2. A Representative Assembly with a right to vote the Budget. As regards the debt there are three loans, secured by special mortgages; two on land, and one on the railroads. Let the mortgagees take these securities, when the loans would be converted into companies, and the interest on them not be dependent upon any political arrangement. Rothschild has always told me that the domains, on which his loan of £400,000,000 is secured, are worth £400,500,000. By handing over to him the security, £500,000 would therefore be obtained. As regards the General Debt (the United), it is a swindle, but without going into this it might be regarded as the general debt of the country, and the Egyptians, like any other nation, would be left to pay or not as they pleased. The main swindle of the Goschen-Rivers-Wilson scheme was that the fellahs had paid £17,000,000 to free the land from a portion of the land tax after 1886. The law which partially liberated the land was abrogated, and, instead of the fellahs being treated like bondholders, although they had paid cash, whereas the latter had really paid about 20% on the value of the bonds, they were told that as a _quid pro quo_ they would receive 1% on their £17,000,000 for fifty years. The Canal question is nonsense. If we hold the Red Sea we hold the Canal, in the sense that we can stop all traffic. If we are at war with a maritime power, either we should have the command of the Mediterranean or we should not. In the latter case, we should still by our hold on the Red Sea be able to close the Canal; in the former case we should be able not only to close it to others, but to use it for our own powers. Protocols and treaties are waste paper, they never hold against the exigencies of a belligerent; and, if we were at war with one maritime power, we should not have the others interfering to maintain our treaty rights, for, differing on many things, all continental powers regard us as the bullies {207} of the ocean. An English garrison at Port Said is a reality; as we are not likely to have one there, our best plan is to leave things alone, and, in the event of a serious maritime war, at once to occupy Port Said. The interests of the Egyptian exiles also claimed Mr. Labouchere's attention. We find him in March putting searching questions as to their precise legal status, demanding satisfactory evidence of their support being adequately provided for, and enquiring why the Egyptian Government had unlawfully deprived Arabi of his title of Pasha.