As even Lesseps suspected at the time, the estimated time-frame was wildly optimistic, but how else could he have generated the enthusiasm? No entrepreneur launches a bold and speculative venture by announcing to the world that the work will take longer than anyone imagines, that the cost will exceed original estimates, and that shareholders will see their initial stake diluted and their prospects for profit dwindle. In all speculative endeavors, there is a dance of seduction, a wink and a nod that, though it would be wonderful if the best-case scenario proved correct, there is precious little chance that it will. Most investors, much of the time, understand the risks, or they allow themselves to be lulled by the unlikely possibility that the best-laid plans will, in fact, result in near-perfect execution.
Just in case the financial prospects were not appealing enough, Lesseps dangled one other attraction. Purchasing shares, he said, would be a contribution to the onward march of progress. It was not unusual for entrepreneurs in the mid-nineteenth century to cloak what might otherwise have been prosaic engineering projects in larger terms. That was part of the reason such projects were funded; making money was another. For five hundred francs, anyone anywhere in Europe could contribute to the betterment of mankind, and create a better future for themselves and their families. Those who wished to join this endeavor were instructed to go to their local bank, place a fifty-franc deposit against each share, and then inform Lesseps personally of the name of the banker and the name of the shareholder. The next fifty francs would be due once the initial sale was approved at the company’s headquarters in Paris. The schedule for the remainder of the balance would be published soon after.1
Arrangements had already been made with the larger banking houses, and leading financiers were given blocks of shares in return for their assistance. Money would have to be collected from hundreds of small local banks, and then funneled to the company. The process was complicated, but though Lesseps needed to work with bankers, they were merely his clients. As he had promised Baron Rothschild, Lesseps had created the company on his own.
It was not as if these two letters were sprung on the public without prior planning. Already, every significant city in Europe and Britain had an agent of the company, with an office and a budget. These agents had spent many months meeting with business leaders and the local aristocracy, and wooing the members of the press. By the fall of 1858, the project was known and understood throughout the continent, and Lesseps had every reason to be confident that the shares would be bought, and bought quickly.
But he was not prepared to sit and wait. For months, he had been attending banquets and receptions in various cities, and he continued his pace throughout the fall. For years, the canal had been billed as an international effort and not simply a French one. Though he had lobbied intensively in England and Scotland, it was uncertain how many shares the English and the Scots would purchase. It was even more unclear how many people outside of Britain and France would participate. Yet, in order to support the assertion that the venture was dedicated to the good of all nations, the company had to consist of international shareholders. In fact, to assure Said (who was deeply worried that he would look like a French stooge if the only shareholders were French), Lesseps set aside eighty-five thousand shares for sale in England, Austria, Russia, and the United States.
He then went on a road show. In August, he visited Odessa. Though it was a major Russian city, it was not exactly a cosmopolitan European center. Honored by the visit, the city dignitaries lavished Lesseps with praise and treated him to a banquet on a yacht called the Vladimir. Attended by luminaries such as Count Stroganoff, the governor-general of Bessarabia, and the director of the Imperial Bank of St. Petersburg, the feast concluded with a fulsome toast lauding the canal as an achievement that marked the apex of human civilization and which would, in its way, reflect glory on both Lesseps and Tsar Alexander II of Russia. Lesseps thanked his hosts and compared his project to Russia’s Company of Steam Navigation for the Caspian Sea, and to the waterways that Russians had constructed to enable more commerce on the Volga and the Don. Further toasts followed; vodka was consumed; and the rhetoric soared to heights only attainable in the afterglow of too much food and just enough alcohol.
Similar scenes were replayed in Trieste, Vienna, Barcelona, and Turin, as well as in French cities such as Bordeaux and Marseille. Lesseps addressed the Chamber of Commerce in Barcelona, a city he had once called home. Businessmen, nobles, men of science and culture, and more than a thousand spectators crowded the hall to hear Lesseps explain, in Spanish, why the time had come to build the Suez Canal. Reporting on the event, the main journal in Barcelona explained why the canal was imperative: “Turkey is troubled; India is trying to rise up against the domination of a sole power; Christian civilization is knocking on the door of China and Japan; it is urgent that there be a shorter route between the Occident and the Orient to speed up interactions between their peoples. History tells us that God is always on the side of those who have the means to satisfy great and legitimate needs.” In Turin, a newspaper reported that banks were preparing for heavy demand on November 5, and that the people of the region eagerly awaited the day. The promise of an “army of workers and numerous machines removing the soil of the isthmus and then, by virtue of the irrigation canal, making fertile the ancient land of Goshen, which was heralded in the blessed Scriptures…. Those who are timid and uncertain about the future should remember that European science will transform Suez into a new Bosporus, a new route to enrich the world to parallel that ancient route that had enriched Rome and Constantinople.”2
By late fall, Lesseps believed that he had effectively made his case, that shares would be bought throughout Europe, and that the enthusiasm of those many banquets and late-night toasts would be translated into bank deposits and agreements to buy shares.
