Construction of the Suez Canal
In 1854 and 1856 the French diplomat Ferdinand de Lesseps had obtained a concession from Said Pasha, the viceroy of Egypt, to create a company to construct a canal open to ships of all nations, according to plans created by Austrian engineer Alois Negrelli. The company was to operate the canal by leasing the relevant land, for 99 years from its opening. The Suez Canal Company (Compagnie Universelle du Canal Maritime de Suez) came into being on 15 December 1858. Over the next 11 years the canal was built, and although the British recognised the canal as an important trade route, they objected to the use of forced Egyptian labour to build it, and perceived the French project as a threat to their geopolitical and financial interests.
Suez Canal shares
Initially international opinion was sceptical and Suez Canal Company shares did not sell well overseas. Britain, the United States, Austria and Russia did not buy any shares, although all French shares were quickly sold in France. The canal opened to shipping on 17 November 1869, and had an immediate and dramatic effect on world trade, playing an important role in increasing European penetration and colonization of Africa.
External debts forced Said Pasha's successor, Isma'il Pasha, to put up his country's shares for sale. In 1875, the London banking house of N M Rothschild & Sons advanced the Prime Minister, Benjamin Disraeli, acting for the British Government, £4million to purchase Suez Canal shares. Disraeli was a close personal friend of Lionel de Rothschild, and according to legend, this was transacted on a gentleman’s agreement, with no documentation, a technically unsecured loan for a sum of several £billion today. The funds were repaid within five months; however, Disraeli was accused by William Gladstone of undermining Britain's constitutional system, due to his lack of reference or consent from Parliament when purchasing the shares with funding from the Rothschilds. France still remained the majority shareholder in the canal.
The Suez Canal post-1875
The Convention of Constantinople in 1888 declared the canal a neutral zone under the protection of the British; British troops had moved in to protect it during a civil war in Egypt in 1882. Under the Anglo-Egyptian Treaty of 1936, the UK insisted on retaining control over the canal. In 1951 Egypt repudiated the treaty, and in 1954 the UK agreed to remove its troops, and withdrawal was completed in July 1956. The company operated the canal until its nationalization by Egyptian President Gamal Abdel Nasser in 1956, which led to the Suez Crisis. In 1962, Egypt made its final payments for the canal to the Universal Suez Ship Canal Company and took full control of the Suez Canal. The company remains extant, after a series of mergers, as GDF Suez. Today the canal is operated by the Suez Canal Authority.
