still persisting in contemporary in Egypt. 

By 1920, half the farming land was owned by 2% of the population and cotton accounted for over 90% of exports (al-Sayyid Marsot, 1985, p. 86).

The emergence of the Izba model of agricultural organization

When forced to break the state’s monopoly over agriculture, Muhammad Ali in effect created a land aristocracy in parallel with a landless peasantry. By the turn of the twentieth century, a quarter of agrarian workers were made landless, and were employed mainly on the large cotton estates. By 1950, landless rural households accounted for 50% of the farming population.

To insure a long term relation between Fellaheen and land owners, Egypt saw the emergence of a new model of agricultural organization; the Izba model [4]. Due to scarcity of farming labour throughout the second half of the nineteen century, land owners experimented with various schemes to encourage retention of rural workers in long term contractual relations. One scheme that was to prove successful in this respect, was to provide each agricultural worker within the estate a small landholding, the Fellah was free to cultivate and dispose of its produce. This type of contractual relation was new to Egypt and to cash-crop farming more generally, and became known as Izba farming (Richards, 1982). 

Egyptian agriculture under the Izba system remained firmly controlled by the colonial powers: while the majority of landowners were Egyptian of Turkish and Circassian origin, the providers of capital were mainly of European origin, dictating all aspects of production and trade, ensuring that cotton exports found their way in the textile mills of Lancashire.

There were nonetheless several factors that may have contributed to the decline of Izba farming during the twentieth century. First, in the wake of independence, the industrialization of the country found a new impetus during the 1920s, and thus shifted capital away from farming. This migration of capital contributed somewhat to the dismantling of large cotton estates.  The process of decline may have further accelerated due to the collapse of foreign demand for cotton in the aftermath of the Great Depression. Furthermore, during the Second World War, the needs of the British armies facilitated the diversification of output away from cotton and in favour of cereal, a crop whose growth did not require the complex contractual arrangements of cotton farming.

Concluding comments

The economic history of Modern Egypt is rife with census data, myths and paradoxes. Benevolent reformer, illiterate tyrant or greedy merchant, the legacies of Muhammad Ali’s reforms persist in many facets of contemporary Egypt, beyond those touched upon here. Nasser’s nationalist government attempted to end social injustices by first instituting a 200 Feddan upper limit to Izba holdings, then reducing the limit further to 100, and finally 50 Feddan, by 1969.  It was also said that Nasser had introduced a mighty 90% marginal tax rate on large incomes, but that “…few however reported receiving such incomes, so taxes were never adequately collected” (al-Sayyid Marsot, 1985; p. 121).

Today, Egypt’s foreign debt is in the order of 35% of gross domestic product, and approximately one third of the state budget is allocated to servicing the public debt. The debt crisis, compounded with austerity measures dictated from a consortium of international creditors, have resulted in one out of three Egyptian households living in poverty by 2018. There is a sense, upon reading the history of modern Egypt, that the lack of output diversification, the general neglect of the Fellaheen, and the rise and fall of Izba farming may have all contributed to this reality.

References

Al-Jabarti (1879) – Abd al-Rahman al-Jabarti cajaib al-athar fil-tarajim wal-akhbar, Cairo.

Bent P. (2015): “Agrarian Change and Industrialization in Egypt, 1800-1950”, presented at the Paris Colloque International Recherche & Règulation.

Hunter F. Robert (1999): Egypt Under the Khedives, 1805-1879: From Household Government to Modern Bureaucracy.

Lutsky V. B. (1969): Modern History of the Arab Countries, Progress Publishers, Moscow for the USSR Academy of Science.

Richards, A. (1982): Egypt’s Agricultural Development, 1800-1980: Technical and Social Change. Boulder: Westview Press.

al-Sayyid-Marsot A. L. (1985) A short history of modern Egypt, Cambridge University Press.

World Bank (2007): Export Diversification in Egypt, Lebanon, Jordan, Morocco and Tunisia, Social and Economic Development Sector Unit Middle East and North Africa Region. Unpublished manuscript.


[1] Prior to Muhammad Ali’s cadastral survey, the area of a Feddan was defined to be 400 squared units of sugar cane sticks of length. To increase tax revenue, the Pasha ordered that a Feddan would be redefined as an area of 333 squared sugar cane sticks. In contemporary Egypt, a Feddan amounts to 4200 squared meters.

[2] Agricultural workers of the Nile Valley have historically been referred to as the Fellaheen.

[3] It is interesting to note that in his travel to Egypt (chronicled in his Rihla), Ibn Batuta (1304-1369) mentions passing through a canal that brought Nile water to Alexandria. There is therefore some historical disagreement about whether the Mahmuddiya canal was really constructed at the initiative of the Pasha, or if instead it had been renovated or further expanded.

[4] Izba, signifying a large rural estate in the Egyptian use of the Arabic word.


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