When the subscription closed on November 30, however, the results were less than stellar. Slightly more than 23,000 people had purchased shares, but over 21,000 of them were French citizens. All in all, French shareholders held more than 200,000, or just over half, of all the shares offered. The next-largest block was bought within the Ottoman Empire, including Egypt; the personal stake of Said alone amounted to more than 60,000 shares. Another 4,000 were purchased in Spain; 2,600 in Holland; and 1,300 in Piedmont. And as for those 85,000 shares reserved for Great Britain, Russia, Austria, and the United States, none were bought. The verdict was clear. Ferdinand de Lesseps had sold his vision to 21,000 Frenchmen and one prominent Egyptian. The rest of the world, however favorably disposed, preferred to stand on the sidelines, cheering perhaps, but not risking money.3
The popular enthusiasm in France was good for the canal in all but one respect: it made the lukewarm reaction elsewhere seem more negative than it was. Given the cost of the shares, the response of the French was more extraordinary than the indifference of the rest of Europe. Five hundred francs was not an inconsiderable sum in 1858. It was slightly more than the average annual income in France. The shares sold for twenty pounds in Britain, and that was more than a member of the working class could afford. In addition, though it was possible for an individual to buy only one share, the company’s agents insinuated that only those who took at least ten would find their requests honored. Here, the response was tepid. In the end, many people owned fewer than ten shares. They were willing to risk five hundred or a thousand francs, but five thousand was beyond the limit most investors wanted to go. Farther east in Europe, the pool of potential buyers was smaller. In Austria, Russia, and Spain, only a tiny portion of the population had the resources to become shareholders, and in the Ottoman Empire, only the thin layer of the ruling classes had the ability and the wherewithal to invest. In the middle of the nineteenth century, the joint stock company was still an anomaly outside of Britain and France; the very idea that thousands of people could have a stake in an engineering project would have been alien only a few decades before. The railroads of the era were being built on a similar principle, bu
t, historically, major public works had been paid for by the state, either nationally by the king or locally by nobles and municipal grandees.
The novelty of a “universal company” only partly explains the indifferent response outside of France. In spite of the efforts of its promoters, the canal was still viewed as a French project overseen by French businessmen to serve the national interests of France. Though Russian aristocrats and the minor nobility of Vienna looked forward to the canal’s completion, they refrained from investing. They saw no reason to expose themselves to potential loss, even if they encouraged Lesseps to pursue his dream. If he succeeded, they would all benefit. If he failed, at least they would not go down with him.
Lesseps had difficulty accepting the reality of what had transpired. In an act of questionable accounting, the company treated the shares that had been reserved in advance as if they had actually been purchased. In a sharp exchange with Baron Bruck, the Austrian finance minister who had been closely involved with the preliminary organization of the company in Vienna, Lesseps demanded that five million francs be paid to the company. His rationale was that the Austrian agents had promised that fifty thousand shares would be bought, and Lesseps considered that a binding commitment. Bruck and the Austrian representatives took the more reasonable stance that a promise to sell fifty thousand shares could not be construed as a legal contract to pay for them. In any event, where was the money supposed to come from? The shares had not been sold. If Lesseps demanded an indemnity, who would indemnify him? Here, as in many of the disputes that surrounded the canal’s creation, Lesseps attempted to turn kind words into financial commitments. That did not work with the Austrian Empire.4
It did, however, yield results with the ruler of Egypt. Said’s reasons for supporting the canal in November 1858 were no different from what they had been in November 1854. The difference was in scale and in scope. The first commitment had entailed no more than thirty thousand francs a month to fund propaganda and preliminary studies—not a pittance, but a far cry from the eighty-eight million francs he would now contribute. That was more than the total annual revenue collected by Said’s government, and though the amount would come due in stages over the course of several years, it was a huge financial obligation. Said initially agreed to purchase sixty-four thousand shares, but he also promised Lesseps that the Egyptian government would acquire whatever shares were outstanding once the subscription closed at the end of November. Trusting Lesseps’s assurances that the initial flotation of four hundred thousand shares would succeed, Said imagined that at worst he would have to cover the balance of a few thousand outstanding shares. When none of the eighty-five thousand shares set aside for other countries were bought and tens of thousands of other shares remained unsubscribed, Lesseps turned to Said and requested that the ruler honor his promise.
Said could have refused, but he believed that his personal prestige as well as the honor of Egypt were at stake. Even though Lesseps encouraged this perception, no matter how good a Svengali he was, he cannot be made to shoulder the entire blame for Said’s decision. Subsequent generations of Egyptians and Europeans characterized Said as a rube who was manipulated to underwrite the canal, but the reality is more complicated.
The years had worn on the relationship between Said and Lesseps, and the viceroy no longer looked at the Frenchman as an old childhood friend. He had come to realize that Lesseps could and would discard anyone who stood in his way. That must have intimidated Said, who, much like Napoleon III, disliked confrontation. At the same time, Said could have said no. That would have infuriated Lesseps, and the company might have been able to coerce him to pay an indemnity. Even worse, his refusal might have doomed the canal. The statutes demanded that the company be fully capitalized. Unless all the shares were subscribed, it could not be duly constituted as a legal entity and would be unable to collect the money due on the shares. Without Said, the entire project could collapse. He did not want that to happen. He had decided that the canal served the interests of Egypt and his family, and though he may not have appreciated being presented with a bill for the outstanding shares, he accepted the burden. Better to invest more in an actual canal that he believed would benefit Egypt than to be forced to pay millions to compensate a group of French entrepreneurs.
