Lesson 13: Economy and Society under Muhammad Ali — The Monopoly System

01Monopoly: the idea of the system

• Muhammad Ali organised the Egyptian economy — agriculture, industry and trade — on the basis of monopoly, so that Egypt would enter the international market as a competitor to other states.
• The meaning of monopoly: the government, personified in Muhammad Ali, supervises the economy in general and in detail.
• The government decides which crops are grown and which goods are made, and fixes the price it pays producers and the price at which goods are sold in the market.

02Monopoly in agriculture

Changing the system of ownership

• Over six years (1808–1814) Muhammad Ali confiscated the lands of the multazims and registered them in the name of the state, thereby abolishing the iltizam system.
• This changed the conditions of agricultural ownership and possession and secured the largest possible agricultural income.

Measures to develop agriculture

• Introducing new farming methods that raise output and cut effort; bringing in skilled instructors and defining duties and responsibilities.
• Paying attention to agricultural education: bringing agricultural experts from abroad and founding a school of agriculture.
• Improving irrigation: digging canals and channels and building barrages — most importantly the Delta Barrages (Qanatir al-Khayriya) — so that the lands of Lower Egypt passed from basin irrigation to perennial irrigation.
• Introducing new plants such as mulberry for rearing silkworms, and indigo, and improving the cultivation of cotton.

How agricultural monopoly was applied

• The peasant was supplied with the seeds, livestock and tools he needed, and their cost was deducted from the value of his crop.
• Peasants were obliged to grow the crops the government decided.
• The government received the crops at the price it fixed.

03Monopoly in industry

The aim

• Muhammad Ali organised industry on the monopoly system to achieve one goal: building the country's own internal strength.

The method of organisation

• Supplying craftsmen with raw materials at the price fixed by the government.
• The government received the manufactured goods at the price it fixed.
• Raising the price of raw materials sold to craftsmen and lowering the price at which their products were bought, so as to secure a suitable profit for the state.

Measures to develop industrial production

• Establishing government factories directly owned by the state (a public sector) to supply the industries needed, and bringing experts from abroad.
• Compelling the sheikhs of the quarters to gather boys to work in the state factories, so that they became in effect skilled craftsmen.
• Sending missions abroad to study the various industrial arts and translating industrial books.

04Monopoly in trade

• Internal trade: Muhammad Ali monopolised the marketing of all agricultural crops.
• Foreign trade: the state itself sold directly to foreign merchants, at home and abroad.
• It monopolised the trade in imports and did not encourage importing, because he held that a strong state is one whose exports exceed its imports.

05Transport and communications

• These were tied to facilitating agricultural, industrial and commercial production.
• Preparing the land routes and building a fleet on the Red Sea and the Mediterranean.
• Repairing the ports, especially the port of Alexandria, and clearing the Red Sea of piracy.
• As a result, the English East India Company preferred the Red Sea route for its trade instead of circling around Africa.

06Development of social conditions

The forces that vanished, weakened or appeared

• The influence of the Mamluks as a ruling body ended; in their place came the family of Muhammad Ali and some Turkish elements.
• The influence of the ulema of al-Azhar and the popular leaders shrank, and leadership passed from al-Azhar to the graduates of the new schools.
• The class of notables (a'ayan) appeared — the large and middle landowners — and their power grew from the mid-nineteenth century as property rights were widened.
• The industrial workers' class appeared in the state's large factories, while the craft guilds continued in small industries as brokers for the government.
• The class of merchants deteriorated because of the state's monopoly of trade: great merchant figures such as Ahmed al-Maharagi disappeared, and foreign merchants and their agencies took their place as middlemen.
• The Bedouin appeared as a settled social force: Muhammad Ali granted their leaders wide lands, and they gradually merged into civilised life.

Comparison table of monopoly in the three sectors

07Exam traps and key takeaways

• Monopoly means state supervision of the economy in general and in detail — including prices both ways (purchase and sale).
• The purpose was to enter the international market as a competitor, not simply to fill the treasury.
• The iltizam was abolished over six years (1808–1814) — the dates are a favourite multiple-choice pair.
• Perennial irrigation in Lower Egypt is the result of al-Qanatir al-Khayriya; basin irrigation was what came before.
• Industry's stated aim is internal self-strength; the profit trick is dear raw materials and cheap finished goods — get the direction wrong and the answer is wrong.
• He discouraged imports on the principle exports > imports — a strong exporter state is not an importing state.
• The proof of the transport success: the East India Company switched to the Red Sea route.
• Social change: leadership moved from al-Azhar to the new-school graduates; merchants fell and foreign agencies replaced them; the Bedouin settled through land grants.