Growing Rivalry

In the middle of the 19-th century, European nations and states were in varying conditions and stages of development. Great Britain, the most industrialized country at the time, controlled an expanding overseas empire. The mid-Victorian boom gave way to an era of deflation, falling profit margins and occasional unemployment. Both the USA and Germany quickly overtook Britain in the production of steel and other manufactured goods. Since Germany's unification, German universities had been leaders in scientific research. Britain remained the world's prime banker, shipper and shipbuilder.

Britain was the first to develop industry, but by the end of the 19-th century the progress of the British industry had been slowed down. So Britain soon found herself outdistanced. The main reason for her relative decline was the existence of the British Empire. British industry was old-established and old-fashioned in many respects.

The early industrial development of Britain became itself a serious handicap. French, American and German industry had to develop in competition with already established British industries, and could do so only by greater efficiency and new technological methods. British industry became backward and conservative. New industries abroad naturally started with the most modern equipment available.

Britain had important interests in Egypt: when the Suez Canal built by French engineers was opened in 1869, Egypt at once became the key to the most important waterway in the world. It was especially important for Britain because the canal was on the main route to India. It cut the distance from England to India by 10.000km. The development of important cotton plantations in Egypt was another reason for British interests in this region, since Britain was the chief importer of cotton. Due to the British investments railways, bridges, canals, telegraphs and docks were built in Egypt.

The operations proved almost boundlessly profitable to British bankers and industrialists. Four great loans at heavy rates were raised. By 1875 the indebtedness of Egypt was so great that the government of the country was forced to sell its shares in the Suez Canal to the British government.

By the end of September 1882 the British were in full military control of the whole country. The occupation of Egypt gave Britain control of the Suez Canal for the next 70 years. Only in 1952 Egypt was given independence.