As it turned out, the final tally for Said was 177,000 shares, which included the original sixty-four thousand to which he had committed himself, plus all the unsold shares from the end of November. Some accounts say that Lesseps demanded payment and addressed Said like a father berating a recalcitrant child. Some say that Said angrily resisted, only to be subjected to veiled threats from Lesseps that, whereas the future of the canal was certain, Said’s was not. Still others suggest that Lesseps arranged a secret meeting with Napoleon III and then demanded payment from Said in the name of the emperor. But all of the stories smack of later propaganda, designed to bolster arguments that the canal was an albatross foisted on Egypt by an avaricious Lesseps.
In truth, Said may have resented the burden, but he also shared the dream. And, much like Lesseps, he wanted his name to be immortalized. “People are mistaken,” Said told the British consul, “if they attribute the piercing of the isthmus to Monsieur de Lesseps alone, for I am a promoter of it. Monsieur de Lesseps has merely carried out my instructions. You will ask me perhaps what my motive has been, and I will tell you that it has been to bring honor to my name and serve at the same time the interests of the Ottoman Empire.” Inheritor of an ancient legacy of Egyptian autocracy, Said never strayed from the vision spun by Lesseps that day in the desert years before. Even as his friendship with Ferdinand deteriorated, they were bound by a common goal.5
On December 15, having secured Said’s support, Lesseps announced the official formation of the Suez Canal Company. That in turn led to the first meeting of the company’s governing body, and the first meeting of the administrative arm charged with overseeing the actual physical work. Billed as a universal company, it was primarily a French-Egyptian company with a smattering of others, but the Administrative Council included Parisian bankers, Belgian public-works officials, a Russian steamship entrepreneur, the inspector general of the Orléans railroad, the head of the Venetian Chamber of Commerce, and Paul Forbes, a banker from Boston. The company was structured to give Lesseps ultimate say on all matters of importance, subject only to annual approval by a meeting of the shareholders.6
At no point did Lesseps face serious opposition from the thousands of people who had invested their money in his spectacular adventure. Though the statutes gave him control, he rarely needed to invoke his authority against the will of the shareholders. They had invested in the canal because they had been swept up by the vision spun by its founder. They revered Lesseps as a man who would not only make them rich, but was offering them a precious opportunity to participate in the march of civilization.
For the most part, these investors were not prominent members of society. They were middle-class, conservative bourgeois who had earned their money through cautious work and were respected members of their communities. They were scorned by the British press, who dismissed them as ignorant villagers duped by a charlatan. According to The Times, naïve French investors were burying “their savings in the mud at the mouth of the Nile…. Were not de Lesseps’ scheme the merest moonshine the share in his company would be bought up in twenty-four hours by English shareholders.” In the words of another London paper, the investors were mostly “hotel waiters, who have been deceived by the papers they had read, and petty grocery employees who have been beguiled by puffs. The priesthood has been victimized…. The whole thing is a flagrant robbery gotten up to despoil the simple people.” Palmerston, surveying the list of those who had bought shares, was unable to resist yet another gibe and scoffed, “Little men have been induced to buy small shares.”7
Though the condescension revealed more about British animosity than about French society, there was some truth in these characterizations. Very few individuals ha
d bought large blocks of shares. In fact, only 128 had purchased more than a hundred shares, and only sixty had taken more than 150. The average holding was nine shares. The investors formed a remarkable cross-section of French society. According to the list published by the company, there were 91 mechanics, 249 engineers, 267 judges, 369 bankers, 433 doctors, 434 teachers, 480 priests, 819 lawyers or notaries, 928 artisans, 973 soldiers, 1,309 civil servants, 2,195 clerks, 4,763 merchants and industrialists, 5,782 land proprietors, and another 4,000 classified as unknown or miscellaneous. The thriving industrial cities of Bordeaux and Lyon took the largest block outside of Paris, followed closely by Marseille, a port city that stood to benefit greatly from the canal.
The shareholders were professionals who formed the core of mid-nineteenth-century France. They were a product of the industrializing world of the Second Empire, earnest, hardworking men who drew the disdain of the same intelligentsia who reviled Napoleon III. They valued patriotism, thrift, and hard work. They wished to make money and acquire nice things. They deferred to authority, respected hierarchy, and rallied to the flag. They believed that society should be ordered from top to bottom, with children deferring to parents, wives to husbands, clerks to employers, all to the emperor, and the emperor to God. They supported Napoleon III, and craved the stability he offered. They were at once very French and very much like their counterparts throughout the world. The intelligentsia thought them terribly boring and possibly inimical to national greatness. But without them, society tends to break apart into bitter factions of ideological absolutism.
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