“When Britain invaded Egypt in the 1880s, Gladstone had put 40% of his net worth into Egyptian bonds… they were yielding probably 12 to 14%. And he thought this was a great buy. And it proved to be a fantastic investment because he invaded Egypt. Britain insisted that the Egyptian pay off their bonds at par.”
Conversations with Tyler · Ideas & Essays · October 2026
Tyler Cowen asked the financial historian about William Gladstone's Egyptian bonds. Ahamed contrasts Egypt with Turkey, whose much larger debt was cut roughly in half and restructured, and leaves open whether Gladstone acted out of self-interest or principle.
Transcript
You know, I don't think it's politically feasible.
Neither do I, but I could do it. Could you? Tell me the story of William Gladstone buying so many Egyptian bonds.
I don't know whether he was just doing it because... I mean, the story is that when Britain invaded Egypt in the 1880s, Gladstone had put 40%. of his net worth into Egyptian bonds. And he'd accumulated them over a few years, but he'd progressively put more and more money into Egyptian bonds until they were yielding at their peak. They were yielding probably 12 to 14%. And he thought this was a great buy. And it proved to be a fantastic investment because he invaded Egypt. Britain insisted that the Egyptian pay off their bonds at par. There was very little restructuring. So anyone who invested in Egyptian bonds at that point got 100 cents on the dollar or 90 cents on the dollar. The question is, did he take the decision to insist that Egypt pay back its debt because of his own personal stake? Or did he just believe in principle that that is what should happen? The interesting contrast is with Turkey. Egypt owed $500 billion…
But could it be Gladstone thought that insisting on full repayment from Egypt was optimal? And he bought the bonds because he knew he would enforce it. But he wasn't doing it to be corrupt. He simply was trading on inside information the way you might find today, you know, inside parts of the Trump…
Yeah, probably. I mean, I'm sure he thought that it was the moral thing for Egypt to pay its debts in full. If he could have insisted that Turkey pay its debts in full, he would have also insisted that Turkey pay its debts in full. He just didn't have the power. He wasn't going to invade Turkey. He…
But given how Victorian the Victorians were, are you surprised that the Egyptian bonds were yielding 12 to 14 percent? They don't seem like that risky an investment. If you know Gladstone will back you up and insist on repayment, I would have bought some. Maybe you too, right? You've managed the…
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